Two-Wheelers: Running Fast
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Market Survey BY: DR I. SATYA SUNDARAM TWO-WHEELERS: RUNNING FAST Easier access to loans and introduction of new models by companies have bolstered the two-wheeler sales in the Indian market. ndia is the second-largest million two-wheelers are expected to 4. Increasing urbanisation, which producer of two-wheelers in be sold yearly from 2015 onwards in creates a need for personal transpor- the world. The Indian two- India. tation wheeler industry stands In 2008-09, Indians bought 5. Changes in the demographic next to China and Japan in over 7.4 million two-wheelers—mo- profile Iterms of production and sales, re- torcycles, scooters, mopeds, step- 6. Difference between two-wheel- spectively. The younger generation throughs and electric two-wheelers. er and passenger car prices, which prefers two-wheelers over cars due The demand for two-wheelers has makes two-wheelers the entry-level to convenience, easy commutation been influenced by a number of fac- vehicle and better fuel efficiency. The In- tors over the past years. The key de- 7. Steady increase in per capita dian two-wheeler market comprises mand drivers for the growth of the income over the past few years about 12 million units per annum, of two-wheeler industry are as follows: 8. Increasing number of models which over 75 per cent is constituted 1. Inadequate public transporta- with different features to satisfy di- by motorcycles. Scooters account for tion system, especially in the semi- verse consumer needs about 18 per cent of the sales in the urban and rural areas overall two-wheeler market in India. 2. Increased availability of cheap Motorcycles vs scooters consumer financing in the last three- Sea changes four years Experts feel that there is a large 3. Increasing availability of fuel- untapped market in the 100cc seg- Sea changes are taking place in efficient and low-mainte- ment, as 70 per cent of urban and 90 the two-wheeler segment. Global nance models per cent of the rural population have two-wheeler makers are investing not even bought their first mo- heavily on upgrading torcycle. If 100cc-motorcycle technology to comply segment is divided into ten with new emission segments, starting from norms in different the entry of deluxe level, parts of the world. there is potential in every More stringent segment. There is a large emission norms are market for scooters going to be observed as well. Scooters from 2015. While now offer mile- the Indian two- age that is not wheeler market very different will move to BS- from motorcy- IV (corresponding cles. Motorcy- to Euro-IV) in 2015, cles are not go- the European region ing to marginalise will be upgraded to Euro- scooters. V in the same period. Over 15 Bajaj Pulsar 135LS At present, the top SEPTEMBER 2011 • FACTS FOR YOU 23 Market Survey Table I Table II Production of Two-Wheelers Domestic Sales of Two-Wheelers (number of vehicles) (number of vehicles) Year Scooters Motorcycles Mopeds Company April-December April-December 2009 2010 1999-2000 1,259,408 1,794,093 724,510 2000-01 879,759 2,183,430 694,974 Hero Honda 3,440,287 3,844,614 2001-02 937,506 2,906,323 427,498 Bajaj Auto 1,235,548 1,797,378 2002-03 848,434 3,876,175 351,612 TVS Motor Company 999,255 1,321,204 2003-04 935,279 4,355,168 332,294 Honda 830,039 1,163,194 2004-05 987,498 5,193,894 348,437 Yamaha 170,712 206,404 2005-06 1,020,013 6,201,214 2,379,574 Suzuki 124,190 196,928 2006-07 943,944 7,112,281 379,987 Mahindra Two-Wheelers 37,977 122,868 2007-08 1,074,933 6,503,532 430,827 Royal Enfield 38,612 38,458 2008-09 1,157,432 6,801,964 435,513 Total 6,779,102 8,691,048 four two-wheeler makers—Hero market leader riding on the success thrust, as it plans to launch a new Honda, Bajaj Auto, TVS and HMSI— of ‘Splendor’ and its derivatives over brand and market it internation- together account for around 93.5 time. The success of ‘Splendor’ and ally. The company exports 1,000,000 per cent of the sales in the domestic later ‘Passion,’ proved the tipping bikes a year to Bangladesh, Nepal, market. The other players are Suzu- point for Hero Honda. Both the mod- Bhutan and Myanmar, while com- ki Motorcycle, India Yamaha Motor, els were promoted as fuel-efficient peting with Chinese and Japanese LML, Mahindra Two Wheelers and bikes. brands, besides Bajaj and TVS Mo- Royal Enfield. Hero Honda is planning to ex- tors. port motorcycles to markets in Latin Hero Honda, however, is not free Hero Honda America and Asia. The vendors are from financial problems. It posted a expected to gear-up for an export 16.2 per cent decline in net profit for Hero Honda thrived on the suc- the fourth quarter ending March 31, cess of the ‘Splendor’ brand cre- 2011—its fourth consecutive quar- ated more than a decade ago. More terly fall due to rising input costs. products were launched by the Del- hi-based company and the current HMSI At present, Honda Motor Com- pany is operating in India through both Hero Honda and Honda Mo- torcycle & Scooters India (HMSI). Honda is looking for mass market bikes. In 2010, the company started the construction of its second two- wheeler factory at Tapukara in Al- war district in Rajasthan. The plant is expected to be operational soon. With this plant being operational, the combined capacity at the two manufacturing units—the other be- ing at Manesar in Haryana—would increase by around 37 per cent to 2.2 million units per year. At present, the company has a Hero Honda Splendor NXG waiting period from two to three 24 FACTS FOR YOU • SEPTEMBER 2011 Market Survey months. It will take Honda at model in India. least two years to balance the In April 2011, Bajaj launched demand. HMSI is consider- a third model under the Discover ing setting up a third facility brand—‘Discover 125,’ which is ex- in India to scale up operations pected to generate another 45,000 after the termination of the units per month. The target is to joint venture between parent make seven to eight million units company Honda Motor Corpo- every year, including the ration (HMC) and Hero Honda new range, after three or Motors. four years. HMSI has three brands Bajaj intends to under the automatic scooter break into the league segment—Activa, Dio and of European and Japa- Aviator. It is the largest mak- nese companies like er of two-wheelers, account- BMW, Piaggio (April- ing for 43 per cent share ia), Ducati, Triumph, in the domestic mar- Honda, Yamaha and ket. HMSI sold 893,335 Suzuki with KTM scooters in 2010-11. Power Sports, Kawa- Honda Activa alone has saki and Bajaj itself. the potential to clock in For this, the company a million units annu- has decided to drop the ally, compared with the family name from its current 700,000 units, communication to ensure if production constraints greater acceptability not are overcome. HMSI Aviator scooter just locally but in overseas Nearly 55 per cent of HM- markets such as Europe and the US. SI’s sales came from scooters even second-largest selling model in the Bajaj Auto posted a net profit though the company has more mo- 150cc category after ‘Pulsar 150,’ of Rs 140,003.9 million during the torcycles in its portfolio. HMSI has sees a sale of around 50,000 units quarter ending March 31, 2011 as seven motorcycle models, which ac- per month. Bajaj Auto presently sells against Rs 5286.5 million in the count for 45 per cent of sales. about 130,000 units of ‘Discover’ per same period the previous year. Its month. About 85,000 units of the turnover during the quarter rose Bajaj Auto ‘Discover 100’ are sold every month, by 25 per cent to Rs 43,010 million. making it the second-largest selling The company’s net profit during At present, two models dominate the year ending March 31, 2011 Table III Bajaj’s portfolio—‘Pulsar,’ launched rose by 96 per cent to Rs 33,400 in 2001, and ‘Discover,’ launched in Motorcycle Majors’ Market million. 2004—that have several variants at Share (Domestic Sales, Table IV different price points. 2010-11) The two models constitute 70 per Company Market Share Domestic Sales of cent of its total two-wheeler sales. (percentage) Two-Wheelers ‘Pulsar’ has become popular as a Hero Honda 44.69 Year Number of vehicles performance-oriented motorcycle, Bajaj Auto 20.50 2004-05 6,209,765 serving mostly the younger buyers. TVS Motor Company 15.10 2005-06 7,052,391 ‘Discover’ meanwhile is promoted as a fuel-efficient bike and is tar- Honda Motorcycle and 2006-07 7,872,334 Scooter India 13.20 geted at the ‘Splendor’ segment. Of 2007-08 7,249,278 course, Bajaj Auto has two other Suzuki Motorcycle India 2.39 2008-09 7,437,619 brands in its portfolio—‘Platina’ and India Yamaha Motor 2.35 2009-10 9,370,951 ‘Avenger.’ There is a sustainable de- Mahindra Tow-Wheelers 1.40 2010-11 11,790,305 mand for these two also. Royal Enfield 0.46 Source: Society of Indian Automobile Manufacturers ‘Discover 150,’ which is the SEPTEMBER 2011 • FACTS FOR YOU 25 Market Survey TVS Motor TVS Motor is the third-largest two-wheeler manufacturer in India.