INDIA – DOMESTIC TWO WHEELER INDUSTRY

External Analysis
 Factors for External Analysis
• Market Sizes
• Industry Trend
• Industry Insights
• Segmentation
• Demand Supply
• Growth
• Cost Structure and Stability
• Critical Success Factor
• Competition Analysis
• Factor affecting the industry
• Porter Five Forces model
• Take Away
MARKET SIZES
• The two-wheeler market in India is the biggest
contributor to the automobile industry with a
size of Rs.100,000 million.
Indian Motorcycle Industry
(Domestic +Exports)
Domestic Motorcycle Industry
INDUSTRY TRENDS
Industry Trend
INDUSTRY INSIGHTS
 Industry Insights
• Vehicle Penetration
• Population Strata
• Age
• Occupation
• Household Income
• Repeat Vs First Time
All India Penetration
Penetration –Motorcycles-Population
Strata
% Contribution by Population Strata
Penetration –By Age
Contribution By Age
Penetration By Occupation
Contribution By Occupation
Penetration By Income
Repeat Vs New Buyer
 Two Wheeler Segment
• Motorcycle
– Economy (Commuter Standard)
– Executive (Commuter Deluxe)
– Premium (Sports)
• Scooter
• Mopeds
Segment Volumes
Segment Share
Entry Segment
Mid Segment
Premium Segment
DEMAND SUPPLY
 The Forecasting Process

• Statistical methods used for forecasting, considering

all the relevant demand drivers for each segment
• Models prepared after considering an exhaustive list
of relevant variables
–Macro-economic variables: eg. GDP components, industrial
production, inflation, interest rates, stock indices
–Sector variables: eg. Model launches, vehicle price, inter-
segment competition
–Enablers/barriers: eg. Finance availability, road connectivity
Motorcycle Domestic Industry Projections
 Summary of Forecasts
Automobile segments 2010‐11 growth over 2009‐10 (per cent)

Motorcycles 16‐18
Scooters 30‐32

Source : SIAM Demand Forecasts for Indian Automobile Industry

Region Based Demand Forecast
 Demand –Supply Gap
As per information we got from Dealers there is
no excess capacity in the Industry
GROWTH
 Growth Drivers
• GDP – 8.5%
• Consumer Confidence
– 55% are Rural
• Crop Production (expected was 260 MT vs Actual near to 230 MT)
• MSP (Major Crops Y-O-Y)
– Sugarcane (33% hike)
– Paddy (11%)
– Wheat (8%)
• Rain (Quantity, Time and Spread)
• 45% are Urban and Semi Urban
• Salary rises
 Domestic Industry Sales
Category 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Two 5,364,249 6,209,765 7,052,391 7,872,334 7,249,278 7,437,619 9,371,231

Wheelers

Two Wheelers registered a growth of 29.38 percent during April-October 2010.

Mopeds, Scooters and Motorcycles grew by 25.00 percent, 52.11 percent and 25.60
percent respectively.
COST STRUCTURE AND STABILITY
  Scooter Motorcycle Moped

Price*(Rs. as in
> 22,000 > 30,000 > 12,000
January 2005)

Stroke 2-stroke, 4-stroke Mainly 4-stroke 2-stroke

Engine Capacity (cc) 90-150 100, 125, > 125 50, 60

Ignition Kick/Electronic Kick/Electronic Kick/Electronic

Engine Power (bhp) 6.5-9 7-8 and above 2-3

Weight (kg) 90-100 > 100 60-70

Fuel Efficiency (kms

50-75 50-80+ 70-80
per litre)

Load Carrying High Highest Low

 Profit-Margin
• PAT -10% to 12%
CRITICAL SUCCESS FACTOR
 Industry Critical Success factor

• Image - quality and compelling product

• Quality Dealer System
• Cost Control
• Meeting energy standard
 Competitive strategy

• Cost Control - "implementing processes to become the

highest-quality, lowest cost producer of our high-
volume products in each hemispheric currency zone".
• Organizational culture: "creating a culture that engaged
employees, while focusing on safety and diversity"
 Environmental factors strategy

• Promote the use of low-emission auto fuel technology

• Government policy
– Excise duty
– Safety Regulation
– Emission norms
COMPETITION ANALYSIS
 Competitor Comparison
Number of Unit sold in 2009-10

Company Hero Honda BAJAJ TVS

Mopeds/Scooter 208000 570000
Economy 613000 600000 200000
Executive 2800000 1125000 140000

Premium: 1200000 775000 300000

Total 4821000 2500000 1210000

Segment wise market share (in Percentage)

Scooter 2.43 0 6.68

Economy 7.18 7.03 2.34
Executive 32.82 13.18 1.64
Premium 14.06 9.08 3.51

Total TW Market Share 48 23 15

 Two Wheeler Competitor

– Bajaj Auto Ltd

– HERO HONDA
– Kinetic Motor Company
– TVS MOTOR
– Yamaha Motor India
– Suzuki Motorcycles India Pvt. Ltd
– Royal Enfield Ltd
– Honda Motorcycle & Scooter
– Mahindra & Mahindra Ltd
– Yamaha Motor India
FACTORS AFFECTING THE INDUSTRY
 Factors affecting the industry

• Macro environmental 
• Initiation of Mass Transport System
• Increase in consumer's salary – which result in
increase of four wheeler purchase.
PORTER FIVE FORCES MODEL
 Risk of Entry by Competitor

• The capital and expertise needed to setup an

auto or parts manufacturing facility, would be
a great enough barrier to entry to prevent
many new entrants from setting up.
• We expect the threat of new entrants to be
high, which makes industry attractive.
 Bargaining power of Buyer
• Buyers in India have a wide variety of choice
• Given Dealership mechanism buyer don’t have
much for negotiation, which makes buyer
power less in turn industry becomes attractive
 Bargaining power of Supplier
• It is likely that the suppliers to the
manufacturers have considerable bargaining
power. They are not held ransom by one single
manufacturer as they can market their
products to any of the others in India.
 Threat of substitute products
• There are a plethora of incredibly cheap
choices, like the famous Tata Nano.
 Rivalry among the establish companies

• The industry is not yet in its shake-out phase and is

still struggling to find the up-and-coming stars and
possibly topple the leaders.
• Each companies is leader in one segment or other
but not leader in whole industry as such.
• Bajaj stands as the leader in the economy segment,
Hero Honda leads in the executive segment, and
there is a competition in the premium segment
between Hero Honda and Bajaj.
TAKE AWAY
 Conclusion
• For New Player given industry is attractive it will require
huge investment and time to gain the market share
• For Existing Player scope of increasing the market share
has potential based on which segment, geography,
demographic has been target
• As per study below are our analysis to increase market
share
– Two wheeler – Motorcycle
– Segment – Economy
– Geography – Rural Area
– Demographic – Age 25-35 years and above .