Betting on rural market, TVS Motor to launch BSVI version of moped

The moped market has seen a 21.6% decline in sales in the first quarter of this financial year

TVS Motor has said it would introduce a BSVI version of moped and expects sales to grow in rural market. The market and analysts were looking for the company’s call on the segment, as mopeds would see a price hike after BSVI compliance.

Moped sales have already been on a decline on account of weak rural sentiment, delay in monsoon, and cost hike due to higher insurance premium that was imposed last year, K N Radhakrishnan, director and chief executive officer of TVS Motor, told analysts in an earnings call.

The moped market has seen a decline of 21.6 per cent in the first quarter this financial year ended June 30 at 171,000 units, compared to 218,000 units during the same period a year ago. This was the only segment where the company has reported a decline in sales during the quarter on year-on-year basis. The total sales have also seen a decline of 0.5 per cent, mainly owing to the drop in moped sales.

“This is the quarter where even the sales of entry level motorcycles are down. Moped being used for utility purposes in rural area, it has also seen a decline. But I am very confident this will be BSVI compliant, and it will come back with the economy starting to pick up and rural economy becoming better,” said Radhakrishnan. The quantum of cost increase will be known close to the launch of the product, he added.

During the last quarter, the entry level motorcycles and mopeds were reasonably growing, but this year it has seen a decline primarily because the rural market has not supported. The firm do not believe in adding stocks to the retail and want to transit into BSVI without any major impact on volume, he added.

The company is expecting the second half to grow better than the first one, depending upon the monsoon rain and the economic growth and a pick-up in consumer sentiments. 

The products under the BSVI standards are getting ready and will enter the market in the second half of the year. The prices will be decided during the time of launch, as TVS hopes that given the cost increase, the government may consider bringing down goods and services tax (GST) for two-wheelers.