The old guard is back with a bang. Legacy players like Bajaj Auto, TVS Motor, and Hero MotoCorp have gained an upper hand in electric two-wheeler sales during May. Effective Thursday, June 1, this segment will see all vehicles sold at a lower subsidy of 15% following the Centre's decision to slash it from the earlier 40%.
After speaking to many customers at TVS and Bajaj Auto showrooms, Mobility Outlook has learned that they have been quite affected by the recent unearthing of alleged wrongdoing by a host of electric scooter makers.
“Cheating is not what I was looking for. I had booked an electric scooter for some other company but after the news of fraud in the FAME II scheme I decided to go with an old company,” said a TVS iQube buyer.
Others echoed his sentiments and memories came back of Rajiv Bajaj', Managing Director of Bajaj Auto, and his quote of 'OATs For Breakfast'' while referring to the new-age players. As per Saurav Kumar, Managing Director, Protiviti Member Firm For India, traditional original equipment manufacturers (OEMs) benefit from long-standing sourcing, manufacturing, and quality assessment systems. On the other hand, start-ups and technology-based companies initially gained momentum due to their ability to quickly bring products to market and agility.
He said, “However, as instances of degraded quality, fires, and poor safety emerged, it eroded the trust of buyers. Consequently, buyers are now gravitating towards established brands (traditional OEMs) and are willing to pay a premium for their products. Furthermore, the availability of government subsidies and tax benefits, combined with an increase in disposable income in metropolitan and Tier 1 cities, has motivated buyers to choose traditional OEMs over newer brands.”
TVS Catching Up With Ola
TVS Motor is rapidly closing the gap with Ola Electric, which indicates the growing popularity of its iQube. The company sold 20,253 units in May, more than twice the number of 8,751 units in April.
A consultant, who did not wish to be named, said 'Even the biggies have returned the money they charged for EV chargers but have gained public confidence because none of them were involved in importing components from China and claiming them to be made in India.'
While Ola Electric only posted a 29.31% increase in MoM sales, it is still a consistent performer. It sold 21,407 units in March, and 21,991 units in April, going up to 28,438 units in May. 'What has helped Ola is its Made in India start-up image. It is commendable that it has opened over 600 experience showrooms in the last eight to 10 months. The recent funding will also help in its scaling up plans,' the analyst added.
Bajaj, Vida, Ather On A Roll
Bajaj Auto and Hero MotorCorp posted 167.98% and 415.86% MoM growth with the former reporting sales of 9,910 units in May, against 3,698 in April. Hero sold 748 units in May, up from 145 units in April. 'Expansion of EV-focused dealerships seems to be helping these two OEMs,' said the analyst quoted earlier.
Bajaj Auto recently opened a dealership focused on EVs in Connaught Place, Delhi, while Hero MotoCorp will use its existing network to retail Vida scooters.
Ather, meanwhile, retailed 15,256 units in May, against 7,786 units in April 2023, a jump of 95%. According to the analyst, it has one of the cleanest images in the minds of consumers when it comes to electric scooters.
“Given the FAME frauds and associated reductions/restrictions, smaller or new players are facing challenges in meeting cash flow requirements, leading to a decline in sales. As a result, traditional OEMs with robust financial support are seizing the opportunity to aggressively promote their products in the market,” Kumar explained.
According to him, these traditional OEMs have also learned from the appealing branding, marketing, and sales strategies pioneered by newer companies, further enhancing their value proposition.
Hero Electric, Okinawa Falter
Hero Electric and Okinawa, the lead players of 2022, saw May sales fall by 36.70%, and 9.73%. With reports doing the rounds that these companies were asked to return the subsidies claimed, Okinawa has constantly maintained that it has not received any such notice. However, the analyst said its image was dented severely and would take a while to bounce back.
''The struggle for supremacy in the electric two-wheeler space has just begun. With the FAME II subsidies slashed, it will be interesting to see how OEMs encourage consumers to invest in electric scooters. With Suzuki, Yamaha and Honda now gearing up to enter this arena, there will be new dynamics in the market.' For now, the legacy players are on a roll.