Intorduction
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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.