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India's scooter sales seen rebounding in 03/04

By Arif Sharif

NEW DELHI, Sept 26 (Reuters) - India's scooter sales are likely to rise by five percent this fiscal year after falling for four straight years driven by booming sales of top-ranked Honda Scooter, analysts said on Friday.

Scooter sales fell by 1.07 percent in April-August, the first five months of this fiscal year, to 367,307 units but sales in the main mid-size segment jumped 36 percent helped by a 133 percent jump in Honda's sales.

Mid-size scooters with 100cc engines are gearless and have electronic starts, making them increasingly popular with women and young people in smaller towns.

"We should do at least a five percent growth in sales this year since Honda no longer faces the capacity constraint it did last year," said Pramod Amthe, analyst at Bombay-based brokerage, Prabhudas Lilladher.

Honda Motorcycle and Scooter India Pvt Ltd, the Japanese giant's wholly owned unit, launched its first model in June, 2001 and has since faced surging demand for its mid-size Activa and Dio models and the larger Eterno.

Honda has become the country's top scooter maker within two years of entering India, displacing local firm Bajaj Auto Ltd , a market leader for decades. It has notched up a 33.8 percent market share this year compared with Bajaj's 25 percent.

Scooter sales in India, the world's biggest two-wheeler market after China, have slid in the past five years as buyers' tastes have shifted to motorcycles owing to their greater fuel-efficiency, ruggedness and higher resale value.

A string of new bike models launched in the past three years and falling product prices also lured buyers away.

In 1997/98, scooters made up 44.2 percent of two-wheeler sales but by 2002/03 their share had dipped to 17.2 percent of industry sales of 5.053 million vehicles.

The share of motorcycles in the same period rose to 76.6 percent from 40.3 percent.

Ravi Shankar, an analyst at Madras-based Sundram Asset Management told Reuters he expected future scooter sales to be driven by new model launches.

"Bajaj has announced it will display two new models at the Auto Expo next year and then there will be new launches down the line. So, that will generate new volumes," he said.

In the past fiscal year to March, seven Indian firms sold 865,624 scooters, down 7.58 percent from the previous year.

Even though overall scooter sales fell, sales of mid-size scooters with engines of 75cc to 125cc jumped 60.03 percent.

Sales of smaller, entry-level scooters with engine capacity less than 75cc rose 17.48 percent, while sales of bigger metal-bodied geared scooters, mainly with engine capacity of 150cc, crashed 35.2 percent.

Five years ago, large scooters were the main market segment where Bajaj Auto and LML Ltd were the main players.