Thursday , 24 October 2019
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With two wheeler sales in the slow lane, seasoned automobile dealer, Farid Veljee, chairman, Veljee Motors speaks on range of issue affecting the industry. He says to Serilda Coutinho that, the automobile market all over India is on de-growth.

‘Local two-wheeler market driven by scooters as compared to bikes’

As the dealer for Piaggio and Suzuki, how are the two brands doing in the state?

Both the brands have a different consumer base. Suzuki is more of a mass product, while the Piaggio range that consists of Vespa and Aprilia is also diverse in terms of the segment it caters to. Vespa caters to the premium segment while for Aprilia the focus is on the younger generation between the age group of 18-30 years. In Goa we are one of the Gold Club dealers for Vespa, which means that we are among the top 25 dealers in India who are part of this category. Sales of Vespa are not driven by volumes. As compared to brands like Honda Activa, we are doing less numbers but since ours is a premium product with the on- road price for the top end model above Rs one lakh we are doing well in terms of price driven sales.

 

What is your assessment of the two-wheeler demand in Goa?

As of today the market all over India is on de-growth. If you read news reports, the overall automobile industry is hit rock bottom. There has been a drop of 35 to 40 per cent in sales in the state for all dealerships. One thing that I have observed for Goa is that the number of vehicles owned by residents outnumbers the population of the state. So this is also a deterrent factor which is going against the growth of the market.  The ongoing saturation has given rise to a bottle neck situation and all dealers have to face it. The insurance for five years that became mandatory last year has also hiked the price up by Rs 6, 000 to Rs 7,000 across two-wheeler brands impacting the purchase decision of those opting for a financial assistance.  Across two-wheelers, the local market is driven by scooters as compared to bikes. Everybody wants a scooter as the public transport is not efficient here and the parking woes are also taken care of, so they prefer the basic version and avoid going in for a scooter above 250cc. Except the youth in the age group of 18-24 years who prefer to go for high speed bikes.

 

What does 2019 look like compared to 2018?

I don’t think the market is going to improve for another two years because the damage done is huge and it cannot be repaired overnight. It will require change in government policies and settlement of GST, all these factors are very important. The current transition to Combined Braking System (CBS) and Anti-lock Braking System (ABS) being made mandatory will be followed by BS- V compliance and later to electric bikes. It takes time for the automobile industry to adjust to these transitions. Till 2020 we do not see the industry or market growing. For any industry to build a foundation it takes at least two years of no change but from last year there has been frequent transition in norms for the industry. Currently the scenario is such that if a dealer does not have his own premises or is dependent on bank funding then it is difficult to survive in the market.

 

Which are your best selling models currently?

Under Piaggio brand it is Vespa and Aprilia while, in Suzuki it is the Access. The Aprilia’s market is limited to the youth while Vespa gets buyers from 18 – 60 year of age because of its vintage value.

 

What are the new launches in 2019?

Piaggio is going to launch Aprilia Storm and Vespa Urbanclap shortly. Storm will be an entry level product that will priced at around Rs 64, 000 with a bright color range catering to the youth. Customers can also expect up gradations in the finish of the bike. Booking have started for the bikes a week back

 

Do merchandise and accessories also contribute to sales?

Except for helmets the merchandise demand is not much in Goa. The accessories and merchandise contribute around five percent to the overall sales.

 

How important are auto financing schemes in Goa when making the decision to purchase?

Ratio in Panjim of finance to direct sales is 40- 60 per cent. Having a presence of finance executives within the premises has made a lot of difference in sales. Especially the contribution of finance in Vespa has grown immensely over the years. As post demonetization cash flow is very less with the people so they prefer opting for finance schemes. With more auto finance companies coming in there is more competition but better schemes also.

 

With new Bharat stage standards being implemented how are dealers clearing stocks?

The transition began last year with the switch from BS-3 to BS-4 followed by CBS and ABS made mandatory for two-wheelers. We had a lot of pressure while making the transmission from BS-3 to BS- 4 as we had to give big discounts to clear stocks and customers had an edge of bargaining and arm twisting .So during that time we has to sell two-wheelers at a loss as there was a timeline given to liquidate the vehicles from BS-III to BS-IV. The same thing we contemplated for the non CBS and non ABS variants but luckily it was just a panic button which was laid to rest as dealers can sell these bikes purchased from the manufacturer prior to April 2019. We did not have to liquidate it in a time bound way, we still have non CBS and non ABS variants and they are still selling as we have enough time to clear stocks.

 

What is the future of electric two-wheelers in Goa?

If the concept comes and succeeds it will not be a hit only in Goa but pan India. It is going to take time to get the infrastructure ready in the form of charging stations at every 10km. We see a good future for electric bikes. The transition will be such that once people switch to e-bikes the fuel driven bikes will phase out, as Government will offer subsidies to electric bikes tackle the rising petrol prices, issues of petrol imports and air pollution. I am not sure about the time span it will take to make this switch but personally I do not see any petrol vehicle on the road after 15

years.

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