Industry analysis on Indian Two Wheeler industry(150-2500cc)

Submitted by-Abhinav Yadav

Introduction

India is the 2nd largest manufacturer of 2-wheelers in the world

Industry started up in early 50s and The Automobile Products of India(API) started manufacturing in the country

2-wheeler market was opened for foreign countries in mid 1980s

Dominant product are 2-wheelers(75%).others are passenger cars(16%)and commercial vehicles(9%)

Bikes are the major segment of India, others are scooters and mopeds

MILESTONES

1983 – Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan and Hero was signed

1985 - First motorcycle "CD 100" rolled out. 1987 - 100,000th motorcycle produced. 1994 - New motorcycle model - "Splendor"

introduced. 1,000,000th motorcycle produced. 1999 - New motorcycle model 150 cc segment-

"CBZ" introduced. 2003 – Hero Honda becomes the first Indian

Company to cross the cumulative 7 million sales mark

2011 - New licensing arrangement signed between Hero and Honda (Hero Honda is renamed as Hero)

Market players in the industry

Hero MotoCorp Ltd-Hunk, Xtreme, Impulse, Karizma R and KarizmaZMR

Bajaj Auto-Avenger 220;Pulsar200NS,220 F,180,150 and international collaboration with KTM -200 DUKE

TVS Motor-Apache RTR 180 ABS,RTR180 and RTR 160

Yamaha-R15 version 2.0,Fazer,FZ-S,SZ-S,SZ-RR

Honda-CBR 250R,CBR150R,CB Unicorn,CB Trigger

Indian 2-wheeler market share

Brand Sales (150-250cc)April 2012

Market share

Bajaj Auto 64505 46.8%

Hero MotoCorp 25294 18.3%

Yamaha 19110 13.9%

Honda 17068 12.4%

TVS 10981 8.0%

Others 880 0.6%

Growth of industry

Rate of growth shown Inc. of 1% in FY2013 with record sales of 10.7 million bikes in 2012-13

It is expected to reach a size of 21-22 million units(domestic and exports) by 2016-17

By 2015-16 industry is expected to reach maturity stage (ICRA)

Motorcycle growth rates reduced and were overtaken by scooters

Porter’s 5 force model

Porter’s 5 forces model

Threats of substitutes› In 150-250cc segment there is less risk of

substitutes.› However in lower segment(90-150

cc)penetration could be seen towards non gear scooter

Bargaining Power of suppliers› Bargaining power of suppliers is less as

quantity supplied is huge and prices of raw materials has come down. Basic raw material required are steel and rubber

Continued… Bargaining power of buyers

› Customers get a healthy choice .› Depends on taste and brand loyalty of the customer. › Supply-demand mismatch in the industry(supply is

greater)

Rivalry among existing firms› Having 6 major companies in market ,competition is

high› Compete each other in terms of better model,

specifications and technology Threat of new entrants

› Entry barriers are very high› Well established players are already existing

SWOT Analysis of industry

Strength› Easy availability of spare parts, cost of parts is low.› Has a high Brand loyalty amongst the customers› Innovation in fuel efficient bikes in 150cc segments› Mergers from international brands › Exports of bikes is increasing

Weakness› Hero is not getting the technical expertise from

Honda after demerger› Similar type of models with same specification› Capacity utilization is low› Skilled labor

Continued…

Opportunity› Increase in disposal income› Credit financing by banks is increasing› Increase in sale of sports bike segment

Threats› Increase in fuel prices› Inflation› Economic slowdown

Future Outlook

The growth rate of entry price segment is expected to be lower (below 40,000)

Competition is likely to intensify in executive segment (price 40,000-50,000)

Premium class segment is expected to grow at the fastest rate (above 60,000)

Conclusion

Competition is high and increasing. Life cycle stage is growth.

Trade export in this sector is medium and imports is low.

Entry of international brands in the sector eg KTM and Kawasaki tends to shift the customer’s taste and preference.

Thank you