Impact Of Two Wheeler Industry

On Business Environment

By : Raghav Malhotra

I.M.S.A.R. Rohtak

Presentation Hierarchy INTRODUCTION - Industry Overview - Evolution of the industry

- Industry Players

TWO-WHEELER (TW) MARKET - Demand of TW in last decade - Segment-wise market share

DOMESTIC MARKET -Segmental Growth Trend -Motorcycles Sales Growth Trend EXPORT MARKET -Trend of TW Exports

ENVIRONMENT ANALYSIS -Identification Of Customer Interests -Some benchmarks -How a Manufacturer analyses the Business Environment

GROWTH ANALYSIS -Why So Much Growth ?? -Future Perspective and Expectations

IntroductionAn Industry Overview

• India is the 2nd largest two wheeler market in the world

• It stands next only to China and Japan in terms of the number of two-wheelers produced and the sales of two-wheelers respectively

• Present estimated size 7.9 mn units per year and expected to touch 10 mn by 2010-11

• CAGR (Compound Annual Growth Rate )(last 5 years) is 10%

• Average two-wheelers per 1000 people in India are 31

• The urban market for two-wheelers is largely penetrated with nearly 57 of every 100 youths that earn an income to support the ownership of a two-wheeler

• More than 10 industry players in existence

Evolution Of Two Wheeler Industry

• The two-wheeler industry has been in existence in the country since 1955.

• Bajaj auto began trading in imported Vespa Scooters in 1948. Meanwhile Automobile Products of India (API) commenced production of scooters in the country in the early 50's

• In the mid 80's, Kinetic introduced a gearless scooter in collaboration with Honda

• The two-wheeler industry in India has grown rapidly in the country since the announcement of the process of liberalization in 1991 by the then finance minister Dr. Manmohan Singh, now Prime Minister of India.

• Today, the industry has the largest share in Indian automobile industry

Industry Players

TWO-WHEELER (TW) MARKET - Demand structure of TW in last decade

Segment wise market share…

Two Wheeler

Three Wheeler

Passenger vehicles

CVs

•The industry has not experienced much change in its structure over the last 6 years

•Two- wheelers form the major share of domestic sales

•Passenger vehicles lead the exports market(57.4%)

•2 wheelers form the bulk of exports as well, but are losing share to Passenger vehicles

•The growth in the two wheeler market is driven by the motorcycle market and is expected to grow at 14-15 % YOY

78.63%

13.44%

4.03%3.9%

DOMESTIC MARKET -Segmental Growth Trend

Motorcycles Sales Growth Trend

• Moto-Bikes are the most favourite ones in a large part of population

Export Market

• The TW exports has got a tremendous growth

• Look at the data

Environment Analysis -Identification Of Customer Interests

• A minute survey of people’s perspective and needs

• Make customer’s requirements , firm’s accomplishments

• Confined specification is “Need of the Hour”

Showing Age of the Respondent

46-5512%

56-656%

36-4520%

26-3520%

15-2542%

15-25

26-35

36-45

46-55

56-65

Some Benchmarks

How a Manufacturer analyses the Business Environment

• By Refining Demographics of a Potential Two-wheeler Owner

AS• Work Culture of the area, where business is going to

be initiated, is concerned with office-goers• 45% of population own a Desktop• 87% own at least 1 mobile phone• Surfs internet more than 8 hours a week• Average household income above Rs 15,000 a month• Single: 55% Married: 45%

Why So Much Growth ??

• Excise duty cut • Lower fuel prices • Lower interest rates • Easing liquidity situation • Modernisation of young generation• A well-equipped middle-class transport • Used in each and every part of country

Future Perspective and Expectations

• Banking Environment is likely to be favourable for the industry in coming years

• Increase in market share in the two-wheeler finance segment by Public sector banks

• UCO Bank is hopeful of disbursing Rs 200 crore worth fresh two-wheeler loans in 2009-2010

• United Bank of India is planning to give two-wheeler loans to customers who have a salary-linked account with the bank

• According to CARE(Credit Analysis & Research ): Rural India will boost two-wheeler growth in FY10 after overcoming the drought

• Fast paced urbanization to rise from 28% to 40% by 2020

• Middle class expanding by 30 - 40 million every year

QUERIES