Exports remain a key long-term growth driver: ICRA.

ICRA has come out with its report on three wheeler industry. The research firm expects that, the long-term sales growth to be the highest in the exports segment, followed by that in the passenger carrier segment and the lowest in the goods carrier segment (due to intense competition from the SCV segment).

India is the world’s foremost producer, consumer and exporter of three-wheelers (3Ws) with domestic sales of ~5.13 lakh units and exports of ~3.63 lakh units in the financial year ending March 31, 2012 (Source: SIAM). 3Ws are widely used in India as an affordable means of short-to-medium distance public transportation and last mile connectivity for goods transportation. Apart from the domestic demand, India has also emerged as important export hub for 3Ws with presence in some of the South Asian, African and Latin American markets that are replicating Indian 3W story with rising disposable incomes but inadequate public transport systems. Overall, the 3W industry has witnessed relatively healthy 15% CAGR volume growth over the last decade driven by moderate domestic growth (~10% CAGR) and robust exports growth (~38% CAGR).

However, the successful launch of four-wheeled Small Commercial Vehicles (mainly Tata ACE in 2005-06) has altered the industry dynamics " especially for the cargo segment, considerably over the last five years. While high tonnage (0.75T and above) 3W cargo segment has already made way for 4W SCVs that provide higher stability, safety, speed, space and style; SCVs are gaining popularity even in the lower tonnage (0.5T) Cargo and Passenger segments with introduction of some of the recently introduced smaller vehicles by CV OEMs. While domestic 3W goods segment has de-grown at 9% CAGR, SCVs have reported robust 21% CAGR growth over the last five years. Besides, slowing economic growth, moderating consumer goods consumption, high inflation, increase in financing costs, rising fuel prices, absence of fresh permits by the state governments and overall high base has impacted domestic 3W passenger sales in FY12. Overall, we expect the long-term sales growth to be the highest in the exports segment, followed by that in the passenger carrier segment and the lowest in the goods carrier segment (due to intense competition from the SCV segment).

Source : moneycontrol.com