Motorcycle Industry in India

Presented By: Anurag Kumar Apurva Bhargav Saptanshu Nigam Vijay Sharma

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History

• In 1955, the Indian government needed sturdy and reliable motorcycles for its Army and police to patrol the rugged border highways. The first batch of 350cc Bullet from the Royal Enfield Company of UK were received and assembled at Chennai.

• The Eicher company acquired Enfield India and the name came to be known as Royal Enfield Motors Limited in 1993. in Thiruvottiyur near Chennai.

• Motorcycle segment was initially dominated by Enfield 350cc bikes and Escorts 175cc bike. The two-wheeler market was opened to foreign competition in the mid-80s.

• Market leaders Escorts and Enfield - were caught unaware by the onslaught of the 100cc bikes of the four Indo-Japanese joint ventures.

• TVS Suzuki and Hero Honda brought in the first two-stroke and four-stroke engine motorcycles respectively.

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Overview

• India, is the second largest producer of two-wheelers in the world. In the last few years, the Indian two-wheeler industry has seen spectacular growth. The country stands next to China and Japan in terms of production and sales respectively.

• Majority of Indians, especially the youngsters

prefer motorbikes rather than cars. Capturing a large share in the two-wheeler industry, bikes and scooters cover a major segment. Bikes are considered to be the favorite among the youth generation, as they help in easy commutation. 

• As of 2002, India with an estimated 37 million motorcycles was home to the largest number of motorised two wheelers in the world. China came a close second with 34 million motorcycles.

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CHANGES IN THE INDUSTRY• The industry had a smooth ride in the 50s, 60s and 70s when the

Government prohibited new entries and strictly controlled capacity expansion. The industry saw a sudden growth in the 80s. The industry witnessed a steady growth of 14% leading to a peak volume of 1.9mn vehicles in 1990.In 1990, due to the rise in fuel prices, high input costs and reduced purchasing power due to significant rise in general price level and credit crunch in consumer financing, the industry witnessed a recession. In 1993, the recession began to ease off and the growth in the motorcycles segment began with the launch of lighter, 100-cc motorcycles.

• The motorcycle segment garnered the largest share of the total two-wheeler sales. The two-wheeler industry grew at a CAGR of 14.6% between 1993 and 99, aided largely by the above average performance of the motorcycle segment, which grew at a CAGR of 24.3% compared to 11% and 8.6% for scooters and mopeds respectively. Until 1997, all three segments grew in size, however from the fiscal 1999, motorcycles started directly eating into scooter sales .

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• The motorcycle market share is about 81.5% of the total two wheeler market in India. Three-fourths of the total exports in the two wheeler automobile industry are made in the motorcycle segment. Exports are made mainly to South East Asian and SAARC nations.

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Fleet composition of all vehicles

Two wheelers

Three wheelers

Cars,Jeeps & Taxies

Buses

Goods Vehicles

Others (Tractors,Trailors & miscellaneous)

Three Wheelers4%

(2.37 million)

Cars, Jeeps and Taxies13%

(7.69 million)

Buses 1%

(0.59 million)

Goods Vehicles5%

(2.96 million)

Others(Tractors, Trailors

and miscellaneous)6%

(3.55 million)

Two Wheelers71%

(42 million)

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Some of the features that deserve attention in respect of the Indian two wheeler

segment are as mentioned:• The total sale of two wheelers in India has touched a figure of 7.86

million units by March, 2007, up 11.42% from the previous fiscal figures of 7.05 million. Production during the period reached 8.63 million units.

• The production of two wheelers in India is expected to reach a staggering 17.85 million units by 2011-12, more than double of the current production level.

• India is likely to export 1.39 million two-wheelers in 2011-12 compared with 590,000 in 2006-07.

• Total investment for new capacity generation in two-wheeler segment is likely to be more than $2.2 billion (INR10, 000 crore). 7

Number of players Bajaj Auto

Hero HondaTVS Motors

Yamaha MotorsSuzuki MotorsHonda MotorsRoyal Enfield

KineticLML India

Mahindra Two Wheelers

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Indian 2-Wheeler Market

HONDA

Motorcycle 50% 30% 13% 4% 1% 2% <1% - <1%

- 15% 28% - 2% 46% 9% <1% -

- - 82% - - - 8% 10% -

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Market Share - Motorcycle

Bajaj Auto, 24.4%

TVS Motors, 17.7%

Yamaha, 3.8%

Others, 5.8%

Honda Motors, 8.5%

Hero Honda, 39.8%

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Top Three Players

• HERO HONDA

• BAJAJ AUTO

• TVS MOTORS

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Hero Honda Motors Ltd is one of the leading companies in the two-wheeler industry. At present, it is the market leader in the motorcycle segment with around 40% of the market share. The company has emerged as one of the most successful players, much ahead of its competitors an account of its superior and reliable product quality complemented with excellent marketing techniques. The company has been consistently addressing the growing demand for motorcycles and has a cumulative customer base of over 5 million customers, which is expected to reach 6mn mark with the rural and semi-urban segment being the new class of consumers.

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Company Profile"Hero", the brand name symbolizing the steely

ambition of the Munjal brothers, came into being in the year 1956. From a modest manufacturer of bicycle components in the early 1940's to the world's largest bicycle manufacturer today.

Joint Venture between Hero Group and the Honda Motor Company of Japan, has today become the World's single largest two wheeler Company. Started with the initial investment of Rs.55 crores, Hero Honda Motors Limited came into existence on January 19, 1984.

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Hero Honda offers the following products

CD 100  KarizmaCD 100 SS AmbitionSplendor  Ambition 135Passion Splendor +CBZ Passion PlusCD Dawn CBZ Star

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Advertising StrategyHHML is an organization, which is known for its

innovative & Aggressive Marketing. The advertising budjet is of Rs.120 crores. All the mediums are used extensively, be it print or mass media like T.V & hoardings.

HHML also promotes sports in the country. It is also the sponsor of the ICC world Cup 2003 and half of the Indian team represents Hero Honda.

Also, advertising is done at a local level by dealers, in which HHML also contributes to help dealer promote the dealership in the local area.

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Some of the Events Sponsored During the Years

1993Hero Cup – Five Nation Cricket Tournament. 

1999Masters Golf Championship.

7th Cricket World Cup in England. 2000

NKP Salve Challenger Trophy.Stardust Hero Honda Millennium Honors Award.

Masters Golf Championship.20th Cinema Express Award. 

2002India-England Women's Cricket Series.

Masters Golf Championship.Second Indian Television Academy Award.

21st Cinema Express Award.India-England Test Series.

First Indian Television Academy Award. 2003

8th Cricket World Cup in South Africa.2004

ICC Champions Trophy in England.16

Brand Ambassadors

Indian Cricket team Players: Virender Sehwag, Mohammad Kaif, Yuvraj Singh, Harbhajan Singh, Zaheer Khan and Sourav Ganguly.

Superstar Hrithik Roshan is also a Brand Ambassador who helps to promote company’s "We Care" campaign comprising safety riding, environment and friendliness

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Some of the famous ads…• ‘Fill it - Shut it - Forget it’ (Splendor).• ‘We Care’ campaign.• ‘Hero Honda Dhak Dhak Go’ (Music Video)• ‘Jet Set Go’ (Karizma)

A fighter plane is on a regular sortie when the pilot notices a moving object. Zooming his camera, he captures a bike cruising at high speed. Informing the control tower, the pilot dives in for a closer look.

The bike gathers speed and enters a tunnel to beat the fighter aircraft. Reaching the air-base, the rider meshes with the staff as they examine the images... ... of the motorcycle, unaware that its owner is amidst them.

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Established in 1945, it was incorporated as a trading company. From 1948 till 1959, it imported scooters and three wheelers from Italy and sold them in India. It then obtained a production license in 1959 and struck a technical collaboration with Piaggio of Italy in 1960 and continued with the same for the next two decades. Its collaboration with Piaggio expired in 1971 and since then the Company's scooters and three wheelers are sold under the "Bajaj" brand name. And then entered in Motorcycle market.

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Bajaj Auto offers the following products

CT 100 Avenger

Platina Discover

Caliber 115 Eliminator Wind 125 Kawasaki Ninja Pulsar 150 KS 

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Advertising StrategyBajaj Auto is an aggressive advertiser. The

advertising Budget of Bajaj Auto is more than Rs.100 Crore. Bajaj has a distinct style of promoting its products, for every product launched there’s a new and fresh advertising strategy, developing the firm-positioning platform.

Brand Ambassador :Cine Star of Asia, Jackie Chan.

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Some of the famous ads…• The very first TV Commercial of the Bajaj

Discover DTSi (125 cc at that time) in 2004 featured the Cine Star of Asia, Jackie Chan..!!

• New Bajaj Pulsar DTS-Fi 220, the sountrack in the video plays ‘Hamara Bajaj’ in its latest avatar..!!

• Pulsar mania – bike stunts of different range.• ‘The Fastest Indian’ – New Pulsar 135

Robber robs the bank and disappear within few minutes on bike before cops arrives.

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Chatting merrily, three girls

walk by a line of motorbikes.

One's dupatta skims over the

bikes and then gets stuck...

...making her turn in

consternation. She pulls it away

slowly to reveal...

... The logo, "Pulsar“.

’Definitely Male’

Some of the famous ads contd…

• TVS Motor Company Limited, part of the TVS Group, is one of India's leading two-wheeler manufacturers. With a turnover of over Rs.2800 crores, the Company manufactures a wide range of motorcycles, scooters, mopeds and scooterettes. Little wonder, it boasts of more than 9.5 million happy customers.

• The year was 1980, was a year to remember for the Indian two-wheeler industry. For it was this year that saw India's first two-seater moped, TVS 50, rolling out on the Indian roads. For some it was freedom to move. 

• With the joint venture with Suzuki Motor Corporation in 1983, TVS-Suzuki became the first Indian company to introduce 100 cc Indo-Japanese motorcycles in September 1984. Through an amicable agreement the two companies parted ways in September 2001. 24

TVS Motors offers the following products

Star City Victor GLX

Star Sport Fiero F2/FX

Jive Apache

Centra Flame Victor GL

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Advertising Strategy

• The aggressive marketing strategy along with the changed approach to advertisement campaign boosted the demand for the TVS models. 

• Agency created the campaign designs which included print ads, banners, handbills, road show kits, truck floats etc.

• ‘Musical Nite’ for those who booked / purchased bikes during the period was organized by the agency.

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Advertising Strategy contd… ‘Meet Sachin Tendulkar’ Campaign: Lucky draw winners were invited to meet Sachin. Bikes autographed by Sachin were handed over to the winners and they got a chance to

interact with the winners.

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Brand Ambassadors

Sachin TendulkarMS Dhoni

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Racing Bar unleashed (TVS Apache RTR)

Recent Ads

Future of Two Wheeler IndustryOpportunity, Challenges and Plan

Opportunities • Rising rural demand.• Market penetration of only 37 percent.• Collaboration with global firm.• Investment in R&D by government.• Excise duty cut.

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Challenges

• Sustaining the growth rate.• Need for innovation – low cost/ hybrid

vehicles.• Upgrading Indian two-wheeler products.• Taking the products to the global market.• Capturing Indian as well as global market.

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Plans

• Encourage exports.• Provide various two-wheeler financing

schemes among manufacturers. • Open R&D centers.• Pressurize government to reduce taxes and

duties.• Collaborate with global players.

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Thank you

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