Insurers looking to expand in India would be interested to know that Research and Markets have published their “Two Wheeler Market in India 2019” report. The two-wheeler market in India is forecasted to expand at a CAGR of 7.33%, and reach a sales volume of 24.89 million units by 2024, from 21.19 million in 2019. Many riders carry little in the way of insurance and the potential to offer ride-sharing, commuter and business use products in India is set to grow. Here are some extracts from the report;
The two-wheeler market has witnessed a significant growth over the last decade. An increased demand in urban and semi-urban areas, and a relatively low cost of ownership are some of the leading factors propelling the growth of the market in India. Being the preferred alternative to public transports and four-wheelers also adds to its popularity.
Lately, the industry has been facing headwinds and is showing signs of weakness with rising fuel prices, growing safety issues, multiple road accidents, higher insurance charges and uncertainty regarding the electrification of bikes. These are the reasons impeding the industry’s growth.
Market Segmentation Analysis
The two-wheeler market in India is segmented on the basis of scooters, motorcycles, and mopeds. The motorcycle segment occupies two-third market share of the two-wheeler market in India, and is followed by the scooters and mopeds segments. The market share of the motorcycles segment increased by 5% year-on-year during the FY 2018-FY 2019 period, while that of the scooters segment decreased marginally during the same period.
In 2018, the top products in the Motorcycles segment were Hero Splendor, Hero HF Deluxe, Honda CB Shine, Bajaj CT100, and Hero Passion, while for the Scooters segment Honda Activa, TVS Jupiter, Suzuki Access, Honda Dio, and Hero Maestro were the major products.
Government Initiatives
With the introduction of the government-backed program, Amma Bikes Scheme, which entitles every working woman in Tamil Nadu for a subsidy of 50% up to INR 25,000 on the purchase of a two-wheeler, the sale of two-wheelers in the state has gone up. However, the conversion of conventional bikes (up to 150 cc) into electric ones had an adverse impact on top players in the two-wheeler market.
Two-wheelers, with a capacity of up to 150 cc, account for approximately 88% of the overall two-wheelers production in India. The target to electrify all these two-wheelers produced by 2025 is a major challenge for giant companies as more than 90% of their businesses are constituted of such bikes.
Although a switch to EV bikes will be painful, the net result may well be more business use/delivery/gig economy insurance demand, as electric becomes the only option in busy towns and city centres.
Competition Analysis
In FY 2019, Hero MotoCorp Limited (formerly Hero Honda Limited) maintained its leadership position in the Indian two-wheeler market, followed by Honda Motorcycle and Scooter India Private Limited. TVS Motor Company Limited and Bajaj Auto Limited maintained the third and fourth positions, respectively.
Other significant players in the sector include Eicher Motors Limited, India Yamaha Motor Private Limited, and Suzuki Motorcycle India Private Limited. Local manufacturer Royal Enfield is also making headway as an exporter with its new twin cylinder models. Most major players are currently going through a transitional phase to launch electric bikes because of the recent Niti Aayog directive.
Who Are The Players?
Insurers already active include Bajaj Allianz, who offer lightweight motorcycle and scooter cover. Add-ons to the basic policy include things like breakdown and depreciation cover against the loss of value of the scooter over a few years. Pillion cover is another optional extra.
IciciLombard, backed by Fairfax Financial Holdings Canada, offers two-wheeler policies that insure loss due to earthquake, cyclone or floods, plus terror incidents or civil unrest. The insured bike or scooter is covered to the agreed IDV value – this is a government assessed market value of a secondhand vehicle, so a slightly different system to the UK for example. This demonstrates how different India is as an insurance market and how new entrants need partnerships with existing insurers and brokers.
Harley-Davidson, Ducati, Triumph and others all have factories in India, and coupled with an expanding middle class, this will prompt an uptake in leisure riding in the coming decade as well. These riders are likely to want riding kit covered, plus personal injury, loss of earnings and so on. For now, bigger bikes with engines over 150cc are exempt from the `go electric’ directive, so the Indian leisure machine market (over 500cc) could grow by 150K units or more in the next 3 years. There may a chance for new insurtech companies to better service these customers online, rather than selling insurance via point-of-sale or local agents.
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