Indian Two Wheeler Industry – 2011-2012
Although the YoY volume growth of the industry remained in double digits, the pace of growth during the last quarter was at its lowest gear in the last three years. In an environment where the increase in inflation, fuel prices and interest rates has been the archenemy of growth in the Indian automobile industry at large, the 2W industry has been the most tough and was reflected in its vigorous volume growth.
A look on the volumes of major 2-wheeler OEMs –
There seems to be an early mix shift underway – favoring scooters over bikes (beneficial to Honda) and favoring executive segment over premium (benefits Hero over Bajaj) has been seen. While growth in scooters appears structural (driven by appeal of the scooter as a vehicle that cuts across gender and age biases), while the growth in executive segment appears cyclical as consumers baulk at high fuel prices and downshift to more fuel efficient products. A long-term trend of consumers preferring premium bikes should resume – volumes should recover, though timing will remain uncertain – maybe in FY14, but potentially after that too.
To understand deeper on the available segments (Motorcycles) and the respective offerings –
1) Economy Segment –
2) Executive Segment –
3) Premium Segment –
Even though the number of offerings in the premium segment seems high, maximum volume churners still remain the products in executive & economy segments. With an aggressive pricing for Pulsar 200 NS & Duke 200; Bajaj plans to gain strategically in terms of volumes over the period of time. Bajaj’s dominance in Executive segment is the the primary reason for its high operating margin and thus emerge as one of the most profitable 2-wheeler OEMs.
Profile of the Indian 2-wheeler companies –
HeroMotoCorp is now world’s largest manufacturer of two-wheelers. The company has benefited from the demand shift to motorcycles, as it focuses solely on this product segment (although has a product called Pleasure in Scooter segment). With fuel efficiency and riding comfort as the main selling points, HMC has been able to address a wide market and post robust sales growth even after its separation from the Japanese major Honda.
Bajaj Auto is well positioned in the motorcycle segment as the 2nd largest player with around 30% market share. Over the last decade, the company has successfully changed its image from a scooter manufacturer to a two-wheeler manufacturer. Its product range encompasses scooterettes, scooters and motorcycles. Though the company is miles behind Hero in terms of sales volumes, it is now India’s most profitable two-wheeler manufacturer.
TVS Motor Company Limited is the third largest two-wheeler manufacturer in India. It is the flagship company of the parent TVS Group employing over 40,000 people with an estimated 15 million customers. It manufactures motorcycles, scooters, mopeds and auto rickshaws. TVS Motor is credited with many innovations in the Indian automobile industry, notable among them being the introduction of India’s first two-seater moped, the TVS 50cc. The company became the leader in its category of sub 100 cc mopeds, having sold 7 million units. It also introduced the TVS Scooty, which is India’s second largest brand in the scooterette segment. The TVS Jive launched in November 2009 became India’s first clutch-free motorbike aimed at a stress-free rider experience. But the growth in F12 was dismal and seems to lose ground against competition.
Honda Motorcycle and Scooter India, Private Limited (HMSI) is the wholly owned Indian subsidiary of Honda Motor Company, Limited, Japan. Founded in 1999, it was the fourth Honda automotive venture in India, after Hero Honda, Kinetic Honda Motor Ltd and Honda Siel Cars India. The entry of Honda into the Indian market as HMSI began with the launch of the Honda Activa, a 100 cc scooter. A slightly modified trendier version of the Activa was soon launched, as the Honda Dio. Honda Eterno was launched thereafter to add to the portfolio of HMSI’s scooters. The Honda Unicorn was the first motorcycle released by HMSI. The Honda Shine has since been released.
India Yamaha Motor, IYM (officially India Yamaha Motor Private Limited) is an Indian subsidiary of Yamaha Motor Company, formed in 2008 as a joint venture with Mitsui. It produces a range of motorcycles for domestic consumption and export. Yamaha motors in India have been present in the market of low range economy bikes for a long time. All bikes in their store were designed for mass market, but with the introduction of FZ-16, FZ-S, Fazer, and R15 they have made an impression on the mid range bike market in India.
Suzuki Motorcycle India Pvt. Ltd. is a subsidiary of one of the world’s leading two-wheeler manufacturer Suzuki Motor Corporation. The company’s products include motorcycles and scooters. The company was incorporated in 1997 in India.
Mahindra Two Wheelers Limited (MTWL) is backed by the Mahindra Engineering Services (MES), the Italy-based design house, engines engineering and Taiwan’s Sanyang Industry Company Limited (SYM). In 2011 Mahindra became the first Indian two-wheeler manufacturer to enter the Moto Grand Prix Championships. This two wheeler maker formally entered the two wheeler industry by acquiring with the successful acquisition of business assets of Kinetic Motor Company Limited.