The story technology loves to tell about itself is the story of disruption. In India’s two-wheeler market, the real disruption happened around 2017–2018 when the country began housing startups in the electric mobility domain. For the next four to five years, there was either zero or abysmally low involvement from traditional internal combustion engine (ICE) OEMs in this space.
Fast forward to the present day, incumbents are now swiftly making a mark and challenging the dominance of new players with cheaper-priced scooters, as well as expansion in the distribution network, while maintaining a core focus on quality.
It all started when the latest debutant of the Indian stock exchange, Ola Electric, which holds the largest electric two-wheeler market share in the country, started losing its grip due to the significant growth of legacy firms Bajaj Auto, Hero MotoCorp, and TVS Motors. According to a recent report by Elara Capital, Ola has lost market leadership in five of the top ten states (four out of these five lost leadership incrementally in August).
Amid intense competition, Ola’s market share dipped to 32% in August, down from 49% in the first quarter of the current fiscal year. Meanwhile, both TVS and Bajaj Auto secured a 19% market share each last month, as per data from the Federation of Automobile Dealers. Notably, overall electric two-wheeler sales in the country declined by 17%, with 88,472 units sold in August compared to July.
Out of those five states, Ola is currently the third-largest firm in three of them, the Elara Capital report pointed out. “In Haryana, Ola suddenly garnered an 81% market share in August, up 2,800 basis points year-on-year and up 1,490 basis points month-on-month. Sustaining this needs monitoring,” Jay Kale, an analyst for the report, said.
Hero MotoCorp-backed Ather Energy regained the top spot in some southern states, such as Karnataka and Kerala, in August, with a market share of 26%–29%. However, in the northern and eastern states, it continues to struggle, with a 3%–6% market share in most of these regions, the report noted.
Gaining Ground
During the month under review, Bajaj Auto retained leadership in Maharashtra and placed second in Gujarat. It has gained both year-on-year and month-on-month share in all states, thanks to the launch of the cheaper-priced Chetak 2901 scooter in June, priced between Rs 96,000 and Rs 1 lakh. What’s working in favor of incumbents is the consistent introduction of competitively priced models and an extensive distribution network.
“The rise in Chetak market shares and volume over the last 12 months has been pretty impressive. This is due to the fact that we trimmed prices and expanded the network,” Rakesh Sharma, ED of Bajaj Auto, said during a quarterly call in July.
He also mentioned that launching an e-scooter in the sub-1 lakh segment, which comprises almost 50% of the electric two-wheeler industry, will help the company widen its distribution. “We were in 250 stores in June; we should be in 500 by the end of July and almost 1,000 by September,” he added.
Similarly, Hero MotoCorp’s electric scooter, Vida, is gaining traction in the eastern markets, where it now holds third position in Bihar and commands a 10.9% market share in West Bengal, the report noted. “Bihar is the only state where it ranks third, while it places fifth at the all-India level,” it added.
Another major player, TVS Motor, extended its leadership in Madhya Pradesh and Chhattisgarh. However, it saw the highest year-on-year market share loss in Gujarat, Delhi, and Andhra Pradesh last month.
According to Kale, the three incumbents and Ather Energy were once thought of as the tortoises of the industry, as they were slow to ramp up while Ola Electric made significant strides in a short span.
“We note the consolidation of Hero, Bajaj, TVS, and Ather’s market share stands at an all-time high of 56.3% as of August. We expect this share to rise further with the ramp-up of distribution and the launch of cheaper-priced scooters, especially from TVS Motor,” he added. He further noted that another conventional market leader, Honda Motorcycle and Scooters India (HMSI), is yet to launch an EV scooter, which could reduce Ola’s share further.