MARKET &COMPETITION ANALYSIS

Current Industry Status The two-wheeler market in India is the biggest contributor to the automobile industry with a size of or Rs 22000 crores. In terms of volume the industry sales around 5.4 million units a year. India is the second largest producer and manufacturer of two-wheelers in the world. It stands next only to Japan and China in terms of the number of twowheelers produced and domestic sales respectively. India is the two wheeler capital of Asia with 27 two wheelers per 1000 persons as compared to 8 two wheelers per 1000 persons in China. According to the figures published by SIAM, the share of two-wheelers in automobile sector in terms of units sold was about 80 per cent. Indian two-wheeler industry has got spectacular growth in the last few years.

Sales of two wheelers in India

Source : SIAM Key market forces Demand drivers for two wheelers Inadequate public transportation system, especially in the semi-urban and rural areas. Delay in initiation of Mass Transport System - Probably a future threat to the two-wheeler market, the implementation of the mass transport system has been delayed. Increased availability of cheap consumer financing in the past 3-4 years; Twowheeler loans and financing has been on the rise. Increasing availability of fuel-efficient and low-maintenance models and increasing number of models with different features to satisfy diverse consumer needs. Increasing urbanization, which creates a need for personal transportation and Changes in the demographic profile Steady increase in per capita income over the past five years. There has been steady increase in consumer's salary - Due to opportunities offered by multinationals the disposable incomes of salaried individuals have increase manifold.

Major players Major players in the 2-wheeler industry are Hero Honda Motors Ltd (HHML), CD Dawn CD Deluxe Pleasure Splender + Splender NXG Passion Pro Passion + Super Splender Glamour Glamour PGM FI Achiever CBZ Extreme Hunk Karizma Karizma ZMR Bajaj Auto Ltd (Bajaj Auto)

Avenger 200 DTSi Pulsar Pulsar Pulsar Pulsar LS (New) 220 DTSi 180 DTSi 150 DTSi

Discover 135 DTSi Discover DTSi Platina 125 DTSi Platina 100 CC XCD 135 DTS Si Cristal DTSi Kawashaki Ninja 250 R TVS Motor Company Ltd (TVS).

The other key players in the two-wheeler industry are Kinetic Motor Company Ltd (KMCL), Kinetic Engineering Ltd (KEL), LML Ltd (LML),

Yamaha Motors India Ltd (Yamaha), Majestic Auto Ltd (Majestic Auto), Royal Enfield Ltd (REL) and Honda Motorcycle & Scooter India (P) Ltd (HMSI).

Segmentation The three main product segments in the two-wheeler category are scooters, motorcycles and mopeds. However, in response to evolving demographics and various other factors, other sub segments have emerged which are scooterettes, gearless scooters, and 4-stroke scooters. Comparative Characteristics
Characteristics Price Stroke Fuel Efficiency (kms per litre) Load Carrying Scooter > 22,000 2-stroke, 4-stroke 50-75 High Motorcycle > 40,000 Mainly 4-stroke 50-100 Highest Moped > 12,000 2-stroke 70-80 Low

The bike segment can be further classified into the following sub segments: 1. Entry level 100 cc bikes 2. Deluxe/Executive segment 100-135 cc bikes 3. Premium/Performance segment 135-250 cc bikes Current market share

Growth trend of major Players Bajaj Auto was the undisputed market leader till the year 2000. Bajaj Auto dominance arose from its complete hold over the scooter market. Hero Honda almost doubled its market share from 20% in FY2000 to 40% in 2005 to emerge as the market leader. This was because of the rising preference towards motorcycles and HH had concentrated on motorcycles only. TVS, on the other hand, witnessed an overall decline in market share from 22% in FY2000 to 18% in 9MFY2005.

Growth Perspective National Council of Applied Economic Research (NCAER) had forecast two-wheeler demand during the period 2002-03 through 2011-12. The forecasts had been made using econometric technique along with inputs obtained from a primary survey conducted at 14 prime cities in the country. The models considered a large number of macro-economic, demographic and socioeconomic variables to arrive at the best estimations for different two-wheeler segments.

2-Wheeler Segment

Regions Sout Wes Northh t Central East & NorthEast 883 All India 10669

Motorcycle

2835 432 2624

7 Scooter 203 219 602 99 1124

At the all India level, the demand for motorcycles will be almost 10 times of that of the scooters. The same in the western region will be almost 20 times. Motorcycle will find its major market in the western region of the country, which will account for more than 40 per cent of its total demand.

Strengths Advancement in technology and new variants in the two wheeler industry. Introduction of new fuel efficient and high performance variants.

Weaknesses Opportunities There is a large untapped market in semi-urban and rural areas of the country. The two-wheeler industry needs to identify these markets with the help of available statistical techniques. Potential markets can be identified using these techniques with the help of secondary data on socio-economic parameters. Increasing urbanization, creating a need for personal transportation and changes in the demographic profile Availability of easy credit for two-wheelers in rural and smaller urban areas.

Threats Introduction of secondhand car market by the reputed car manufacturers and easy loan availability for new as well as used cars. Introduction of new small cars like Tata Nano.

Emerging trends in consumer preference

Till the year 1999 the scooter segment had the highest share of 41% in the two wheeler market. The share of motorcycle segment almost doubled from 42% in 1999 to 79% in 2005.

Bajaj was market leader in the two wheeler industry till the year 2000. It had market share of 32% in the entire two wheeler industry in 2000. Bajaj Auto had stopped making Chetak which was once the worlds largest selling scooter in 2006. Hero Honda almost doubled its market share from 20% in 2000 to 40% in 2005 to emerge as the market leader. Bajaj could hardly sell 1000 scooters per month in the year 2009. It finally decided to exit the scooter segment in December 2000. The shift in the consumers preference pattern has been mainly because of the following major factors: Change in the country's demographic profile and increasing urbanization. Technological advancements, availability of new high performance and fuel efficient bikes.

Declining difference in prices of scooters and motorcycles. High re-sale value of motorcycles.

Marketing Strategies In 2006 Bajaj had been outperforming Hero Honda in growth figures with the success of its 125 cc segment. Bajaj Auto had clocked 37% growth in motorcycle sales compared to Hero Hondas 7.5% While Hero Hondas 100-125 cc segment declined by 3.5% that of Bajaj increased by 35%. Bajaj was close to snatch away the market leader position from Hero Honda. Hero Honda then took a strategic decision to focus on top lines rather than bottom lines. Bajaj took a miscalculated strategy of quitting the 100 cc segment. Credit squeeze induced by the global economic crisis worked in favor of Hero Honda.