Intorduction

INTORDUCTION

1 “THE STUDY OF CONSUMER BUYING BEHAVIOUR IN MID SEGMENT MOTOR BIKES WITH SPECIAL REFERENCE TO HONDA SPLENDOR”

2 HISTORY OF TWO WHEELERS

Who invented the first motorcycle? It seems like a simple question .But the answer is a bit complicated. Just as the automobile was the answer to the 19th century dream of self-propelling the horse drawn carriage, the invention of motorcycle was creation of self-propelled bicycle. The person credited with building the first motorcycle in 1885 was Gottliet Daimler (who later teamed up with Karl Benz to form She Daimler Bens corp.) The gasoline runs vehicle had one wheel in the front and at the back (rear) with a smaller, spring-loaded outrigger wheel on each side. The motorcycle was constructed of wood, with the wheel cast out of iron and spokes of kandeel wood. Definitely it was a “bone-crusher” chassis. Hiberland & Munich planned the first successful two-wheeler in 1894. It had a step through frame, with its fuel tank mounted on the down lube. The engine was a parallel twin, mounted low on frame with its cylinder going to the fore. In 1916 the Indian Motorcycle Company introduced first Motorcycle model H racer, and placed it on sale at the astronomical price of $350.It featured overhead value with valves per cylinder, and was easily capable of speeds of 120 mph during World War II . All branches of the armed force in Europe used motorcycles principally for dispatching. After the war it enjoyed a sport vogue until the great depression of 1929. After the World War II, a revival of interest in motorcycle was observed in late 20th century, with the vehicle being used for high speed touring and sports competition .the more sophisticated motor scooters were manufactured in Italy soon after World War II, which was followed by manufacturing of 125cc model, since than an increased number of powerful bike have blazed the road.

3 INTRODUCTION TO THE INDUSTRY

India has the largest number of two wheelers in the world with 42.6 million vehicles. India has a mix of 30% automobiles and 70 % two-wheelers in the country. The two-wheeler industry is growing at an impressive rate of 17% to 18% with growth rate varying across the different sub-segments. India was the second largest two wheeler manufacturer in the world with the birth of Automobile products of India (API) that manufactured scooter in the 1950s. API manufactures Lambrettas but, BAJAJ Auto. Ltd. Surpassed API and remained number 1 through the turn of the century. Bajaj Auto Ltd. Had its association with piaggo of Italy (manufacture of vespe). The license Raj that existed between up to 1980s In India, didn’t allow foreign companies to enter the market and imports were tightly controlled. This regulatory regime made it easier for local players to have a seller’s market. At one time customers were forced to wait for 12 years to buy a scooter from Bajaj. Comment the CEO of Bajaj at that time was he did not need a marketing Department, but only a dispatch department explains the situation. In the 1990, Bajaj had a waiting list that was twenty six times of its annual output for scooters. The motorcycle segment had the same waiting time with three manufacturer; Royal Enfield, Ideal Jawa, and Escorts. Royal Enfield made a 350cc Bullet with the only four-stroke engine at that time and took higher end of the market. There was little competition for their customers. Ideal jawa and Escorts took the middle and lower end of the market respectively. In the mid 1980s, the Indian government regulations changed which permitted foreign companies to enter the Indian market through joint ventures. The two wheeler market changed with Indo-Japanese joint ventures: HONDA, TVS Suzuki, Bajaj Kawasaki and Kinetic Honda. The entry of these foreign companies changed the Indian market dynamics. The scenario was changed from supply side to the demand side. Consumers 4 started to gain influence over the products they bought and raised higher consumer expectations. The industry produced more models with different options, prices and fuel efficiencies. The Foreign companies’ new technology helped in more reliable and better quality products. Indian companies were forced to change to keep up with their global counterparts. And now the two-wheeler industry is growing at an impressive rate of 17% to 18% with growth rate varying across the different sub- segments. The major players in this industry are HONDA, Bajaj, TVS, Kinetic, and Yamaha escorts Suzuki.. These giants have strategic alliance with foreign counterparts such as hero with Honda motors [Japan]. Each of them has wide product line with aim at different segments and age groups. These companies come up regularly with new variants to cater the needs of different customer segments. The technologies used by these companies are of high quality which influences individual purchase? There are ups and downs in this industry in terms of market share. Presently HONDA leads the market in terms of sales, consumer satisfaction and Brand image.

AUTOMOTIVE INDUSTRY In India there are 100 people per vehicle, while this figure is 82 in China. It is expected that Indian automobile industry will achieve mass motorization status by 2014.

The automobile industry is one of the core industries in India economy, whose prospect is reflective of the economic resilience of the economy. With the liberalization of the economy, India has become the playground of major global automobile majors.

5 INTRODUCTION TO THE ORGANIZATION

3.4 Since the first car rolled out on the streets of Mumbai (then Bombay) in 1898, the Automobile Industry of India has come a long way. During its early stages the auto industry was overlooked by the then Government and the policies were also not favorable. The liberalization policy and various tax relief’s by the Govt. of India in recent years has made remarkable impacts on Indian Automobile Industry. Indian auto industry, which is currently growing at the pace of around 18 % per annum, has become a hot destination for global auto players like Volvo, General Motors and Ford.

A well developed transportation system plays a key role in the development of an economy, and India is no exception to it. With the growth of transportation system the Automotive Industry of India is also growing at rapid speed, occupying an important place on the 'canvas' of Indian economy.

Today Indian automotive industry is fully capable of producing various kinds of vehicles and can be divided into 03 broad categories: Cars, two-wheelers and heavy vehicles. 3.5 COMPANY PROFILES HERO GROUP

Hero group, the largest manufacture of bicycles in the world was established by Munjal family in 1940s from Ludhiana who is the hero of bicycle world. Group patriarch and chairman of HONDA motors Mr. Brijmohan Lal Munjal along with his brothers’ Dayanand, Satyanand and Omprakash set up the family business after migrating from Pakistan in 1947. In the mid 50,s they set up hero cycles and went down in history as the largest manufacturer of 6 bicycles in the world. In the late 70,s they graduated to manufacturing mopeds [Majestic auto]

HONDA

Honda Motor Company, Japan as the leading automaker company is specialized in providing technical know-how, design specification, R&D innovation to its most prolific affiliate in the world.

OUTLOOK Honda will continue to provide HONDA with full and latest technological support. Both of them will develop and expand the two-wheeler business in the country. They agree to strengthen model line up. Honda Motor Co. Ltd., Japan, renewed its Technical Collaboration Agreement for another 10 years, uptill 2014. The previous renewal was in 1994 after the establishment in 1984. Honda has strengthened its R&D facilities in India and together with R&D in Japan, it will continue to provide HONDA with the Leading Edge Honda Technology.

According to Mr. Brijmohan Lal, Chairman, HONDA Motors Limited, HONDA is a 'Showcase' of an ideal partnership where both the partners have combined their unique strengths and have successfully created the 'World's No. 1' two-wheeler company.

COMPANY FLASHBACK Two-wheelers in India is a synonymous to the brand HONDA, a unit of Hero Group. Established in 1984 as a joint venture of The Hero Group (India) and Honda Motor Co. Ltd. (Japan), HONDA is the 'world's No. 1' two-wheeler company.

7 Driven by the trust of over 5 million customers, the product range of HONDA commands a market share of approximately 50%. Starting with a sale figure of only 43,000 units in 1985-86, the company has reached a high of 26,21,400 units in 2004-05. According to Pawan Munjal, Managing Director and CEO of HONDA, the gap with its nearest rival, Bajaj Auto, is over a million units in 2004-05.

On a compounded annual growth rate (CAGR) basis, the sales volume of the company have been growing at 33% for the last 6 years (as stated in 2003-04) and the net sales value at 36% over the same period. Parallel to it, the profit of the company has been growing at 50% CAGR.

The company enjoys debt free status since March 01 and had zero level of contingent liabilities as of 31st March 03. The entire long term debt of Rs. 116 Cr. as on 31st March 03 represents an interest free loan from the Government of Haryana on account of sales tax deferment, and has no costs attached to it.

HONDA BIKES NOT TO CROSS PATH WITH HONDA Honda’s wholly-owned Indian subsidiary Honda Motorcycle & Scooter’s foray into motorcycles will be complementary, and not competitive, to the existing product range of its joint venture HONDA Motors.

This has been conveyed by the Japanese automobile giant to its joint venture partner Hero group’s management. Honda’s technical collaboration in HONDA, in which it also holds 26 per cent shares, will come to an end in 2004.

“The products which will be launched by both Honda subsidiary and HONDA post 2004 will be a joint decision,” HONDA’s senior vice-president (marketing) Atul Sobti told FE. 8 “Honda is expected to target a different market segment through it’s wholly- owned subsidiary in India,” a HONDA official explained, adding that “details about specific products have still to be worked out jointly”.

There has been widespread speculation over the future relationship of Honda with HONDA in the two-wheeler industry after expiry of its technical collaboration in 2004.

HONDA chairman Brij Mohan Lal has all along maintained that Honda would only act in the interest of the joint venture though some kind of competition between the two companies is imminent once Honda also enters the motorcycle segment on its own.

“Discussions between us and Honda Motorcycle & Scooter are already on. A committee with representatives from Honda Motorcycle, HONDA and Honda will be set up after six months (in 2003),” a HONDA executive told FE.

HONDA has said earlier that there would be a joint committee which would decide on marketing strategies and products selection.

HONDA’s existing market share is around 47 per cent, while that of HMSI is around three per cent, he said.

Both Honda entities in the country will together retain 50 per cent market share in the two-wheeler industry.

HONDA is now planning to enter a segment between 100 cc and 150 cc, which will most likely be 125 cc, in September. At present, most of its bikes including the CD-100, Splendour, Passion are in the 100 cc segment addressing various consumer needs. It also launched the 156 cc CBZ in the premium segment.

9 Experts point out that competition is hooting up in the motorcycle market with Bajaj Auto, TVS Motor and Yamaha gaining ground, and Japanese major Suzuki planning to enter by 2004.

HONDA plans to expand its capacity from 1.5 million units to 2 million per annum, over the next one year, to cater to the huge demand for motorcycles....

HONDA RIDING STRONG This has been a trying year for the two-wheeler industry and, as in the case of cars; the biggest bottleneck has been limited access to financing.

Industry sources say that 2009-10 is going to be as difficult though the optimists insist that customers will bite the bait so long as there is enough going for the product concerned. This possibly explains the sustained success of models like the Activa, Scooty, Splendor, Passion, and Pulsar among others as well as new ones like the Stunner and YZ16.

SLIDESHOW OF THE DAY: PRIVATE JETS TAKE OFF

By the end of the day, a bike is far more affordable than a car, which means it is reasonable to expect buyers to put cash down on the table at one go. However, they would need a good reason to do so, which means that manufacturers have to work overtime on providing enough excitement in their products.

MORE INDIA BUSINESS STORIES

The dark horse in the premium bike segment could be Yamaha whose 150cc FZ16 has already won rave reviews. The company’s biggest task on hand is to rebuild its retail infrastructure (in terms of sales and service) which has been a chink in its armor for years now.

THE JOINT VENTURE

The joint venture between India's Hero Group and Honda Motor Company, Japan [for Motorcycle in 1984 ] has not only created the world's single largest

13 two wheeler company but also one of the most successful joint ventures worldwide until the year 1999 when it had announced a 100% subsidiary, Honda Motorcycle & scooter INDIA

(HMSI). This announcement cased the HHM stock price to decrease 30 % the same day. Munjal had to come up with new strategies decisions as, HMSI and other foreign new entry companies were causing increased intensity of rivalry for HHM. HHML’s success relied on its ability to create a motorcycle that required little maintenance and had enormous fuel efficiency. It was not expensive, but it had a reputation to last the distance over years without requiring any serious repairs. Spares were easy to get and inexpensive.

HONDA, HONDA FURTHER TIES FOR FUTURE LAUNCHES

Japanese two-wheeler maker Honda and its Indian partner, the Hero group, wish to further their 25-year-old partnership.

Both sell two-wheelers, including motorcycles and automatic scooters, in the same segments, with some cannibalization already taking place, according to executives in HONDA, India’s largest two-wheeler producer.

Both companies may look at sharing details of new products with each other, including engines, design sequences and vehicle platforms.

Honda Motorcycle and Scooter India (HMSI), the country’s fourth-largest two-wheeler maker, has already helped HONDA Motors (HHML) in areas like design and styling for a couple of products.

Speaking to Business Standard, Shinji Aoyama, president and CEO, HMSI, said, “We enjoy a very positive association with HONDA. We shared the basic vehicle design with them for their new CBZ and Hunk (motorcycles).

14 We may look at sharing engines or platforms in the future but there are no confirmed plans yet.”

Currently, HMSI and HHML share a supply chain and details related to production capacity.

Recently, Pawan Munjal, managing director and CEO, HHML, said since both operated in the 100-150cc segment, there had been some cannibalization of products. HONDA sells as many as 14 products in the local market and HMSI sells six.

According to an earlier understanding between the two, HMSI was to look at capitalizing only on the scooter segment, while HHML was to focus on the motorcycle segment. However, when the motorcycle market grew faster than the scooter, HMSI was forced to change strategy.

With the launch of Unicorn (150cc model) in 2004, HMSI announced its entry into the motorcycle segment. Thereafter, it launched two more motorcycles, both in the 125cc segment.

The company will also launch a 100cc motorcycle, a segment which accounts for about 70 per cent of the entire market and where HONDA has a near- monopoly. The bike will be launched by December this year or early next year.

According to data from the Society of Indian Automobile Manufacturers (Siam) for March 31, HONDA has almost 60 per cent share in the motorcycle segment, while Honda commands 57 per cent in the scooter segment.

HONDA’s revised strategy is to focus on the largely-untapped rural market, while Honda will focus on aggressively-styled products that are better suited to the urban consumer.

15 Both fared well last year despite the downturn in the domestic market. HMSI, for the first time, sold more than a million units in the domestic market, a growth of 16.5 per cent. The company has projected a growth of 18 per cent this financial year, with sales of 1.2 million units in the Indian market. It is also hoping to increase its growth in the motorcycle segment by 25 per cent by next year, aided by as many as five new launches.

A city-based analyst said since both companies competed in the same space, they could save through sharing technology and better production management

HONDA BETS ON INFORMATION SECURITY TO MAINTAIN INTEGRITY

While drafting its new security policy, two-wheeler giant HONDA ensured that its efforts to create a secure enterprise went beyond IT security to encompass complete information security.

Enterprise security may not be as critical in a manufacturing organization as in the banking, financial services and insurance (BFSI) sector. Nonetheless, it is important, especially when it comes to a manufacturing company like HONDA, which is extremely dependent on its computer systems and networks for its operations. A disruption in IT infrastructure could spell disruption in business operations. Taking all this into consideration, the company has been constantly evolving its information security set-up to keep pace with its expanding IT infrastructure. Today enterprise security at HONDA has reached one of the most critical junctures as the bike major has recently created a comprehensive information security policy.

INFORMATION SECURITY AS OPPOSED TO IT SERCURITY.

16 Enterprise security at HONDA goes beyond IT security to encompass complete information security. The company identified the need for complete information security with IT security as one of the aspects within this whole concept. “IT security will take care of only some intrusions. But for any organization there is a need to have a clear identification of authorizations through information classification,” explains S R Balasubramaninan, vice president, Information Systems, HONDA Motors. The need was to find out what type of information was there, who should access it and who should not in order to ensure complete data integrity.

INFORMATION SECURITY POLICY

While the company had some documented policies relating to various aspects, including IT security post-1999, they were not comprehensive enough to cover all areas. Increasingly expanding connectivity warranted the need for a complete policy, defining the security issues both from within and outside the organization. The company’s plans for connectivity with business partners included rolling out the second phase of its supply chain solution, allowing dealers and vendors to interactively do transactions with the company on the Net. (It already provides dealers and vendors one-way access to the Web server). Furthermore, it is also trying to allow employees access to applications like instant messaging and SAP, especially for field staff and mobile workers. In such a scenario, which required opening up its systems to partners, the need for a robust policy was imminent.

A few months ago, HONDA started working on its new information security policy with HCL Comnet as the consultant. The policy broadly covers around 17 domains. These domains include networking and telecommunication, back-up, software purchase, use and maintenance, incident management, e-mail, Internet, access control, password control, anti-virus, notebooks, information disposal, acceptable use, system development, desktop, information classification, training and physical security. HCL Comnet carried out the vulnerability assessments and outlined the areas requiring improvement. These included recommendations for patch up gradation on various operating systems and for networking devices as well as physical security— specifically for the server room. The consultant also recommended the removal of modems provided to users for directly accessing the Net from their PCs. Though the 17 connections had been removed, the modems were left behind, which, the consultants pointed out, created vulnerability as the users could plug them in and start using them. According to Balasubramanian, based on the recommendations of the consultants, the company fixed up the loopholes in its security set-up, including some recommendations regarding the firewalls and the protection of servers. The company has already carried out pre-vulnerability assessments, fixed the vulnerabilities and then conducted post-vulnerability assessments.

On the other side, HONDA also worked on the information classification part of its information security policy, which didn’t exist earlier. This involves participation from the top management with user representation from all the functional areas. The present exercise of classification of information is being done depending on confidentiality, criticality and availability. Apart from information classification, the access rights to various classes of people are also being defined in the policy. The functional heads are made responsible for their departments and endorse the classification of information being done.

SECURITY SET UP SO FAR

The year 1999 was the inflection point for the entire IT set-up at HONDA, including information security. The company undertook a complete revamp of its IT infrastructure with a new architecture, expansion of its network, IT assets and applications. The security approach has been evolutionary, in line with these growing requirements. Connecting the entire organization during 1999, the company put its mailing system into place. This, however also led to the import of viruses into the system, thereby warranting the need for a complete anti-virus solution. Before this, there was anti-virus software installed only on a few desktops. The company chose McAfee for its comprehensive features and good installed base. HONDA has now implemented the complete suite, covering the desktop, servers and mail gateway.

The company first deployed the Total Virus Defense (TVD) system, which was later upgraded to the Active Virus Defense (AVD) system around two years ago. Under AVD, HONDA is using Group Shield for Lotus Notes mailing system, Netshield for NT and Window 2000 servers and Virus Scan for end-user desktops. The AVD works under the ePolicy Orchestrator agent, which is an agent installed on each and every desktop and delivers the means to control the anti-virus applications. According to Balasubramanian, it gives the company power to enforce its anti-virus policy, to update the policy on end-user desktops and to monitor update 18 progress through graphical reports. ePolicy has made it easier to enforce any anti-virus policy in the company in just two hours in all the offices. As part of the AVD architecture, HONDA has three AVD servers at the head office in Delhi, and the Gurgaon and Dharuhera plant. The AVD server at Delhi takes care of all head office- based servers, desktops and all zonal and area office desktops. Likewise, with the Gurgaon and the Dharuhera AVD servers. All the three servers are connected to the McAfee Internet site through the Net. As a result, whenever McAfee releases any new anti-virus DAT files, all three AVD servers get synchronized with McAfee server and download the DAT file (incremented) immediately, which are then distributed to all the servers and desktops. In case of a virus attack on any of the servers and desktops, the policy agent updates the AVD server about this new virus.

NEED FOR FIREWALL

The need for further beefing up the security set-up beyond an anti-virus solution was felt as the company further opened up its systems to external access. Around a year-and-a-half ago, apart from providing Internet access through the proxy server, the company also decided to provide connectivity with dealers and vendors for information sharing, i.e. they could directly log in to the Web server. This required the deployment of a firewall to guard the systems from possible hackers and virus attacks. “This was the first time that we were really connected to our partners. Earlier we only had a mail gateway through which we exchanged mail. So, there really wasn’t a need for a firewall at that time. But now, since we are allowing people to log in and with people accessing the Internet there is the need for a firewall,” explains Bal

Subramanian. Firewalls deployed at Comsat Max: HONDA has a perimeter firewall that serves as the Internet gateway for both the plants and head office. It has chosen Checkpoint as its firewall, which runs on a Nokia box and is managed and monitored by the service provider, Comsat Max. The company’s IT security architecture divides the network into zones, based on the function of the infrastructure contained therein. The zones created are:

• DMZ zone • Third-party zone

19 • Application servers zone • Critical servers zone • Security management zone • Network and system management zone • LAN & WAN zone

UNAUTHORIZED INTERNET ACCESS

Restriction of access to unauthorized sites is taken care through the proxy server, which was deployed around two years ago for Internet access to internal users. The rules for access control have been defined in the server itself. It defines factors like which PCs have access to the Internet, the sites that can be accessed, time period during which only certain users can access the Internet, etc.

Access as well. It has deployed PGP software on the critical desktops and notebooks within the organization for encrypting data. While the software was deployed around two-and-a-half years ago, it keeps on identifying and adding critical notebooks and desktops. The information on the desktops and notebooks is kept in a folder and is encrypted, which requires a user name and password to access it.

Furthermore, HONDA has built in integrity in the application itself, which is well documented with profiles for each user. Depending on his/her profile, the user gets the rights for accessing the data. The authentication is done through passwords.

FUTURE PLANS

Now that HONDA is readying itself for the second phase of its supply chain initiative of connecting with dealers and vendors, it is planning to build more components on top of its existing security set-up. While in the first phase, the company had allowed dealers and vendors only one-way access, in the second phase it will allow them to interactively do transactions with the company on the Net. Once the second phase

20 starts rolling out in April next year, the company plans to deploy additional features like an intrusion detection system, user authentication and single-user sign-on.

As part of the new information security policy, the company will be outsourcing the monitoring of all its external access, hacking and intrusions to third-party service providers with SLAs. “We will outsource primarily because the third-party service providers have the expertise and resources to monitor 24x7,” explains Bal Subramanian. Also, as a policy, HONDA will initiate regular half-yearly audits to check compliance with the security policy and also to check whether the policy needs a change.

HONDA PLANS ULTRA CHEAP MOTORCYCLE AT RS. 15000

If plans go on stream as per schedule, HONDA will unveil a new motorcycle that would be available in the market for a price ranging between Rs 12,500 and Rs 15,000. The company plans to create a new niche segment of the Indian motor cycle market where it can be the undisputed king. This actually has been HONDA’s plan for a long time. We carried a story about an ultra cheap motorcycle from HONDA for India between Rs 12,500 and 15,000 last year. Things are moving forward at HONDA for sure - but very little info has been released to the media.

HONDA, which is already the biggest in terms of market share in the Indian motor cycle market with its hugely popular models, expects to push up sales and acceptance levels by launching sub-Rs 15,000 motorcycles. The cheapest motorcycle in the Indian market currently sells for around Rs 30,000.

HONDA’s cheapest motorcycle models currently in India are the CD Deluxe, Glamour, Splendor NXG, Splendor + and Passion Plus.

The ongoing credit crunch and high interest rates initially looked like a bad thing for HONDA, but the company has done well. Their cheap motorcycles and low prices have actually helped them recapture the cost-conscious market, 21 and in this financial year, HONDA sales would marginally surpass sales in the last year.

HONDA top brass has already swung into action with the hopes of building a cheap motor bike son for the Indian market. Though not much has been put on the drawing board yet, company officials clarified that HONDA is seriously looking at the possibility. The move is said to have been sprung up following the government’s outlining of the Automotive Mission Plan. The company, which is the leader in the two-wheeler segment, is expected to witness higher than the industry growth and gain market share driven by significant presence in rural India and new product launches.

As for the present, HONDA is expected to perform well in the coming 2008 Diwali festive season with new motorcycle launches on the anvil. The company has been driving growth in the industry despite a high interest rate scenario and an overall credit squeeze in the market remaining unchanged.

HONDA GETS FOR CHEAP MOTOR BIKES

The Rs 1-lakh car is getting ready to roll out of the Tata stables. With a car for so less an amount, motorcycles suddenly seemed expensive. Motorcycle makers also have begun launching bigger and more expensive motorcycles.

UPDATE: IT LOOKS LIKE WE ARE GETTING CLOSE TO THE ULTRA CHEAP MOTORCYCLE FROM HONDA

The Munjals, though, are moving down the price brackets to widen the gap. The world's biggest two-wheeler maker is planning to build a motorcycle that will sell for Rs 12,500-15,000 and create an all-new class of buyers. The current crop of cheapest motorcycles in India cost between Rs 30,000 and Rs 35,000.

22 The Munjals are, in fact, evaluating the scenario. They have made it known that a possible $300-350 motorcycle is what they are planning. Though there is nothing on the drawing board yet, HONDA is seriously looking at it.

Meanwhile, a report said that HONDA is being egged on by the government's unannounced concessions in its 10-year vision statement, which envisages the development of low-cost vehicles.

According to the Automotive Mission Plan, the focus should be on developing and selling appropriate products for the large population of the country. The products could include cost-effective small carriers, strong rugged vehicles for the rural market and $300-350 motorcycles, it said.

Small car manufacture has already stepped on the gas with the government deciding snip excise duty on small cars to 16 per cent from the earlier 24 per cent. Automobile experts don't rule out a similar evolution of the two-wheeler market.

HERO HONDA SUCCESSFUL TARGETS THE RURAL MARKET

HONDA is a joint venture between Honda Corporation, Japan and the Mumjal family with both parties owning 26% each. HONDA has made its strong presence in the rural India and so it is able to withstand against the market competition. Selling of deluxe models of the bikes and a decline in raw – material prices has brought an improvement in the EBITDA margin level, in the financial year 2008. The dealership network of HONDA is strong and it also has a good penetration effect in the rural areas. The company has manufactured 46,000 units in Haridwar plant and its daily production has reached between 1000 to 1200 units on a daily basis. Recently, HONDA reported an impressive July sales at 281317. The PAT growth was driven by low tax provision at 22.2% verses estimated 29.5%. The EBITDA is at Rs.

23 3.4B (verses estimation of Rs. 4.2B), which is due to lower realization growth and higher other expenditure. There are few banks which are likely to reduce auto loan interest rate at 1 to 2%. In the coming month, HONDA is expected to do better sales volumes on account of better monsoon and growth in the rural area.

The brand’s simple ad campaign

“Fill it, shut it, and forget it”

Popular as fuel efficient bike, The Hero Group and Honda own 26% stake in HONDA, which is the world’s single largest two-wheeler maker. The remaining shareholding is in the hands of the public. Honda has strengthened its R&D facility in India and together with R&D in Japan will continue to provide HONDA with leading edge Honda technology.

CORPORATE PROFILE OF HONDA

In some ways, Hero and Honda are like two volumes of a single book. What has made the book a bestseller is the fact that right from the outset, the co- authors knew the script they had to write in order to be successful in the Indian market. Over the course of two and a half decades, both partners have fine-tuned and perfected their roles. As the largest motorcycle producer in the world, Honda has been able to consistently provide technical know-how, design specifications and R&D innovations to its most prolific affiliate in the world, HONDA. This has led to the development of world class, value for- money motorcycles and scooters for the Indian market. On its part, the Hero Group has taken on the singular and onerous responsibility of developing the supply chain, ramping up production facilities, setting up distribution networks and creating customers. Since both partners are completely focused on their respective skills, they have been able 24 not just to complement each other, but also draw from each other’s strengths. In the process, HONDA has gone on to create history, by becoming one of the most successful joint ventures in the world. Today, every second motorcycle sold in the country is a HONDA. There are more than 22 million HONDAs o Indian roads today. There are more HONDA bikes on this country's roads than the total population of some European countries put together. The company's growth in the two-wheeler Market in India is the result of an intrinsic ability to increase reach in new geographies and growth markets. HONDA's motorcycles and scooters are sold and serviced through a network of over 3500 customer touch points.

HONDA'S MISSION

HONDA’s mission is to strive for synergy between technology, systems and human resources, to produce products and services that meet the quality, performance and price aspirations of its customers. At the same time maintain the highest standards of ethics and social Responsibilities this mission is what drives HONDA to new heights in excellence and helps the organization forge a unique and mutually beneficial relationship with all its stake holders.

HONDA’S MANDATE HONDA is a world leader because of its excellent manpower, proven management, extensive dealer network, efficient supply chain and world-class products with cutting edge technology from Honda Motor Company, Japan. The teamwork and commitment are manifested in the highest level of customer satisfaction, and this goes a long way towards reinforcing its leadership status. The joint venture between India's Hero Group and Honda Motor Company, Japan has not only created the world's single largest two wheeler company but also one of the most successful joint ventures worldwide. During the 80s, 25 HONDA became the first company in India to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. A legendary 'Fill it - Shut it - Forget it' campaign captured the imagination of commuters across India, and HONDA sold millions of bikes purely on the commitment of increased mileage.

Over 20 million HONDA two wheelers tread Indian roads today. These are almost as many as the number of people in Finland, Ireland and Sweden put together! HONDA has consistently grown at double digits since inception; and today, every second motorcycle sold in the country is a HONDA. Every 30 seconds, someone in India buys HONDA's top selling motorcycle Splendor. This festive season, the company sold half a million two wheelers in a single month—a feat unparalleled in global automotive history.

HONDA bikes currently roll out from its three globally benchmarked manufacturing facilities. Two of these are based at Diarrhea and Gurgaon in Haryana and the third state of the art manufacturing facility was inaugurated at Haridwar, Uttrakhand in April this year. These plants together are capable of producing out 4.4 million units per year. HONDA's extensive sales and service network now spans over 3000 customer touch points.

COMPARE STUDY OF HONDA

HONDA values its relationship with customers. Its unique CRM initiative - HONDA Passport Program, one of the largest programs of this kind in the

26 world, has over 3 million members on its roster. The program has not only helped HONDA understand its customers and deliver value at different price points, but has also created a loyal community of brand ambassadors. Having reached an unassailable pole position in the Indian two wheeler market, HONDA is constantly working towards consolidating its position in the market place. The company believes that changing demographic profile of India, increasing urbanization and the

Empowerment of rural India will add millions of new families to the economic mainstream. This would provide the growth ballast that would sustain HONDA in the years to come. As Brijmohan Lal Munjal, the Chairman, HONDA Motors succinctly points out, "We pioneered India's motorcycle industry, and it's our responsibility now to take the industry to the next level. We'll do all it takes to reach there.''

27 PRINT ADS

MODELS

HEROHONDA BIKE MODELS Model: Achiver ES Model: Achiver Kick Model: CBZ Xtreme ES Start Model: CBZ Xtreme Model: CD Dawn Model: CD Deluxe Kick Start Model: Glamour Model: Glamour FI ES Model: Glamour FI Electric Start Kick Start Model: Glamour Kick Model: Hunk ES Model: Hunk Kick Start 28 Start Model: New Karizma Model: Passion Plus Model: Pleasure Model: Splendor NXG Model: Splendor NXG Model: Splendor Plus (Alloy) (Spoke) Model: Super Splendor Model: Ambition Model: CBZ Model: CBZ* Kick Start Model: CBZ* Electric Model: CD 100 SS Start Model: Dawn Model: Karizma Model: Passion Model: Splendor Model: Street Dlx Model: Super Splendor KS

29 HONDA DAWN

4 Stroke, Single Cylinder, Air Engine Cooled Cubic 97.2cc Capacity Max. Power 7.4 BHP @ 8000rpm Gear Box 4 Speed Ignition CDI Front Brakes 130mm Drum Rear Brakes 110mm Drum Front Tyre 2.75 X 18 Rear Tyre 3.00 X 18 Wheelbase 1230mm Ground 160mm Clearance Dry Weight 114 Kg Tank Capacity 10.5 Litres

HONDA PASSION PLUS

30 4-stroke, Single Cylinder, Air - Engine Cooled OHC Displacement 97.2 cc Max. Power 7.5 Ps at 8000 rpm Gear Box 4 Speed Constant Mesh Clutch Multi-Plate Wet Type Max. Speed 85 Kmph. Frame Tubular Double Cradle Suspension Telescopic Hydraulic Fork (Front) Suspension Swing Arm with 5 step (Rear ) adjustable hydraulic damper. Tyre Size 2.75 * 18- 4 PR /42 P (Front) Tyre Size 3.00*18-4/6 PR (Rear ) Brakes (130mm)/ Hydraulic Disc Type (Front) (Optional) Brakes Internal Expanding Shoes Type (Rear) (130 mm) Final Drive Roller Chain Battery 12 V-2.5 Ah Ignition Electronic CDI

31 Starting Kick Starter Wheelbase 1235 mm Ground 160mm Clearance Length 1980 mm Width 720 mm Height 1060 mm Kerb Weight 116 kgs. Fuel Tank 12.8 litres (Reserve 1.1 litres) Capacity Head light Halogen Bulb 35 W / 35 W

32 HONDA ACHIEVER

Specifications Engine / Transmission 4 Stroke, Single Cylinder, Engine Air Cooled, Displacement 149.1cc Max. Power 10 KW (13.4 Bhp) Top Speed 101 kmph Acceleration 0-60 in (5 seconds) Gears 5 Gears Tyre Tyre Size (Front) 2.75 * 18- 42 P /4 PR Tyre Size (Rear) 3.00*18-52 P/6 PR Electricals Halogen Bulb 35 W / 35 W Head light (Multi Reflector) Brakes Brakes (Front) Drum / Disc Brakes (Rear) Drum Features Kerb Weight 134 Kgs Frame Diamond Cradle • rburetor controlled Variable Ignition" for better, throttle, acceleration, 33 and immediate response

• Unique "Anti-Kick back" device 240 mm front Disc Brakes as standard.

• 5speed (1-down 4-up pattern) gearbox.

• kick start and self start option

COMFORT

• New 5 step adjustable "Gas Reservoir Suspension" - "GRS" for comfortable ride even on the toughest of roads

• Puncture resistant Rear Tuff -up Tube.

• 1325 MM long wheel base for enhanced stability.

• Wide 100 / 90 low aspect ratio Rear tyre.

• 240 mm front Disc Brakes as standard.

• Self Start option.

• Better that CBZ Extreme and Pulsar

• Latest 10W30 SJ Grade, JASO MA Grade Engine oil which allows oil change at intervals of 6000 kms.

• Reduced maintenance cost, excellent ability to start immediately in cold weather.

34 TECHNICAL SPECIFICATION OF HONDA HUNK

Dimensions & Weight Length (mm) 2080 Width (mm) 765 Height (mm) 1095 Wheelbase (mm) 1325 Kerb Weight (kgs) 145 Ground Clearance 145 (mm) Engine Model Designation Air Cooled, 4 - Stroke Single Cylinder OHC Starting Self Start/Kick Start Displacement (cc) 149.2 Ignition Advanced Microprocessor Ignition System (AMI) Bore & Stroke 57.3 X 57.8 mm Suspension Front Telescopic Hydraulic Shock Absorbers 5 Step Adjustable Gas Reservoir Suspension – Rear GRS Brakes Type Disc: 240 mm Dia Disc - Non Asbestos Type Internal Expanding Shoe Type (130 mm), Non Rear Asbestos Type. Tyres Front 2.75 X 18 42P Rear 100/90 X 18 - 56P (With Tuff-up Tube) Fuel Tank 12.4 Litre

35 HONDA CBZ XTREME SELF STAR

The HONDA CBZ Xtreme has little in common with its earlier version the HONDA CBZ except a similar headlamp. With the HONDA CBZ Xtreme, HONDA has tried a radical departure from its earlier 150 cc design themes. The success of this approach is proven by the fact that since its launch in 2006, the HONDA CBZ Xtreme has been selling almost 15, 000 to 20, 000 units per month, and crossed the 50, 000 mark within April 2007. This large, handsome, and good-looking bike has more to it than meets the eye.

LOOKS

• Tubular diamond-frame type chassis with a single down tube and a box- section swing arm

• Matt-black powder-coated engine block

• Matt-black alloy wheels

• Black plastic lower side panels striped across by a shiny chrome sash

• Split hand grips for the pillion rider gives a different look

• Additional Teflon coat over visible silvery surfaces

• The side indicators that usually stick out in other bikes are integrated into the headlamp housing

• A strip of clear glass above the headlamp conceals the parking lamp or pilot lamps positioned above the headlight

• Body colored rear mirrors adds color to the handlebar area

• Classy, brushed-steel console finish

36 • Deeply contoured seat

• Sculpted and sharp rear cowl

• Rear indicators integrated into rear LED headlamps

CONTROL

• Extremely compact body design meant for swift turn-in

• Awesome acceleration: 0 - 60 kmph in 5 seconds

• 4-stroke air-cooled single cylinder engine, producing 14.4 bhp at 8500rpm

• Maximum torque12.8Nm at 6500rpm

• Fine tuned throttle responses with low engine noise

• Efficient self start instantly powers up the engine

• Low engine noise makes it hard to detect a running engine

• Splendid stability and fabulous turning ability

• CBZ-X travels in a straight line and doesn't skid even at turns at 100kmph

• Forward leaning position enhances effortless braking

• Split rear grip, again a first-time feature in motorcycles in India

• Instrument cluster contains analogue gauges, including a speedometer, fuel gauge, and an engine-rpm meter in addition to turn, neutral indicators, and a powerful high beam

COMFORT

• Powerful high beam builds safety for the night rider

• The large speedometer, smaller tachometer, and fuel gauge can be read

37 quickly and easily

• Tinted cowl improves aerodynamics and cuts the glare on the bike's instrumentation

• Relaxed and comfortable riding

• Upright posture doesn't strain wrists

• Generous knee recesses built into the fuel tank are friendly for tall riders

• Well placed footrests

• Forward leaning position enhances effortless braking

• Disc brake is highly efficient and gives instant response

• Extremely good suspension built with the fast moving solo rider in mind

• High ground clearance allows riders to see forward over hatchbacks and sedan cars

• Wide 100/90 low aspect ratio rear tyre for additional road grip and safety

• Tail lamp cluster has a segmented stop-and-brake light section with turn indicators built into a single unit

• Puncture resistant tuff up tube increase reliability of performance

• The CBZ Xtreme has the best gearbox in its class, smooth and free from problems

MILEAGE AND ECONOMY

• New model comes with a 3-year / 40,000 kms warranty

• CBZ-X gives 50kmpl in city roads 61kmpl on highways

38 • Tuff up tubes are economical vis-a-vis emergencies

TECHNICAL SPECIFICATION OF CBZ XTREME+

Dimensions & Weight Wheelbase (mm) 1325 Length (mm) 2080 Width (mm) 765 Height (mm) 1145 Ground Clearance (mm) 145 Weight (kgs) 141 Engine Model Designation Air Cooled, 4 Stroke OHC Starting Self Start/Kick Start Idle Speed 1400 rpm Displacement (cc) 149.2cc Ignition AMI - Advanced Microprocessor Ignition System Bore & Stroke 57.3 X 57.8 MM Suspension Front Telescopic Hydraulic Shock Absorber Swing arm with adjustable hydraulic shock Rear absorber Brakes Front Disc Type (dia 240 mm) Rear Drum Type, internal expanding shoe type Tyres Front 2.75 X 18" 42 P (Alloy) Rear 100/90 x 18 - 56 P (Alloy) Fuel Tank 12.3 Lts. Performance Max. Horsepower 10.6 KW(14.4 PS) @ 8,500 RPM

39 (ps/rpm) Max. Torque (kg m/rpm) 12.80 NM @ 6,500 RPM

HONDA PASSION PLUS- WHEN STYLE MATTERS MORE

The HONDA Passion Plus is a cosmetic upgradation of the HONDA Passion that involves two tone colors, body colored mirrors, white dial instrument cluster and a wider pillion grip. It has included new bright multi- reflector headlight, tall light and indicators that provides improved safety while driving

Company Stroke Maximum Power Displacement HONDA Motors 4-Stroke 7.5 PS at 8000 rpm 97.2 cc Ltd.

STRIKING FEATURE

• Aluminum die cast rear grip • Heat protector on the muffler • New dials in the instrumental panel • Multi-reflector winkers • Wider wheel base • Large storage space with locking facility • Broad rear tire

COLOR VARIANTS

• Moon yellow • Cloud silver • Amaranth maroon • Tornado grey 40 • Tahitian blue • Black with magna red stripes • Black with purple stripes • Candy blazing red • Turquoise blue • Tasmanian green • Black with orange stripes

TECHNICAL SPEIFICATION

Dimensions & Weights Length 1980 mm Width 720 mm Height 1060 mm Wheel base 1235 mm Ground clearance 160 mm Kerb Weight 116 kg Fuel Tank Capacity 12.8 Liter Engine Type Air - Cooled , OHC Stroke (2/4) 4-stroke No. of cylinders Single cylinder Displacement 97.2 cc Electrical 12 V-2.5 Ah No. of Gears 4 - Speed constant mesh Clutch Multi-Plate Wet Type Suspension Front Suspension Telescopic Hydraulic Fork Swing Arm with 5 step adjustable hydraulic Rear Suspension damper

41 Brakes Internal Expanding Shoes Type 130mm/ Front Brake Hydraulic Disc Type (Optional) Rear Brake Internal Expanding Shoes Type 130 mm Tyres Front Tyre Size 2.75 x 18” - 4 PR / 42 P Rear Tyre Size 3.00 x 18” - 4 / 6 PR Performance Maximum Power 7.5 PS @ 8000 rpm Start Kick Starter

SNIPPETS • The first automobile in India rolled in 1897 in Bombay. • India is being recognized as potential emerging auto market. • Foreign players are adding to their investments in Indian auto industry. • Within two-wheelers, motorcycles contribute 80% of the segment size. • Unlike the USA, the Indian passenger vehicle market is dominated by cars (79%). • Tata Motors dominates over 60% of the Indian commercial vehicle market. • 2/3rd of auto component production is consumed directly by OEMs. • India is the largest three-wheeler market in the world. 42 • India is the largest two-wheeler manufacturer in the world. • India is the second largest tractor manufacturer in the world. • India is the fifth largest commercial vehicle manufacturer in the world. • The number one global motorcycle manufacturer is in India. • India is the fourth largest car market in Asia - recently crossed the 1 million mark.

SEGMENT KNOW-HOW Among the two-wheeler segment, motorcycles have major share in the market. HONDA contributes 50% motorcycles to the market. In it Honda holds 46% share in scooter and TVS makes 82% of the mopeds in the country.

Data says that 40% of the three-wheelers are used as goods transport purpose. Piaggio holds 40% of the market share. Among the passenger transport, Bajaj is the leader by making 68% of the three-wheelers. Cars dominate the passenger vehicle market by 79%. Maruti Suzuki has 52% share in passenger cars and is a complete monopoly in multi purpose vehicles. In utility vehicles Mahindra holds 42% share.

In commercial vehicle, Tata Motors dominates the market with more than 60% share. Tata Motors is also the world's fifth largest medium & heavy commercial vehicle manufacturer.

MISCELLANEOUS

Hyderabad, the Hi-Tech City, is going to come up with the first automobile mall of the country by the second half of 2008. It would be set up by city- based Prajay Engineers Syndicate in area of more than 35 acres. This 'Autopolis' would have facilities for automobile financing institutions and

43 insurance services to create a complete range of services required for both auto companies and customers. It will also have a multi-purpose convention centre for auto fairs and product launches.

INDIAN AUTOMOBILE INDUSTRY GROWTH The passenger car and motorcycle segment in Indian auto industry is growing by 8-9 per cent.

OVERVIEW SNIPPETS • India, sourcing base for global auto majors. • Passenger car and motorcycle segment is set to grow by 8-9%. • The two-wheeler segment will clock 11.5% rise by 2007. • Commercial vehicle to grow by 5.2 per cent. • Estimated component market size is US$ 6.7 bn.

44 • Motorcycles had the upward march, 17.1 per cent in domestic market touching 58,15,417 units against 49,64,753 units in 2004-05. • Scooter segment grew by 1.5 per cent, fall at 9,08,159 units against 9,22,428 units in 2004-05. • Commercial vehicles segment grew at 10.1 per cent with 3,50,683 units against 3,18,430 units in 2004-05. • Medium and heavy commercial vehicles managed a growth of 4.5 per cent against 23 per cent growth in the year ended March 31, 2005. • Light commercial vehicles sales growth was 19.4 per cent at 1,43,237 units against 1,19,924 units in 2004-05. • Three-wheelers sales rose by 17 per cent at 3,60,187 units against 3,07,862 units in 2004-05.

AUTO COMPONENT MARKET

The Indian auto parts industry is significantly fragmented with a large number of players having a turnover of less than US$10 million per year. The industry directly employs about 2,50,000 people and has an annual turnover over US$ 56.3 billion. • Estimated market size - US$ 6.7 bn • Estimated market size by 2012 - US$ 17 bn • Projected CAGR - 15%

MARKET ADVANTAGE

• Fast paced urbanization to rise from 28% to 40% by 2020. • Upward migration of household income levels. • Middle class expanding by 30-40 million every year. • Growing working population.

VEHICLE PRODUCTION IN INDIA

45 Automobile Industry is the largest industry in India with an impressive growth in the last two decades. The reason behind the growth was abolition of licensing in 1991 and permitting automatic approval and successive liberalization of the sector

46 PRODUCTION OF 2 WHEELERS

2005-06 2005-06 (Apr- (Apr- Manufacturers Manufacturers Mar) Mar) In Nos. In Nos. Japanese Indian HONDA Motors Ltd. 3,006,486 Bajaj Auto Ltd. 2,042,289 Honda Motorcycle & Scooter TVS Motor Company 603,436 1,366,866 India (Pvt.) Ltd. Ltd. Yamaha Motors India Pvt. 248,665 LML Ltd. 107,044 Ltd. Suzuki Motorcycle India Pvt. Kinetic Engineering 2,328 82,392 Ltd. Ltd. Majestic Auto Ltd. 56,819 Kinetic Motor Company 53,880 Ltd. Royal Enfield (Unit of 30,596 Eicher Ltd.) Total 3,860,915 Total 3,739,886

If we take a quick look of almost a decade, it is seen that two-wheelers are the most produced in automobile industry followed by passenger cars and then three wheelers. The following are the number of units produced in 2003-04 and 2004-05 (April-Sept. 04) of different segment of vehicles:

Name of the Sector No. of units Production 2004-05 2003-04 (April-Sept. 04)

47 Commercial Vehicles 9 275224 156815 Cars 12 842437 465983 Multi-Utility Vehicles 5 146103 114739 2-wheelers 12 5624950 3023805 3-wheelers 4 340729 177554 Total 42 7229443 3938896

48 AUTO EXPORT INDIA

In auto export, passenger vehicle exports have grown over five times from the start of the decade and two-wheeler exports have reached more than double.

OVERVIEW

SNIPPETS

• In 2003-04 the export of the industry was 55.98%. • Two-wheelers are mostly exported from India. • The reason behind the export is cost competitiveness in terms of labor and raw material. • The export of auto components has grown to 19% from the start of the decade.

FACTS AND FIGURE

The Indian automotive export industry presently is finding a good recognition globally. The auto industry along with the component industry is contributing to the export effort of the country. In 2002-03, the export of the automobile industry had registered a growth rate of 65.35%. In 2003-04, it was 55.98%. The following table briefs about the 2003-04 and 2004-05 (upto April-Dec. 2004) automobile export in numbers.

Category 1998-99 2004-05 (Apr-Dec) Passenger Car 25468 121478 Multi Utility Vehicles 2654 3892 Commercial Vehicles 10108 19931 Two Wheelers 100002 256765 Three Wheelers 21138 51535 Percentage Growth -16.6 32.8 49 EXPORTS OF AUTO COMPONENTS Investments in the auto ancillary sector are rising rapidly. In 1997, the size of the auto component industry was US$ 2.4 billion and now in 2004-05 it has become US$ 8.7 billion industry. The export of auto components has grown at a compounded growth rate of 19 per cent over the past six years.

50 ANALYSIS OF INDIAN EXPORTS

• Cost competitiveness in terms of labor and raw material. • Established manufacturing base. Economics of scale due to domestic market. Strengths • Potential to harness global brand image of the parent company.

• Perception about quality. Weakness • Infrastructure bottlenecks. Opportunitie • Huge export markets such as Europe, America, Africa, and s others for Indian cars. Threats • China, Malaysia, Thailand, etc.

EXPORTS IMPERATIVE:

INTERNAL FACTORS: • Attaining high quality for global standards. • Continuous cost reduction for global competitiveness. • Supply chain management (logistics). • Attaining economies of scale & scope.

EXTERNAL FACTORS: • Improve infrastructure (ports, roads, etc). Improve EXIM regulation

VEHICLE DISTRIBUTION IN INDIA Maharashtra has maximum number of registered vehicles in India

51 OVERVIEW

In this section we will discuss about distribution of vehicles in Indian States and Union Territories. If we look at the graph of vehicle distribution by area, we will learn that in Maharashtra, maximum number of vehicles ply. Check yourself from the following details

NON TRANSPORT VEHICLES IN STATES • Maharashtra has the most number of vehicles followed by Tamil Nadu and Gujarat The figures are are 8133837, 8004982 and 6508397 units respectively. • In cars , Maharashtra leads the path with 831261 registerd cars and next to it are Tamil Nadu and Gujarat haveing 690271 and 504801 registered units respectively. • In two-wheelers, Tamil Nadu has registered the maximum units, 6260093.

TRANSPORT VEHICLE IN STATES • Maharashtra is the leader once again with a total of 1066610 registered vehicles. • In Light Motor Vehicles for goods Maharashtra has registered 228157 vehicles, Tamil Nadu with 195069 vehicles holds the second position. • In Light Motor Vehicles for passengers, Maharashtra tops by having 463550 units and Kerala follows with 276244 units. • Most number of taxis ply is Tamil Nadu which is followed by Kerala and then by Maharashtra. The figures are 110080, 108503 and 94920 units respectively.

52 NON TRANSPORT VEHICLES IN UNION TERRITORIES • Total non-transport vehicles in the Indian Union Territories are 4669433. • Delhi has the maximum registered non-transport vehicles plying, 3751582. Next is Chandigarh with 548790 and Pondicherry with 275422 registered vehicles.

TRANSPORT VEHICLES IN UNION TERRITORIES • Total number of transport vehicles in the Indian Union Territories is 6999998. • Delhi has the maximum registered transport vehicles plying, 219288. Next is Pondicherry with 17054 and Chandigarh with 12985 registered vehicles.

53 TRANSPORT IN STATE

Total transport vehicles in the Indian states are 6735291. Among them Maharashtra has the maximum registered transport vehicles plying. Next is Tamil Nadu with 786568 and Gujarat with 719479 registered vehicles. The following pie-chart and table will give you a complete picture of transport vehicles in different states of the country.

54 CURRENT SCENARIO • The Indian automobile industry crossed a landmark with total vehicle production of 10 million units. • The two-wheeler market grew by 13.6 per cent with 70, 56,317 units against 62, 09,765 units in 2004-05. • Commercial vehicles segment grew at 10.1 per cent with 3, 50,683 units against 3, 18,430 units in 2004-05.

India, in auto sector, is turning to be a sourcing base for the global auto majors. The passenger car and the motorcycle segment is set to grow by 8-9 per cent in coming couple of years, says the ICRA report. The industry is likely to maintain the growth momentum picked up in 2002-03.

The ICRA's analysis points on the auto sector that the passenger car market in the country was inching towards cars with higher displacements. The sports- utility-vehicle (SUV) that was getting crowded every day, would witness intense competition as many SUVs had been competitively priced, the report said.

Honda, Suzuki, General Motors and Hyundai, the global automakers had already launched their premium SUVs in the market to broaden their portfolio and create product excitement in the segment estimated at about 10,000 units annually.

In the two-wheeler segment, according to the report, the motorcycles would clock 11.5 per cent rise during 2004-2007 over its siblings-scooters and mopeds. Scooters sales would decelerate and mopeds would also see the same. Overseas market would present huge opportunities for the two-wheeler makers. 55 The commercial vehicles are likely to grow at a CAGR of 5.2 per cent. Heavy commercial vehicles market would rise at 5.5 per cent and sales of light buses and trucks would achieve 4.7 per cent growth. For the tractors, the report predicts a growth at 4.6 per cent.

INDIAN AUTO MARKET GROWTH FOR YEAR 2005-06 • The domestic automobile industry sales grew 12.8 per cent at 89, 10,224 units as against 78, 97,629 units in 2004-05. • The automotive industry crossed a landmark with total vehicle production of 10 million units. • According to the Society of Indian Automobile Manufacturers (SIAM), car sales was 8, 82,094 units against 8, 20,179 units in 2004-05. • The growth of domestic passenger car market was 7.5 per cent • Car exports stood at 1, 70,193 units against 1, 60,670 units in 2004-05. • The two-wheeler segment, the market grew by 13.6 per cent with 70, 56,317 units against 62, 09,765 units in 2004-05. • Motorcycles had the upward march, 17.1 per cent in domestic market touching 58, 15,417 units against 49, 64,753 units in 2004-05. • Scooter segment grew by 1.5 per cent, fall at 9, 08,159 units against 9, 22,428 units in 2004-05. • Commercial vehicles segment grew at 10.1 per cent with 3, 50,683 units against 3, 18,430 units in 2004-05. • Medium and heavy commercial vehicles managed a growth of 4.5 per cent against 23 per cent growth in the year ended March 31, 2005. • Light commercial vehicles sales growth was 19.4 per cent at 1, 43,237 units against 1, 19,924 units in 2004-05. • Three-wheelers sales rose by 17 per cent at 3, 60,187 units against 3, 07,862 units in 2004-05.

56 In this competitive scenario consumer has number of choices for selecting motorbikes as well as cars thus there are number of choices and brands available to the customer. The basic issue with this project is to study about the consumer preference toward selecting/purchasing low segment or economic two-wheeler among the available alternatives.

57 OBJECTIVE

58  To know the brand awareness towards Hero Honda models in Jaipur  To know the competitive strategies of Hero Honda.  To learn the HR process of the organization.  To study the recruitment policy’s and procedure.  To learn the ability to select a recruitment model that will improve the Futures of the present and future workforce of the organization  To learn the framework around how to achieve recruitment objectives  HR Policies are not known to most of the employees. It should be made clear on the day of joining or on the First working day.  Interview Assessment Sheets are not filled by both Functional and HR- Interviewer. It should be filled on the time of interview.  The company should follow job rotation to retain its best talents.  In the Skip Level Meetings, no name and oracle code should be asked. To get the true reply from the employees. There should be frequent Feedback Sessions for employees.  New Joiners should be made clear of there KRA on the first working day.

59 RESEARCH

METHODOLOGY

60 This chapter deals with the methodology adopted for the project. Both primary and secondary data were used for the preparation of project.

Collection of Primary Data The researcher approaches various functional heads in charge of materials, production, finance and marketing and collected related information for the study. The data was collected by the researcher based on observation technique personally. The researcher has done physical inspection of stores and stock levels.

Collection of Secondary Data 1. Data for the previous year was obtained from the records of the company. 2. The stores of Company consists various inventories of raw materials, consumables, spares packing material etc. the range of inventories are vide and consists about more than thousand items. Hence, the focus was turned mainly to consumables and raw materials. The elements were selected after considering its usage value, importance and contribution towards production.

Research may be defined as a diligent enquiry and careful search for new knowledge through systematic, scientific and analytical approach in any branch of knowledge. It is a systematic method of discovering new facts or verifying old facts, their sequences in the relationship, casual explation and the natural laws, which govern them. On the other hand, methodlogy refers first to an approach towards inquiry and later invoves particular methods or techniques. It deals with various methods used for the same interpretation and inference. Thus, research methodology is a procedur designed to plan and evaluate before conducting the research.

61 To achieve the defined objectives research methodology outlines the approach for conduct of the whole research work, describe the scope, research instruments, respondents characteristics sample planning and data collection methods, hypothesis formulation, data analysis tools and techniques and period of study. Research design A research design is a framework or blueprint for conducting the research projects. It details the procedure necessary for obtaining the information needed to structure or solve research problem. 1 descriptive research This describe phenomena as they exist. It is used to identify and obtain information on the information characteristics of a particular issue. It may answer such questions as: 1 what is the absentee rate amongst a particular group of workers? 2 what are the feelings of workers faced with redundancy? The data collected are often quantitative, and statistical techniques are usually used to summarize the information . descriptive research goes futher than exploratory research in examing a problem since it is undertaken to ascertain and describe the characteristics of the issue. An undergraduate disserion may include descriptive research but it is likely that it will also include one of the following two types as you are required in your dissertion to go beyond description an to explain or predict. 2. Analytical or explanatory research This is a continuation of descriptive research. The researcher goes beyond merely describing the characteristics, to analyse and explain why or how something is happening. Thus, analytical reseach aims to understand phenomena by discovering and measuring casual relations among them. It may answer questions such as: 1 how can the number of complaints made by customers be reduced?

62 2 how can the absentee rate among employees be reduced? 3 why is the introduction of empowerment seen as a threat by departmental managers? 3 Predictive research It goes further by forecasting the likelihood of a similar sitation occurring elsewhere. It aims to generalize from the analysis by predicting certain phenomena on the basis of hypothesized, general relationships. It may attempt to answer question such as: 1 will the introduction of an employee bonus scheme lead to higher levels of productivity? 2 what type of packaging will improve our products? It provides ‘how’, ‘why’ and ‘where’ answers to current events as well as to similar events in the future. It is also helpful in situations where ‘what if’? questions are being asked. Process of research There is no consensus about how to conceptualize the actual undertaking of research. There are, however, two main traditions of approaching a research topic: 1 Quantitative research 2 Qualitative research 1. Quantitaive research- the quantitative approach usually starts with a theory or a general ststement proposing a general relationship between variables. With this approach it is likely that the researchers will take an objective position and their approach will be to treat phenomena as hard and real. They will favor methods such as surveys and experiments, and will attempt to test hypothesis or ststement with a view to generalizing from the particular. This approach typically concentrates on measuring or counting and involves collecting and analyzing numerical data and applying ststiastical tests.

63 2. Qualitative research- the alternative tradition is the qualitative approach. Here the investigator views the phenomena to be investigated as more personal and softer. He or she will use methods such as personal accounts, unstructures interviews and participant observation to gain an understanding of the underlying reasons and motivations for peoples attitudes, preference, behavior. With this approach, the emphasis is more on generating hypothesis from the data collection rather than testing a hypothesis.

In reading around the subject you will find many alternative names for qualitative and quantitative research. It is good to have an understanding of these and to recognize them when you seen them I research methods textbooks. Sample size and method of selecting sample 1. Experiments

2. Survey

3. Obseervation

4. Existing data

1. Experiments : Participants randomly assigned to different groups being studied. Groups are treated differently in one or a few very specific ways-the independent variable. Behavior resulting from this treatment and ones does not, usually the treated group is called experimental group and other groups are called control groups. Conditions other than the independent variable are geld as constant as possible for all groups. These constant conditions are called controls. If participants are their own control group, that is they receive both research treatments; the design is called a within-subjects experiments. Conclusions can be

64 taken to indicate a cause and effect relationships between the independent and dependent variables. Because of this, the experiment is in a class by itself and it is a very special type of research procedure.

Advantage: • Control over variables

• Closest to establishing casuality

Disadvantage: • Expensive and time consuming

• Hard to generalize/small sample size

• Ethical issues

2. Survey : A survey is a structured list of questions presented to people. Surveys may be written or oral, face to face, over the phone. It is possible to cheaply survey large numbers of people,but the data quality may be lower than some other methods because people do not always answer quentions accurately.

Types of surveys: A. Questionnaire

B. Interviews

A. Questionnaire: it refers to a set of questions given to the respondents who are asked to fill it and on that basis the research is carried on.

65 Advantage • Cheaper and quicker

• Easy to quantify

• Large sample sizes

Disadvantage • Not observing actual data

• Less rapport than interviews

• Lesser quality data than interviews

B. Interviews: They refer to a process whereby the interviewer and the respondent interact face to face. The interviewee is asked various questions regarding his experiences in the orgainsation.

Advantages: • Establishing rapport with respondents

• Good understanding of the respondents views

Disadvantages: • Expensive

• Time onsuming

• Smaller sample sizes

66 3. Observation : There are many types of studies which could be defined as observational research including case studies,ethnographic studies, ethological studied etc. the primary characteristics of each of these types of studies is that phenomena are being observed and recorded. Often times, the studies are qualititaive in nature. For example, a psychological case study would entail extensive notes based on observations of and interviews with the client. A detailed report with analysis would be written and reported constituting the study of this individual case. These studies may also be qualitative in nature or include qualitative components in the research. For example an ethological study of primary behavior in the wild may include measures of behavior durations i.e. the amount of time an animal engaged in a specified behavior. This measusrs of times would be qualitative.

Advantages: • First hand look at the behavior

• Close involvement with group brings understandings

Disadvantages: • Expensive and time consuming

• Small sample sizes

• Possible danger and ethical issues

• Loosing identify with groups

4. Existing data : This includes study of the existing data present in the organization for the research.

67 Advantages: • Saves time, efforts and money

Disadvantages: • Inherit errors and biases

• May not meet needs of current study

68 FACTS & FINDINGS

69 India, in auto sector, is turning to be a sourcing base for the global auto majors. The passenger car and the motorcycle segment is set to grow by 8-9 per cent in coming couple of years, says the ICRA report. The industry is likely to maintain the growth momentum picked up in 2002-03.

The ICRA's analysis points on the auto sector that the passenger car market in the country was inching towards cars with higher displacements. The sports- utility-vehicle (SUV) that was getting crowded everyday, would witness intense competition as many SUVs had been competitively priced, the report said.

70 ANALYSIS ANALYSIS &&

INTERPRTATAION INTERPRTATAION

71 1 “Bikes which are mostly used” A)Bajaj 14 B) HONDA 28 C) TVS 15 D) Yamaha 5 E) Royal Enfield 5 F) Kawasaki 3 G) Honda 10

13% 18% Bajaj 4% 6% Hero honda TVS Yamaha 6% Royal Enfield Kawasaki 34% 19% Honda

OBJECTIVE: To know the popularity of brand among the segment.

FINDINGS: Overall findings show that HONDA is the market leader in all the middle segments motorbikes followed by bajaj and TVS. Few other popular brands include Honda among students and Yamaha and bajaj among service and business class people.

72 2 “Expectation fulfil by the current bike”

A)Yes 63 B) No 17

Yes 70 63 60

40 Series1 30 No 20 17

0 Yes No

OBJECTIVE: To know the customers satisfaction with their bike.

FINDINGS: Overall finding show that there are 78.75% people are satisfy with their current bike & rest of the people are not satisfy with their bike in term of service and feature which is provided by the automobile company

73 3 “Planning to buy a new bike” A) Yes 42 B) No38

43 Yes 42 42

40 Series1 39 No 38 38

36 Yes No

OBJECTIVE: To find out the new purchase to be made in the near future for knowing the perception about the new purchase.

FINDINGS: Overall findings show that more than 52.5% of the participants are planning to buy a new bike in the near future and rest of the people are not planning to purchase the bike.

74 4 “Price points at which consumer will like to buy a bike”

A) Rs. 35000 or Below 4 B) Rs 35000 - Rs 50000 42 C) Rs 50000 - Rs 75000 19 D) Rs 75000 and above 10 E) Price no consideration 5

Price no Price no consideration consideration

Rs 75000 and above Rs 75000 and above

Rs 50000 - Rs Series2 Rs 50000 - Rs 75000 75000 Series1 Rs 35000 - Rs Rs 35000 - Rs 50000 50000

Rs. 35000 or Below Rs. 35000 or Below

0 5 10 15 20 25 30 35 40 45

OBJECTIVE: To find out the customers buying capacity in term of price.

FINDINGS: By this research we find that the 52.50% people like to purchase the bike in between Rs 35000-50000. In this category we can include the service classmen and the businessmen. 23.75% people want to purchase the

75 bike in between Rs 50000-75000. In which we can include the majority of student.

5 “Brand which is prefer by consumer”

A) Bajaj 18 B) HONDA 36 C) TVS 7 D) Yamaha 15 E) Others 4

5% 23% 19% 0% Bajaj Hero honda TVS 9% Yamaha Others

44%

OBJECTIVE: To estimate the buying preference for the product or brand among the participants.

FINDINGS: the overall findings show that HONDA is the most prefered brand among the participants. The scenario is similar in case of students and businessmen but the servicemen prefer Bajaj more to any other bike. 76 6 “Reason due to consumer prefer the above mentioned bike”

A) Mileage 28 B) Looks & Style 27 C) Comfort 14 D) Service& Spares 11

11 Service& Spares

14 Comfort Series2 Series1 27 Looks & Style

28 Mileage

0 5 10 15 20 25 30

OBJECTIVE: To identify the basic cause of the inclination of the participants for their favorite brand

FINDINGS: The overall finding from the respondents says that preference for mileage is more than any other factor. But the students preference is looks & style which is against both the servicemen and businessmen.

77 7 “Purpose of a bike”

A) College 22 B) Office 26 C) Business 17 D) Travelling & Roaming 10 E) House hold work 2

15 26 10 22 17 5 10 0 1 5 A) College B) Office C) Business 2 D) Travelling E) House hold & Roaming work

OBJECTIVE: To Identify the Purpose to Use Bikes

FINDINGS: The overall findings indicate the maximum use of bikes for College and traveling followed by Office and Business. Students use bikes for

78 college and traveling whereas servicemen and businessmen use the bike for their respective purposes.

8 “Factor affects decision making when selecting a bike” A) Family or Friends 20 B) Advertisement 10 C) Brand 17 D) Style & Features 19 E) Technical Advancement 14

20 20 19 18 17 16 14 14 12 10 10 8 6 4 2 0 Family or Advertisement Brand Style & Technical Friends Features Advancement

Series1 Series2

OBJECTIVE: To identify the internal or external factor this affects the consumer buying behavior and responsible for brand awareness.

FINDINGS: The overall finding from the respondents says that:

79 • 25% respondents are depended on the opinion of their friends and family thus it affects the most.

• 23.75% respondents are always considering style and features in their purchase.

• Brand plays an important role in buying decision which is 21.25%.

SWOT SWOT ANALYSISANALYSIS

80 STRENGTH: 1. LEADING COMPANY WITH U.S.P IN AUTOMOBILE SECTOR. 2. INNOVATIVE AND MODULAR FUNCTION IN COMPATITATIVE ENVIRONMENT. 3. EASY APRROACH AND EFFECTIVE SUPPLY CHAIN MANAGEMENT. WEAKNESS: 1. TOO MUCH LESS FOR UNTAPPED MARKET 1. COST MANAGEMENT MAKING THE HIGH RATES OF PRODUCT 2. UNTAPPING THE LOWER PROFILE.

OPPORTUNITY: 1. HIPING THE AUTOMOBILE SECTOR. 1. WELL AWARE CUSTOMER AND INTEREST CREATION IS HIGH 2. COMPETATIVE ADVANTAGE WITH U,.S.P

THREATS: 1. NEW COMPANIES WITH ADVANCED TECHNOLOGIES. 2. QUALITY COMPROMISATION WITH PRODUCT DIFFER COMPANY TO COMPANY 3. INVESTMENT OF FOREIGN TRADE INVESTOR.

81 CONCLUSION CONCLUSION

82 • From the analysis of the responses received from the customers in Jaipur, overall findings show that HONDA is the most prefered brand among the participants. The scenario is similar in case of students and businessmen but the servicemen prefer Bajaj more to any other bike.

• HONDA and Bajaj are the biggest competitor in the two wheeler market.

• Among the five attributes ( which we considered important for customers’ purchasing decision ) customers gave highest consideration to mileage followed by the look & style. Other attributes like comfort, service and spares were considered later.

• Most students prefer HONDA in this segment and usually they use bikes for fun and roaming.

• The overall findings indicate the maximum use of bikes for College and travelling followed by Office and Business. Students use bikes for college and travelling whereas servicemen and businessmen use the bike for their respective purposes.

• Servicemen still would like to go for mid segment motorbikes but with mileage with the first considerable thing followed by looks and style and power.

Study shows that how other bikes are different from HONDA • 20% respondents are already having Bajaj Pulsar. Rest 80% respondents say that their bike is different from Bajaj Pulsar on the following grounds: • People having HONDA think that their bike is more economic and cheaper than Bajaj Pulsar.

83 • They also consider their bike for low maintenance as compare the Bajaj Pulsar. • People having other then HONDA consider Bajaj Pulsar as more powerful bike than other bike in the same segment except some models i.e. Royal Enfield. Approx all respondents agree for the thing that Pulsar is more applicable than any other bike for looks and style in the same category.

84 RECOMMENDATION RECOMMENDATION AND AND SUGGESTIONSSUGGESTIONS

85 • Apart from mileage, HONDA should also focus on the looks and style of the bike which could atrract the consumers.

• HONDA should also focus its products on the student and the businessmen arena apart from just being concentrating on the servicemen segment.

• Bajaj although focussing on the demands of their target customers, it should also focus on the service and spare segment.

• To increase the demand for the newly launched products, HONDA should also focus on the advertising of its products.

• Companies should conduct reseach to know the preferences of the customer by allowing them to design their product on internet. This would help the companies to make a customised product.

• Yamaha Should be more focused on advertising and should add more product or varient to its portfolio.

86 BIBLIOGRAPHY BIBLIOGRAPHY

87 BOOKS

₪ C.R Kothari: Research Methodology

NEWSPAPERS

₪ Economic Times.

₪ Business Times.

₪ Business Standard

WEBSTIES

₪ www.herohonda.com

₪ www.amfindia.com

₪ www.google.com

₪ www.valueresearch.com

₪ www.mutualfundindia.com

₪ www.moneycontrol.com

MAGAZINES

₪ Business world

₪ Auto Expo