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CORRECTED-As long as India's oil demand is driven by mopeds, it won't be the new China

© Provided by The Rahnuma Daily

(Corrects to add ‘a year’ in 16th graf to make clear the figureshown is China’s average annual salary)

* India has overtaken China in pace of fuel demand growth

* Indian motorbike sales to hit 19 million in 2018

* But Indian car sales are stagnant, much lower than China’s

By Sankalp Phartiyal and Nidhi Verma

NEW DELHI, July 13 (Reuters) – Sanjay Kumar is beaming withjoy. The 23-year-old has just bought a used motor scooter, hisfirst, for 30,000 rupees ($445), after years of saving togetherwith his mother.

He says the Maestro Scooter by Indian motorbike maker Hero will let him ferry his mother for shopping trips aswell as navigate New Delhi’s chaotic roads between part-timejobs.

“We never had the kind of income to buy a vehicle. Now I cantake my mother on my bike for local shopping, and workotherwise. I can easily cut down on my travel time and avoidcongestions by using my scooter,” he said.

Sanjay is one of millions of new motor scooter riders whohave helped push the pace of India’s oil demand growth well pastChina’s.

Yet as long as this growth is driven by mopeds, not cars,the oil industry’s hopes that India will become a pillar of oildemand to match the giant Chinese market are set to be disappointed.

India’s thirst for gasoline – the fuel most used bypassenger vehicles – has soared 12.6 percent in the first sixmonths of the year from 2015, growing at more than double thepace of China.

However, its overall gasoline consumption at around 544,000barrels per day is less than a fifth of China’s 2.8 million bpd.

At the core of India’s fuel consumption growth are smallmotorbikes.

Some 16.5 million new units were sold in 2015/16, accordingto industry and manufacturing data, up from 11.8 million in2010/2011, making it the world’s second biggest sales marketafter China, which sold 24.6 million motorbikes last year.

New motorbike sales in India are expected to reach 19million by 2018, said Roy Kurian, vice president for sales andmarketing at Yamaha Motor India Sales.


But while India is catching China in motorbike sales, itlags far behind in cars, which use more petrol per journey.

Modern motorbikes have a fuel efficiency of over 100 milesper gallon (mpg). Older models may only reach around 50 mpg, butthat’s still about twice as efficient as most cars.

Sales of new four-wheeled passenger vehicles in China hitalmost 25 million last year, double the volume in2010.

India’s car sales are measly by comparison. New passengervehicle sales have stagnated below 3 million a year since 2010.Monthly sales of less than 215,000 are well below their historicpeak of just over 300,000 half a decade ago.

India’s poor roads and choked cities favour bikes over cars,but the most important factor is price.

India’s average monthly salary of around $120 remains farbelow China’s average of over $9,000 a year, making motorbikesthe default choice for the swelling number of young commuters.

Small motorized two-wheelers cost 25,000 rupees to 50,000rupees ($370 to $750) compared with 200,000 rupees to 500,000rupees ($3,000 to $7,500) for the cheapest new cars.

India-based credit rating agency ICRA says theincome levels of average Indians have risen 8-9 percent a yearfor the past five years. In a population where 65 percent ofpeople are under 35, and where financing options are improving,this has supported the two-wheeler market.

“Commuting is a basic necessity, (but) in metropolitan areasand cities we have a public transport system that is not goodenough,” said Yamaha’s Kurian.

“Two-wheelers have become an automatic choice because of thetraffic chaos and parking issues in almost every city,” he said,adding that a lack of public transport and poor roads outsidecities were also boosting sales in rural India.

(Writing by Henning Gloystein; Editing by Richard Pullin)

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