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Study on Two Wheeler Automobile Industry in Mumbai

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Study on Two Wheeler Automobile Industry in Mumbai Study on Two Wheeler Automobile Industry in Mumbai 1. Overview of Two-wheeler Industry: Bajaj is the first Indian two wheeler automobile company in the market since 1945 with the name M/s Bacharj trading corporation private limited. In 1959 M/s Bacharj trading corporation private limited change its name as Bajaj Auto Ltd. Bajaj Auto obtains license from the Government of India to manufacture two- and three-wheelers vehicles in 1959. Hero Honda Motors Limited was established in 1984, as a joint venture between India's Hero Group (world's largest bicycle manufacturers) and Japan's Honda Motor Company and created the world's single largest two wheeler company and also one of the most successful joint ventures worldwide. During the 80s, Hero Honda became the first company in India. Over 19 million Hero Honda two wheelers are running on Indian roads today. TVS Motors is the third largest company in the two- wheeler industry with a market share of 16%. Infect, it is the only Indian company without a foreign collaboration in the two-wheeler industry. When the company opted out of the collaboration with Suzuki in 2002, many believed that TVS was headed towards extinction. But the company proved the doomsayers wrong and came out with a very successful `TVS Victor'. TVS Motors Ltd. originally incorporated in 1982 to manufacture two-wheelers in collaboration with Suzuki Motors of Japan, TVS was one of the leaders in two- wheeler industry. Yamaha Motor Corporation is the auto mobile company of Japan (1953) which works in India since 1955 and providing latest technology in India from last two decades. Yamaha Motor India was incorporated in august 2001 as a 100% subsidiary of Yamaha motor corporation, Japan Honda motors of Japan is not a new name in the two wheeler scenario in the country, they were in a tie up with the Firodias owned Kinetic group. However in the late 90s they parted ways after problems arose over issues like introduction of new models, advertising 1 Study on Two Wheeler Automobile Industry in Mumbai expenditure, marketing strategies and other related issues. In the mid 80 Honda motors of Japan joined hands with the largest bicycle maker of India the Hero cycles to create Hero Honda which in a couple of decades or so have gone on to become the single largest motorcycle company in the world. Though Honda has come on its own on the Indian market yet it will be providing technological support to Hero Honda for the next ten years. Thus presenting a unique situation in which the company will be in direct competition with the company which it has been associated for nearly two decades. Honda Motorcycles and Scooters India limited, a 100% subsidiary of Honda motor company Japan eventually entered the Indian market with Honda Unicorn in 2004. Royal Enfield was the name under which the Enfield Cycle Company (a division of the British arms-making company Royal SmallArmsFactory in Enfield Lock), made motorcycles, bicycles, lawnmowers and stationar y engines. This legacy of weapons manufacture is reflected in the logo, a cannon, and their motto "Made like a gun, goes like a bullet". Use of the brand name Royal Enfield was licensed by the Crown in 1890. The original Redditch, Worcestershire based company was sold to E. & H. P. Smith in 1963 and then to Norton-Triumph-Villiers (NVT). Production ceased in 1970 and the company was dissolved in 1971. In 1955 Enfield of India started assembling Bullet motorcycles under licence from UK components, and by 1962 was manufacturing complete bikes. India bought the rights to use the Royal Enfield name in 1995. Royal Enfield production, based in Chennai, continues and Royal Enfield is now the oldest motorcycle brand in the world still in production with the Bullet model enjoying the longest motorcycle production run of all time. The Two-wheeler industry is known for its inherent cyclical feature with 18 months of growth followed by 18 months of degrowth. The industry had outperformed thebroader market in the latter half of FY (Financial Year) 06. FY07 was a period of consolidation with the big players capturing a larger market share among their niche segments. Thereon it continued to underperform the broader market with the exception of Q3FY09. BSE Auto Index has seen a fall of >30% in the last quarter and has hit an all-time low of 2444 points which has not been seen in the past 4 years. We believe the industry is ready to pick up from a lower base, which keeps its downside capped. Sale volumes of the industry would continue to replicate a seasonal trend. Though the sale volumes have witnessed a decline for more than a year, its revival would be a slow and steady process, which would be delayed on account of the unfavorable macro- 2 Study on Two Wheeler Automobile Industry in Mumbai economic conditions and depressed consumer sentiments. On one hand the slackening growth in the GDP and IIP would put pressure on the demand factor, whereas the fall in inflation, input costs and crude prices would ease the cost constraints. We can expect the scenario of FY07 to be repeated, wherein the sales and margin would be inversely co-related. Sector incentives and government policies would determine the sector movement going forward. 1.1Evolution of two-wheeler in India: Two-wheeler segment is one of the most important components of the automobile sector that has undergone significant changes due to shift in policy environment. The two-wheeler industry has been in existence in the country since 1955. It consists of three segments viz. scooters, motorcycles and mopeds. In India there are some MNC’s and Indian company dealing in automobile sector. The main key players who are dealing in this sector are Hero Honda, Bajaj, Yamaha, Honda, and TVS. Hero Honda is the biggest player in this sector in India as well as in the world and playing a very important role in two wheeler automobile sector. Hero Honda, Bajaj and TVS are the Indian companies and Yamaha & Honda are international automobile brand. 1.2Industry Structure: India is the 2nd largest two-wheeler market in the world with a size of over Rs. 100,000 MN. The total sale of two wheelers in India has touched a figure of 7.9 MN units by March, 2007, up 11.4% from the previous fiscal figure of 7.1 MN units. Production during the period reached 10.8 MN units, entailing a demand ratio of 72%. In terms of sales and market share the major players of the industry are Hero Honda, Bajaj Auto and TVS Motors. Other players include Kinetic Motors, Yamaha Motor and Honda Motorcycle and Scooter India (HMSI). The composition of the industry consists of motorcycles, scooters and mopeds. Over the past decade, there has been a consumer preferential shift from mopeds to scooters and now motorcycles. On account of the shift, the motorcycle segment dominates the two-wheeler industry with a market share of close to 80%. The motorcycle segment is further sub divided into 3 classes, starting from the entry/economy class (Rs. 30,000 – Rs. 40,000), executive class (Rs. 40,000 –Rs. 50,000) and the premium class (>Rs. 50,000). The motorcycle segment is primarily led by Hero Honda with a market share of 59% followed by Bajaj Auto (18%), HMSI (9%), TVS Motors (7%) and Yamaha (5%). On the other hand the scooter segment is led by HMSI which has a dominant share of 63% followed by TVS Motors (16%) and Hero Honda 3 Study on Two Wheeler Automobile Industry in Mumbai (14%). When it comes to the moped segment, it is primarily dominated by TVS Motors with a market share of 100%. Over the last decade, the two wheeler automobile sector has successfully changed its image. Its product range encompasses Scooterettes, Scooters and Motorcycles. The main product ranges of two wheeler automobile sector are as follows: ➢ Scooters ➢ Motorcycles ➢ Mopeds No. of players in the two wheeler automobile sector (India): ➢ Hero Honda motors ltd. ➢ Bajaj auto ltd. ➢ TVS motors company ltd. ➢ Yamaha motors India ➢ Honda motorcycle and scooters India ➢ Royal Enfield ➢ Suzuki Motors ➢ LML ➢ Mahindra 2 Wheelers 4 Study on Two Wheeler Automobile Industry in Mumbai 2. M anufacturing Process: 2.1 Basic Manufacturing Process: Raw Materials The primary raw materials used in the manufacture of the body of motorcycle are metal, plastic and rubber. The motorcycle frame is composed almost completely of metal, as are the wheels. The frame may be overlaid with plastic. The tires are composed of rubber. The seat is made from a synthetic substance, such as polyurethane. The power system consists of a four-stroke engine, a carburetor to transform incoming fuel into vapor, a choke to control the air-fuel ratio, transmission, and drum brakes. The transmission system contains a clutch, consisting of steel ball flyweights and metal plates, a crankshaft, gears, pulleys, rubber belts or metal chains, and a sprocket. The electrical system contains a battery, ignition wires and coils, diodes, spark plugs, head-lamps and taillights, turn signals and a horn. 5 Study on Two Wheeler Automobile Industry in Mumbai A cylindrical piston, made of aluminum alloy (preferred because it is lightweight and conducts heat well), is an essential component of the engine. It is fitted with piston rings made of cast iron. The crankshaft and crankcase are made of aluminum. The engine also contains a cylinder barrel, typically made of cast iron or light alloy. The Manufacturing Process 1. Raw materials as well as parts and components arrive at the manufacturing plant by truck or rail, typically on a daily basis.
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