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CHAPTER -1
INTRODUCTION
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CHAPTER -1
INTRODUCTION
An overview of two-wheeler industry
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 prefermotorbikes rather than cars.
Capturing a large share in the two-wheeler industry, bikes andscooters cover a
major segment. Bikes are considered to be the favorite among the youth
generation, as they help in easy commutation. Large variety of two wheelers are
available in the market, known for their latest technology and enhanced
mileage.Indian bikes,scooters and mopeds represent style and class for both men
and women in India.
Benefits of two wheelers
Two-wheelers are the most popular and highly sought out medium of
transport in India. The trend of owning two-wheelers is due to its-
Economical price
Safety
Fuel-efficient
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Comfort level
Before the Foreign Motor Cycle Entrance in Market:
There were three manufacturer in the motor cycle segment viz. Enfield,
ideal Jawa and Escorts while Enfield bullet was a four stroke, Jawa and the
Rajdoot were two stroke bikes. The motorcycle segments was initially dominated
by Enfield 350CC bikes and Escorts 175CC bike.
After the Foreign Motor Cycle Entrance in Market:
The two-wheeler market was opened to foreign competitor in the mid 80s.
And the then market leader Escort and Ensiled were caught unaware by the
onslaught of the 100CC bikes of the four Indo-Japanese joint venture. With the
availability of fuel-efficient low power bikes, demand swelled, resulting in Hero
Honda, then the only producer of four stroke bikes (1oocc category), gaining a
top/ The first Japanese motor cycle were introduced in the early eighties. TVS
Suzuki and Bajaj brought in the first two-stroke and four stroke engine motorcycle
respectively. There two player initially started with assembly of (KD kits, and later
on progressed to indigenous manufacturing. In the 90s the major growth for
motorcycle segment was brought in by Japanese motorcycles, which grew at a rate
of nearly 25% (AGR in the last five years). The industry had a smooth ride in the
50s, 60s and 70s when the government prohibited new entrees and strictly
controlled capacity expansion the industry saw a sudden growth in the 80s. Te
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industry witnessed a steady growth of 14% leading to a peak volume of 1,9 mn
vehicles in 1990.
In 1990 the entire automobile industry saw a drastic fallen demand. This
resulted in decline of 15% in 1991 and 8% in 1992 resulting in a production loss
of 0.4 mn vehicles. Baring Hero Honda, all the major producers suffered from
recession in Fy. 93 and 94 Bajaj showed a marginal decline in 1992.
The reasons for recession in the sector were the incessant 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 factors like increased
production in 1992, due to new entrants coupled with the recession in the industry
resulted in companies either reporting losses or a fall profits.
The domestic two wheeler sales of 3.778mn in Fy 2000 the motor cycle share
represent 47.7% (41% in Fy 1999 (the motor cycle segment has gradually
increased its presence from 27% in Fy 92 to 47.7% in Fy 2000. Mainly at the
expense of the scooter and to some extent the moped segment.
It is expected that Motor cycle segment will continue to grow at an average
of 20% in Fy 01 this will increased demand for Motor cycle from 1.796 mn FY
2000 to 2.15 mn in FY 01 The supply of motor cycles as per the present trend will
increase from 2.08mn in FY 2000 to 2.38 mn in FY 01. The segment will be
witnessing several new entrants in FY 10, mainly in the four stroke sub segment
this will lead to an over supply situation and increase the competition of the
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Japanese segment. Motor cycle segment has witnessed tremendous of growth over
the past few year, the reason can be change in the buying behavious of the
consumer and the change in the trends.
In the last six years, the domestic two-wheeler industry has seen structural
changes. This can be seen from the change in composition of two-wheeler sales,
where the motorcycles have consistently gained market share of 41% of total two-
wheeler sales. This trend is expected to continue in the next two years till the four
stroke scooters make their presence felt in the segment. The table below gives in
idea about the strides made by the motorcycle segment in the last eight years.
In (Percent) Motor Cycle
FY 93 25.2
FY 94 26.7
FY 95 29.5
FY 96 30.0
FY 97 33.3
FY 98 37.0
FY 99 41.0
FY 2000 47.6
2010 76.7
Source: SIAM
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The Indian motorcycle industry can be broadly categorized in the Indian
motorcycles and Indo-Japanese motorcycles. The Indo-Japanese motorcycle
segment is dominated by Hero Group, Bajaj and Escorts in collaboration with
Japanese vehicles manufactures Honda, Kawasaki and Yamaha respectively. The
Indian motorcycles segment is dominated by Bajaj (M 80), Escorts and Royal
Enfield.
In motorcycles sales, western region leads with a marker share of 40% of
the total motorcycle sales. South an north regions come second and third with a
market share of 27.5% and 17.4% of total motor cycle sales respectively.
Technologies and Usage of Motor Bikes:
Two-wheeler is one of the rare industries, which is capital as well as labor
intensive. The setting up of a green field venture and ancillary network require
enormous capital investment. The assembly operation is highly labour intensive.
The capital requirement for a venture varies from segment to segment based on
amount of outsourcing.
Two-wheeler Market in India
Automobile, being the leader in product and process technologies of the
manufacturing sector, has been recognized as one of the major drivers of
economic growth. The Indian economy has been growing around 8% for the past
few years. This growth has enabled an overall change in the social status of the
Indian population. Additionally, every year, many rural areas and Tier-III cities
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are progressing to a higher status, opening immense growth opportunities for the
two- wheeler industry.
The two-wheeler market has emerged as the most vibrant and transforming
segment of the overall Indian automobile industry, witnessing an unprecedented
growth. Rising rural demand and fuel efficiency are among the major factors
boosting the growth in the market. Despite the economic slowdown, the Indian
automobile industry has been performing consistently well, compared to other
major markets of the world. The Indian two-wheeler market possesses a
significant potential, and is anticipated to grow at a CAGR of around 11% during
FY 2011- 2015 to reach 17.8 Million Units by FY 2015-end.
Our report has studied the Indian two-wheeler market from various perspectives. It
entails a detailed analysis of the market in terms of segments. Each section
sufficiently explains the current and future market trends, and the ongoing
developments in the Indian two-wheeler market. Our research also foresees
immense opportunities for various international and domestic players in this
segment.
The report has also considered the preferences by gender, and income levels as
part of macro-economic indicators to understand this market of India, which is one
of the worlds leading two-wheeler exporters.
Our report, Two Wheeler Market in India, has comprehensively analyzed the
emerging trends, like reviving of scooter segment and shooting demand for
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executive and premium segment bikes in two wheeler markets, which are expected
to prevail in near future. Our proposition in this report is likely to facilitate clients
in understanding the present and future outlook of the two wheeler market and
developments in the country. Further, we have also evaluated various government
regulations and initiatives that will provide the prerequisite boost to the two
wheeler market in India, and facilitate cutting-edge market intelligence to
intending clients while making investment decisions.
Five facts about India's growing two-wheeler market
Two-wheeler company Hero MotoCorp on Monday said its first bike without the
technology of erstwhile partner Honda will hit the market by 2014.
The bike could be developed in India or anywhere but it would be on a completely
new platform, managing director and CEO Pawan Munjal said.
The company continues to use Honda technology for its products after the break-
up of their joint venture, Hero Honda. It has a licence agreement with the Japanese
firm till 2014. The joint venture ended in December 2010.
Here are five things to know about the Indian two-wheeler industry:
According to industry body, the Society of Indian Automobile
Manufacturers, the Indian two-wheeler industry is expected to post an
annual growth of 11-12 per cent, and the market is expected to double
every four years till 2020. According to data from Nomura and Crisil, as
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many as 10 million two-wheelers were sold in India 2011-12. Vehicles in
the executive segment formed the bulk of sales at 6.5 million, followed by
the economy segment (1.8 million) and premium segment (1.7 million).
The recent series of hikes in the price of petrol have played a significant
role in the sale of two-wheelers, according to SIAM, as most first-time
four-wheeler buyers in rural India and tier II and tier III cities have deferred
their purchases. Two-wheelers account for a whopping 76 per cent of
market share in the automobile sector in Asias third-largest economy.
Passenger vehicles account for 16.25 per cent.
Barely 18 months after Indias most successful two-wheeler marriage
ended, Honda made its ambitions clear by launching the 110cc Dream
Yuga, its first low-cost motorcycle meant to target the budget market ruled
by Hero and Bajaj. The Dream Yuga comes at an attractive Rs 44,642, and
will compete with Heros Splendor, which costs Rs 42,950. The Splendor is
Indias top-selling bike.
Other two-wheeler companies such as Yamaha and Suzuki, too, are steadily
focusing on the mass-market segment in an attempt to dislodge the two
giantsHero and Bajaj. Yamaha last month announced a new $280 million
factory in India to nearly triple its capacity to 2.8 million motorcycles by
2018, while Suzuki Motor, which is expected to launch a mass-market
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offering soon, is building a new factory to take its India capacity to close to
one million motorcycles by 2014.
Hero has a market share of around 56 per cent in the overall domestic two-
wheeler market. At 25.5 per cent, Bajaj comes a distant second, but
maintains a healthy lead over Honda and TVS, which have 7.5 per cent and
6.2 per cent market share, respectively. In terms of volume growth over the
previous fiscal year, Hero leads with 16.5 per cent, followed by Honda
(13.6 per cent), Bajaj (7.4 per cent) and TVS Motors (minus 0.3 per cent).
Top brands from each stable are as follows: Hero Passion, Splendor and
Pleasure (scooter); BajajPulsar and Discover; Honda Unicorn, Twister
and Activa (scooter); TVSFlame, Apache and Scooty (scooter).
A little more than two decades after it began to open its economy in 1991, India
still counts as an emerging market. There's still plenty of room for growth in
product categories from alcohol to mobile phones, as a consumer revolution takes
hold among a middle class that is expanding rapidly.
Take two-wheelers, for instance. Data from the Society of Indian Automobile
Manufacturers show that sales of two-wheelers in India rose anastonishing 85
percentbetween 2007-2008 and 2011-2012, to 13.4 million units a year.
The two-wheeler market was one of the drivers of India's consistent double-digit
growth, reflecting exploding demand for fuel-efficient transport in rural areas --
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where public transport is often poor or nonexistent -- and from specific segments
of the urban population such as students, office workers and working women.
(Much of the advertising for scooters is directed at the last category, such as a
commercial featuring the Bollywood film-star Priyanka Chopra with the tagline,
"Why should boys have all the fun?")
The market for two-wheelers in India, though,may have peaked earlier than most
others. Demand rose just 2.9 percent in the last financial year, even though a host
of multinational companies, including the Japanese brands Honda, Suzuki and
Yamaha, have recently entered the Indian market to compete with the big
domestic brands owned by the market leaders, Hero MotoCorp Ltd. andBajaj
Auto Ltd. (as well as other significant players such asTVS MotorsandMahindra
Two Wheelers).
The phase of exceptionally high growth is probably over, with the two-wheeler
market having come close to its maximum penetration level in a slowing
economy. But that might not be not such a bad thing. After surviving years of
ferocious competition domestically, and swiftly leading an undeveloped market
into a state of maturity, Indian two-wheeler manufacturers have begun to take
amore global view.As demand at home cools, the Splendors, Boxers, Passions
and Scootys are increasingly turning up on other continents.
The next phase of expansion for Indian two-wheeler companies will probably be
built on exports to other emerging markets in Asia, Africa and Latin America.
http://www.livemint.com/Money/5VfprDDt1C7Db9UMdBRzQN/Are-heady-growth-rates-history-for-twowheelers.htmlhttp://www.heromotocorp.com/en-in/http://www.bajajauto.com/http://www.bajajauto.com/http://www.tvsmotor.in/index.asphttp://www.mahindratwowheelers.com/http://www.mahindratwowheelers.com/http://www.livemint.com/Industry/lrpWHVjiR4oaisTN0UH8uO/Twowheeler-firms-eye-Africa-Latin-America.htmlhttp://www.livemint.com/Industry/lrpWHVjiR4oaisTN0UH8uO/Twowheeler-firms-eye-Africa-Latin-America.htmlhttp://www.mahindratwowheelers.com/http://www.mahindratwowheelers.com/http://www.tvsmotor.in/index.asphttp://www.bajajauto.com/http://www.bajajauto.com/http://www.heromotocorp.com/en-in/http://www.livemint.com/Money/5VfprDDt1C7Db9UMdBRzQN/Are-heady-growth-rates-history-for-twowheelers.html8/12/2019 Bhanu Reort
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This week, in the business newspaper Mint, Shally Seth Mohile took stock of
these trends in a report titled "Two-wheeler firms eye Africa, Latin America":
Indian two-wheeler makers, finding the going tough in a domestic market that is
close to saturation point, are breaking new ground in markets such as Africa and
Latin America. Rising labour costs in China, which is the biggest exporter of two-
wheelers to these markets, are helping the Indian cause. ...
In India, an economic downturn, high borrowing costs and increasing fuel prices
have slowed sales growth. Combined two-wheeler sales in India remained flat at
57,51,267 units in the five months from April to August, compared with 57,10,176
units in the same period a year ago, according to the Society of Indian Automobile
Manufacturers, or SIAM. After expanding at a brisk pace for several years, sales
rose by a mere 3% in fiscal 2013.
The story of Hero MotoCorp might be seen as a sign of the increased willingness
of the Indian automobile industry to think globally, a stark contrast to the
protectionism habitually sought by Indian industry in the decades after
independence.
In December 2010, the companypulled the plug on Hero Honda, its 26-year-old
joint venture with Honda Motor Co.,buying out the Japanese auto giant in India, a
transaction valued at close to $2 billion. Part of its reason for doing so was that it
was limited by the terms of the joint venture to exporting two-wheelers only to
those markets where Honda wasn't already present.
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Three years later, Hero remains the leading player in India's two-wheeler market
(even as its former partner, Honda, has set up its own operations in India and risen
quickly to beat outBajaj Auto for second position). But it has a lot of catching up
to do overseas.
In the years that Hero Honda had remained restricted to South Asia, Bajaj had
madesignificant progress in reaching out to emerging markets elsewhere. It is
now the market leader inNigeria,has a significant presence in many markets in
Latin America, and exports make up almost35 percent of its revenue from
motorcycle sales (it also makes three-wheelers). Eventually, the company expects
sales from exports to surpass domestic revenue.
Earlier this year, Heroannounced ambitious plans to expand the company's
presence to more than 50 countries by the end of the decade and keep pace around
the world with Bajaj. The company, which currently exports about200,000 two-
wheelers annually (Bajaj, by comparison, sells more than 1 million) said that it
would soon be selling two-wheelers in Kenya, Burkina Faso, Ivory Coast, Ecuador
and Peru, and that it planned to set up a manufacturing unit in Colombia. In a2011
profile of the company's chief executive officer, Pawan Munjal, Samar Srivastava
wrote of the company's plans to make up for lost time in the global market:
Tapping into Africa, Latin America and South East Asia, the three markets the
company plans to get into, will be a tough challenge. First off, the company has
decided that it will not play the price game there, which would bring it in direct
http://articles.economictimes.indiatimes.com/2013-08-03/news/41034016_1_scooter-india-scooter-sales-motorcycle-saleshttp://www.dnaindia.com/money/1601883/report-bajaj-auto-sees-exports-overtaking-local-saleshttp://www.globalbajaj.com/nigeria/englishhttp://articles.economictimes.indiatimes.com/2012-07-22/news/32788596_1_export-plans-motorcycle-sales-bajaj-autohttp://www.business-standard.com/article/companies/as-competition-heats-up-in-india-hero-heads-overseas-113091701118_1.htmlhttp://www.thehindubusinessline.com/companies/hero-motocorp-picks-up-49-stake-in-us-firm/article4868755.ecehttp://www.thehindubusinessline.com/companies/hero-motocorp-picks-up-49-stake-in-us-firm/article4868755.ecehttp://forbesindia.com/printcontent/30072http://forbesindia.com/printcontent/30072http://forbesindia.com/printcontent/30072http://forbesindia.com/printcontent/30072http://www.thehindubusinessline.com/companies/hero-motocorp-picks-up-49-stake-in-us-firm/article4868755.ecehttp://www.thehindubusinessline.com/companies/hero-motocorp-picks-up-49-stake-in-us-firm/article4868755.ecehttp://www.business-standard.com/article/companies/as-competition-heats-up-in-india-hero-heads-overseas-113091701118_1.htmlhttp://articles.economictimes.indiatimes.com/2012-07-22/news/32788596_1_export-plans-motorcycle-sales-bajaj-autohttp://www.globalbajaj.com/nigeria/englishhttp://www.dnaindia.com/money/1601883/report-bajaj-auto-sees-exports-overtaking-local-saleshttp://articles.economictimes.indiatimes.com/2013-08-03/news/41034016_1_scooter-india-scooter-sales-motorcycle-sales8/12/2019 Bhanu Reort
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competition with Chinese brands. So it is more likely that it will end up competing
with homegrown Bajaj and erstwhile partner Honda in these markets. The belief
inside Hero is that if Bajaj can export a million motorcycles, then there is no
reason why they cannot, in time, notch up similar numbers.
Mahindra Two Wheelersannounced last month that it was going to make three
models available in Latin America with the aim of doubling exports to 20 percent
of overall sales. Cumulatively, these developments signal a global ambition on the
part of one of the few manufacturing sectors in India that can hope to hold its own
against Chinese goods.
Two-wheeler sales in India are spread across three main product categories:
motorcycles, scooters, and mopeds. While in the previous decade, scooters were
the largest selling product category, in the current one, consumer preferences
appear to have shifted decisively in favour of motorcycles, which now account for
over 80 percent of total two-wheeler sales in India. The rural market, a key
demand driver for the two-wheeler industry as a whole, has been a significant
contributor to the shift in preference towards motorcycles. With their longer wheel
base and better mileage, motorcycles enjoy preference over scooters, especially in
country-sides, as they ride well over long distances and uneven roads, besides
being perceived to have a superior style quotient. However, given the practicality
of scooters, especially in urban areas, their demand is likely to be sustained. As a
product category, scooters have also undergone an image makeover, having
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metamorphosed into vehicles with cleaner technology, gearless options, and
features targeted at female commuters
Higher segment motorcycles in gain prominence although entry-
level bikes remain volume leaders
Motorcycle models with a sticker price of up to Rs. 40,000 comprise the entry -
price segment, which largely consists of 100cc bikes. This segment is currently
dominated by the CD Deluxe model of Hero Honda Motor Limited (HHML) and
Platina of Bajaj Auto Limited (BAL). The two wheelers being a relatively small
ticket item, has customers usually belonging to the most vulnerable and
economical section, within the universe of motorcycle buyers. The segments
profitability for two-wheeler manufacturers declined in 2007-08, with volumes
falling and price competition getting more intense. The Rs. 40-50,000 mid-price
segment is largely concentrated around 100-135cc models of various players and
account for bulk in volumes, which is approximately 63 percent in motorcycles.
HHML remains a strong market leader in the mid-price segment with its highly
successful Passion and Splendor models. BAL has Discover and Pulsar 135 in this
range. The premium price segment (Rs. 55,000 and above) is currently
dominated by BAL with its Pulsar range of motorcycles.
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RURAL MARKETING INITIATIVES
Honda tapped into the interiors of the country, with an aim to penetrate a larger
market with their two wheelers, especially in the rural areas. The company uses IT
for the co- ordination with the channel partners and updation of the sales details of
two wheelers in the rural areas. This helps the company in demand forecasting of
the two wheelers in the region. They initiated programs like Har Gaon, Har
Aangan and Service Har Jagan, in the rural areas of few states in India. There is a
network of over 2000 rural sales channel partners set up by Hero Honda, who
constantly extend these programs on the state and the national level. As a part of
the Ride Safe Programs, the company has appointed rural sales executives, who
conduct free check-ups, bike camps, loan melas, test ride camps, awareness camps
on programs like Genuine Spare Parts, GoodLife Program, Hero Honda
Advantage and educate people on safety riding, maintenance etc. Hero Honda also
conducted these camps in association with Monsanto, Godrej Aadhar, IIFCO etc
all across the country. Through these programs, Hero Honda aims to escalate the
volume growth of their two wheelers. Additionally, the company has set up many
kiosks and displays in the DCM Hariyali Kisaan Bazaar Centres in the rural areas
in the Indian states of Uttar Pradesh, Madhya Pradesh, Haryana, Punjab and
Uttaranchal, as a part of its branding activities.
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Chapter-2
Indian Two-Wheeler Industry: A Perspective
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Indian Two-Wheeler Industry: A Perspective
Automobile is one of the largest industries in global market. Being the leader in
product and process technologies in the manufacturing sector, it has been
recognised as one of the drivers of economic growth. During the last decade,
well-directed efforts have been made to provide a new look to the automobile
policy for realising the sector's full potential for the economy. Steps like abolition
of licensing, removal of quantitative restrictions and initiatives to bring the policy
framework in consonance with WTO requirements have set the industry in a
progressive track. Removal of the restrictive environment has helped restructuring,
and enabled industry to absorb new technologies, aligning itself with the global
development and also to realise its potential in the country. The liberalisation
policies have led to continuous increase in competition which has ultimately
resulted in modernisation in line with the global standards as well as in substantial
cut in prices. Aggressive marketing by the auto finance companies have also
played a significant role in boosting automobile demand, especially from the
population in the middle income group.
Evolution of Two-wheeler Industry in India
Two-wheeler segment is one of the most important components of the automobile
sector that has undergone significant changes due to shift in policy environment.
The two-wheeler industry has been in existence in the country since 1955. It
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consists of three segments viz. scooters, motorcycles and mopeds. According to
the figures published by SIAM, the share of two-wheelers in automobile sector in
terms of units sold was about 80 per cent during 2003-04. This high figure itself
is suggestive of the importance of the sector. In the initial years, entry of firms,
capacity expansion, choice of products including capacity mix and technology, all
critical areas of functioning of an industry, were effectively controlled by the State
machinery. The lapses in the system had invited fresh policy options that came
into being in late sixties. Amongst these policies, Monopolies and Restrictive
Trade Practices (MRTP) and Foreign Exchange Regulation Act (FERA) were
aimed at regulating monopoly and foreign investment respectively. This
controlling mechanism over the industry resulted in: (a) several firms operating
below minimum scale of efficiency; (b) under-utilisation of capacity; and (c)
usage of outdated technology. Recognition of the damaging effects of licensing
and fettering policies led to initiation of reforms, which ultimately took a more
prominent shape with the introduction of the New Economic Policy (NEP) in
1985.
However, the major set of reforms was launched in the year 1991 in response to
the major macroeconomic crisis faced by the economy. The industrial policies
shifted from a regime of regulation and tight control to a more liberalised and
competitive era. Two major results of policy changes during these years in two-
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wheeler industry were that the, weaker players died out giving way to the new
entrants and superior products and a sizeable increase in number of brands entered
the market that compelled the firms to compete on the basis of product attributes.
Finally, the two-wheeler industry in the country has been able to witness a
proliferation of brands with introduction of new technology as well as increase in
number of players. However, with various policy measures undertaken in order to
increase the competition, though the degree of concentration has been lessened
over time, deregulation of the industry has not really resulted in higher level of
competition.
A Growth Perspective
The composition of the two-wheeler industry has witnessed sea changes in the
post-reform period. In 1991, the share of scooters was about 50 per cent of the
total 2-wheeler demand in the Indian market. Motorcycle and moped had been
experiencing almost equal level of shares in the total number of two-wheelers. In
2003-04, the share of motorcycles increased to 78 per cent of the total two-
wheelers while the shares of scooters and mopeds declined to the level of 16 and 6
per cent respectively. A clear picture of the motorcycle segment's gaining
importance during this period is exhibited by the Figures 1, 2 and 3 depicting total
sales, share and annual growth during the period 1993-94 through 2003-04.
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National Council of Applied Economic Research (NCAER) had forecast two-
wheeler demand during the period 2002-03 through 2011-12. The forecasts had
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been made using econometric technique along with inputs obtained from a
primary survey conducted at 14 prime cities in the country. Estimations were
based on Panel Regression, which takes into account both time series and cross
section variation in data. A panel data of 16 major states over a period of 5 years
ending 1999 was used for the estimation of parameters. The models considered a
large number of macro-economic, demographic and socio-economic variables to
arrive at the best estimations for different two-wheeler segments. The projections
have been made at all India and regional levels. Different scenarios have been
presented based on different assumptions regarding the demand drivers of the two-
wheeler industry. The most likely scenario assumed annual growth rate of Gross
Domestic Product (GDP) to be 5.5 per cent during 2002-03 and was anticipated
to increase gradually to 6.5 per cent during 2011-12. The all-India and region-
wise projected growth trends for the motorcycles and scooters are presented in
Table 1. The demand for mopeds is not presented in this analysis due to its already
shrinking status compared to' motorcycles and scooters.
It is important to remember that the above-mentioned forecast presents a long-
term growth for a period of 10 years. The high growth rate in motorcycle segment
at present will stabilise after a certain point beyond which a condition of
equilibrium will set the growth path. Another important thing to keep in mind
while interpreting these growth rates is that the forecast could consider the trend
till 1999 and the model could not capture the recent developments that have taken
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place in last few years. However, this will not alter the regional distribution to a
significant extent.
Table 1 suggests two important dimensions for the two-wheeler industry. The
region-wise numbers of motorcycle and scooter suggest the future market for these
segments. At the all India level, the demand for motorcycles will be almost 10
times of that of the scooters. The same in the western region will be almost 20
times. It is also evident from the table that motorcycle will find its major market in
the western region of the country, which will account for more than 40 per cent of
its total demand. The south and the north-central region will follow this. The
demand for scooters will be the maximum in the northern region, which will
account for more than 50 per cent of the demand for scooters in 2011-12.
Table 1: Demand Forecast for Motorcycles and Scooters for 2011-12
2-Wheeler Segment Regions
South West North-Central East & North-East All India
Motorcycle2835(12.9)
4327(16.8)
2624(12.5)
883(11.1)
10669(14.0)
Scooter203(2.6)
219(3.5)
602(2.8)
99(2.0)
1124(2.08)
Note:Compound Annual Rate of Growth during 2002-03 and 2011-12 is presented inparenthesisSource: I ndian Automobile Industry: Optimism in the Air , Industry I nsight, NCAER
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The present economic situation of the country makes the scenario brighter for
short-term demand. Real GDP growth was at a high level of 7.4 per cent during
the first quarter of 2004. Both industry and the service sectors have shown high
growth during this period at the rates of 8.0 and 9.5 per cent respectively.
However, poor rainfall last year will pull down the GDP growth to some extent.
Taking into account all these factors along with other leading indicators including
government spending, foreign investment, inflation and export growth, NCAER
has projected an average growth of GDP at 6.7 per cent during the tenth five-year
plan. Its mid-term forecast suggests an expected growth of 7.4 per cent in GDP
during 2004-05 to 2008-09. Very recently, IMF has portrayed a sustained global
recovery in World Economic Outlook. A significant shift has also been observed
in Indian households from the lower income group to the middle income group in
recent years. The finance companies are also more aggressive in their marketing
compared to previous years. Combining all these factors, one may visualise a
higher growth rate in two-wheeler demand than presented in Table 1, particularly
for the motorcycle segment.
There is a large untapped market in semi-urban and rural areas of the country. Any
strategic planning for the two-wheeler industry needs to identify these markets
with the help of available statistical techniques. Potential markets can be identified
as well as prioritised using these techniques with the help of secondary data on
socio-economic parameters. For the two-wheeler industry, it is also important to
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identify the target groups for various categories of motorcycles and scooters. With
the formal introduction of secondhand car market by the reputed car
manufacturers and easy loan availability for new as well as used cars, the two-
wheeler industry needs to upgrade its market information system to capture the
new market and to maintain its already existing markets. Availability of easy
credit for two-wheelers in rural and smaller urban areas also requires more
focussed attention. It is also imperative to initiate measures to make the presence
of Indian two-wheeler industry felt in the global market. Adequate incentives for
promoting exports and setting up of institutional mechanism such as Automobile
Export Promotion Council would be of great help for further surge in demand for
the Indian two-wheeler industry.
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Indian Two-Wheeler Industry: Rural India to be the next growth frontier
India is seeing the penetration of two-wheelers increasing at a rapid pace driven by
the rise in the household incomes, reducing trend in excise duties and hitherto easy
availability of two-wheeler finance. Though the two wheeler industry is presently
passing through a rough patch, we project the long term outlook to be healthy with
increase in penetration levels.
This report on The Indian Two-Wheeler Industry gives valuable insight of the
industry encompassing its evolution in India, its characteristics, demand drivers,
Government regulations and trends in duties, commentary on industry players and
competition and the trends in domestic sales and exports. The trends are analysed
in depth for various vehicle segments, namely motorcycles, scooters, mopeds and
electric two-wheelers, further sub-classified based on the engine capacity. Various
segments and sub-segments are appropriately associated with the relevant products
and companies for enhancing the understanding of the competitive scenario in the
industry. The cost analysis presented in the report will help the reader identify the
critical cost items and their trends. The company section in the report provides
detailed profiles of the top three players in the industry, including their financial
and operational data and product range.
The report presents our forecasts of domestic as well as export sales for each of
the next five years till FY 2014, separately for all the segments. We have
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developed a robust model for forecasting domestic sales. It takes into account the
cost of owning a two-wheeler, age demographics and income distribution of the
populace. It also attempts to quantitatively adjust for qualitative factors like
current economic scenario and outlook, consumer confidence level and persuasive
sales techniques of dealers and vehicle financers.
We have done a cross country analysis and penetration of two wheelers for the 20
big cities vis a vis the income levels in those cities, other urban areas and rural
areas and quantified the opportunity in each of these markets. This analysis helps
gauging the opportunity for two-wheeler manufacturers in different regions across
India.
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Ignition Kick/electronic Kick/Electronic Kick/Electronic
Engine
Power(bph)
6.5-9 7-8 and above 2-3
Weight(Kg) 90-100 >100 60-70
Fuel Efficiency
(kms Per liter)
50-75 50-80+ 70-80
Load carrying
Lowest
High Highest Low
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Segmental Market Share
The Indian two-wheeler industry has undergone a significant change over the past
10 years with the preference changing from scooters and mopeds to motorcycles.
The scooters segment was the largest till FY 1998, accounting for around 42% of
the two-wheeler sales (motorcycles and mopeds accounted for 37%) and 21 % of the
market respectively, that year). However, the motorcycles segment that had
witnessed high growth (since FY1994) became larger than the scooter segment in
terms of market share for the. first time in FY1999. Between FY1996 and
9MFY2005, the motorcycles segment more than doubled its share of the two-
wheeler industry to 79% even as the market shares of scooters and mopeds stood
lower at 16%> and 5%, respectively.
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Trends in Segmental Share in I ndustry Sales (FY1996-9MFY2005)
While scooter sales declined sharply by 28% in FY2001, motorcycle sales reported
a healthy growth of 20%), indicating a clear shift in consumer preference. This
shift, which continues, has been prompted by two major factors: change in the
country's demographic profile, and technological advancements.
Over the past 10-15 years the demographic profile of the typical two-wheeler
customer has changed. The customer is likely to be salaried and in the first job.
With a younger audience, the attributes that are sought of a two-wheeler have also
changed. Following the opening up of the economy and the increasing exposure
levels of this new target audience, power and styling are now as important as
comfort and utility.
The marketing pitch of scooters has typically emphasized reliability, price,
comfort and utility across various applications. Motorcycles, on the other hand,
have been traditionally positioned as vehicles of power and style, which are rugged
and more durable. These features have now been complemented by the
availability of new designs and technological innovations. Moreover, higher
mileage offered by the executive and entry-level models has also attracted interest
of two-wheeler customer. Given this market positioning of scooters and
motorcycles, it is not surprising that the new set of customers has preferred
motorcycles to scooters. With better ground clearance, larger wheels and better
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Supply
Manufacturers
As the following graph indicates, the Indian two-wheeler industry is highly
concentrated, with three players-Hero Honda Motors Ltd (HHML), Bajaj Auto
Ltd (Bajaj Auto) and TVS Motor Company Ltd (TVS) - accounting for over 80% of
the industry sales as in 9MFY2005. The other key players in the two-wheeler
industry are Kinetic Motor Company Ltd (KMCL), Kinetic Engineering Ltd
(KEL), LML Ltd (LML), Yamaha Motors India Ltd (Yamaha), Majestic Auto
Ltd (Majestic Auto), Royal Enfield Ltd (REL) and Honda Motorcycle & Scooter
India (P) Ltd (HMSI).
Although the three players have dominated the market for a relative long period
of time, their individual market shares have undergone a major change. Bajaj Auto
was the undisputed market leader till FY2000, accounting for 32% of the two-
wheeler industry volumes in the country that year. Bajaj Auto dominance arose
from its complete hold over the scooter market. However, as the demand started
shifting towards motorcycles, the company witnessed a gradual erosion of its
market share. HHML, which had concentrated on the motorcycle segment, was
the main beneficiary, and almost doubled its market share from 20% in FY2000 to
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40% in 9MFY2005 to emerge as the market leader. TVS. On the other hand,
witnessed an
overall decline in market share from 22% in FY2000 to 18% in 9MFY2005. The
share of TVS in industry sales fluctuated on a year on year basis till FY2003 as it
changed its product mix but has declined since then.
Impact Analysis - Two wheelers
Robust demand to continue
After an 11.4 per cent growth in 2003-04, two-wheeler sales surged by over 17
per cent year-on-year (Y-o-Y) for the first 10 months of 2004-05. Sales growth, led
by the sales of motorcycles, escalated consistently during the April to January
period due to increasing household incomes, easy availability of finance, and the
success of certain new models launched during the period.
Two-wheeler demand is expected to grow at a healthy rate of 11-12 per cent from
2004-05 to 2005-06. Rising household incomes, frequent new model launches and
the increasing penetration of finance and distribution will act as key growth
drivers.
The motorcycle segment witnessed stupendous growth in 2004-05 (20.3 per cent
Y-o-Y) after a moderate performance (growth of 13.7 per cent Y-o-Y) in 2003-
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04. The buoyant growth in this segment will be maintained on account of the entry
of global players like Honda Motors and Suzuki (entry expected in 2005) and the
domestic players' growing focus on motorcycles. The segment is expected to grow
by 12-13 per cent in 2005-06.
Led by the ungeared segment, scooter sales are likely to grow by 8 per cent, while
moped
Sales are expected to stagnate or decline marginally in 2005-06.
Budget Impact
Neutral impact on the two-wheeler segment
A. The reduction in the import duty on used two-wheelers will not affect the
industry...
B. The hike in the excise duty on steel will not affect the industry, as cenvat credit
can
be availed for the same.
C. The extension up to March 2007 of 150 per cent deduction on R&D
expenditure
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will marginally benefit domestic two-wheeler players, such as TVS Motors,
Bajaj
Auto and Kinetic.
D. The reduction in personal tax rates will increase household disposable income,
which is a positive for two-wheeler demand.
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Prices and Duties.
Two wheelers Tariffs
(Per cent ) Customs Excise
2009-10 2010-11 2011-12 2012-13
Two wheelers 61.2 61.2 16.3 16.3
Steel items 5.1 5.1 12.2 16.3
Engines and engine
parts
20.4 15.3 16.3 16.3
Other components 20.4 15.3 16.3 16.3
Secure: CRIS INFAC
Major Players
Company name Impact Impact factors
Bajaj Auto Ltd. Neutral A,B,C,D
Honda Motors Ltd. Neutral A,B,C,D
TVS Motors Company
Ltd.
Neutral A,B,C,D
Hero Motorcorp Neutral A,B,C,D
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CHAPTER-3
ORGANIZATIONAL PROFILE OF THE COMPANY
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History and Background of Honda Motorcycles
Honda Motorcycle and Scooter India, Private Limited (HMSI)is the wholly
owned Indian subsidiary ofHonda Motor Company, Limited,Japan. Founded in
1999, it was the fourth Honda automotive venture in India, afterHero
Honda,Kinetic Honda Motor Ltd andHonda Siel Cars India.
The entry of Honda into the Indian market as HMSI began with the launch of
theHonda Activa, a 100 cc scooter. A slightly modified trendier version of the
Activa was soon launched, as theHonda Dio.Honda Eterno was launched
thereafter to add to the portfolio of HMSI's scooters.
TheHonda Unicorn was the firstmotorcycle released by HMSI. TheHonda
Shine has since been released.
The Honda story is the story of one man, Soichiro Honda, and his unparalleled
achievement of bringing motor cycles to the masses. Soichiro Honda was a racer,
a businessman, and a manufacturer. But most of all he was a dreamer. He dreamed
of a better way of making piston rings, founded a small company, and began
production. He dreamed of giving people everywhere an economical form of
transportation, and began producing small motorcycles, including one built in
1949 called the D-Type Dream.
He also loved racing too. So his company built bigger and faster machines, two,
four, five and six-cylinder race bikes and won the Isle of Man.
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Honda Dio
The Honda Dio is a stylish version of the Honda Activa, having almost the same
technical specifications. The engine is slightly more powerful. The Dio is targeted
at young people. Honda calls it India's first "motoscooter".
Honda Eterno
Advertised as the "Geared Surprise" prior to launch, the Honda Eterno is a 4-
stroke, 150 cc scooter. Honda claims that the Eterno gives the best mileage in its
class.
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Honda Unicorn
The Honda Unicorn is HMSI's first motorcycle for the Indian market. It is
powered by a newly developed 4-stroke, 149 cc engine. The Unicorn is the first
bike in India to incorporate the mono suspensionsystem. The bike is touted as the
"Flying Machine" by Honda.
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Honda Shine
Marketed as the "Dream Machine", the Honda Shine has the newly developed 125
cc Optimaxengine. The motorcycle is targeted at the mid-range motorcycle
segment.
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Honda CBF Stunner
This bike is a 125 cc bike with a sporty fairing, producing approximately 11 bhp.
Honda CB Unicorn Dazzler
This bike is a stylish commuter. It has the same 149.1 cc Unicorn's engine, but has
high lift cams. It produces 14 bhp of power and around 12.8 NM of torque.
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The factory
The HMSI factory is built on a plot of 52 acres (210,000 m2)
atManesar,Gurgaon district ofHaryana. Construction of the factory was
completed in January 2001. The initial production capacity was 100,000 scooters
per year, which is currently 6,00,000 scooters. The motorcycle production capacity
is 10,00,000 per annum. The initial investment was Rs. 215crores and has now
grown to 800 crores.
ISO 14001
Current performers of major players in the market
Two Wheeler flash update -
The two-wheeler majors announced impressive volume numbers for
October 2010. The motorcycle volumes of the top three players registered a 23.2%
yoy and 15% mom growth during October 2010 to 463,649 units. This was in spite
of shradh, which is considered an inauspicious period, during the first week of
October. All the top three players registered healthy numbers, which is an
encouraging sign for the coming festive season.
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Honda Motors Ltd
Table: Motorcycle volumes
2010 2011 Growth (%)
April 196,024 134,318 45.9
May 212,177 163,582 29.7
June 200,922 160,889 24.9
July 205,654 143,141 43.7
August 191,635 145,730 31.5
September 217,507 157,583 38.0
October 245,475 207,472 18.3
Cumulative sales during April to September in FY05 increased by 32.1% yoy to
1,469,394 units.
Exports during October 2010were up 65% yoy to 5,558 units.
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Honda Motors Ltd.
Table: Motorcycle sales volume
2010 2011 Growth (%)
April 90,532 71,074 27.4
May 87,663 87,217 0.5
June 97,595 82,239 18.7
July 103,260 77,966 32.4
August 106,745 76,487 39.6
September 126,420 95,680 32.1
October 143,491 107,115 34.0
Cumulative sales for motorcycles during April to October in FY05 grew by
26.4% yoy to 755,706 units. Honda Motors sales during October 2010 increased
by 13.5% on a mom basis, largely due to sales of its Shine and Activa models
that have been accepted well in the market. With this, it improved its market.
Total sales for Hero Honda Auto increased 12.6% yoy to 995,111 units
during the April to October 2009 period as against 884,001 units between April to
October 2010.
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Activa volumes stood at 90,222 units while the Discover sold 19,632 units in
October. The Shine models continued their leadership in the premium segment by
selling 23,107 units.
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Hero Motor Corp.
Hero Honda is a part of the Hero Group of companies. Hero Honda Motor
Limited was established in 1984 in joint venture with Honda Motors of Japan to
manufacture motorcycles. The Hero Group and Japans Honda Motor Company
each owns 26 percent stake in Hero Honda. The remaining shareholding is in with
financial institutions and public. Hero Honda is a leader in the two wheeler
segment in the country, and even claims to be the worlds largest two wheeler
company in its advertising. It produces motorcycles Ambition, Splendor,
Passion, CD100 SS, CBZ, Karizma, and Dawn. During the year ended
march 31, 2003; Hero Honda has recorded a 17.7 percent rise in sales at 1.67
million motorcycles with its turnover of Rs. 5,194.58 crore.
Plant Location:
HHML had two plants:
One located at Dharuhera, Haryana near Delhi
And other at Gurgaon, 30 kms away from the existing plant.
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PRODUCTS OF HONDA
Honda Aviator
Honda Activa
Honda Dio
Honda Eterno
Honda Unicorn
Honda Shine
Honda CBF Stunner
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TVSSuzuki
A leading producer of automotive components, the TVS group was formed
as a transport company in 1911. Originally incorporator in 1982 as India
motorcycles Pvt. Ltd. to produce motorcycles in collaboration with Suzuki, Japan,
the company later went public under the banner Ind-Suzuki Motorcycles Limited,
which was later renamed TVS Suzuki Limited. The perfect blend between the best
design engineers and the latest technology made TVS-Suzuki one of the leading
two-wheeler manufacturers in the country.
Product range
TVS Victor GL109 cc. Victor GLX- 124cc, Centra- 99 cc , Fiero F2, FX-
147 .5 cc, Scooty pep- 75 cc.
Plant Location
TVS first plant is located at hosur, in the state of Tamil Nadu. Second plant
at Byathlli village near Mysory about 70 kms from Bangalore (Karnataka) for
manufacture of scooter.
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Yamaha (YML)
EYML was a joint venture between Escort Ltd. the flagship company of the
Escorts Group, and the global giant, Yamaha Motors Co. Ltd. of Japan. Ever since
dinging the first technical assistance agreement between the two companies in
1985, Yamaha Motor company Limited (YMC) and Escorts motorcycles. In
November 1995, the tow companies established the joint venture company,
Escorts Yamaha Motors Limited, based on a 50-50 capital investment. In June
2000, that investment ratio was changed to 74% for YMC and 26% for Escorts
Limited, and YMC assumed managerial control of the company with the name
being changed to Yamaha Motors Escort Limited (YMEL). It then undertook
numerous measures to build the companys motorcycles manufacturing and
marketing operations. In June 2001, an agreement was reached between YMC and
Escort Ltd. under which YMC acquired the remaining 26% of the stock held by
Escorts. The stated aims of this move to make YMEL a 100% YMC subsidiary
were to increase the overall speed of managerial and business decision, to improve
produce development capabilities and production efficiency, while also
strengthening the marketing organization.
Products:
Crux -R100 cc, Enticer/ Deluxe124 cc, Fazer123 cc , Libero LX106
cc.
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Feature Challenges for Honda Motors
Indian companies e.g. LML, Kinetic motors try to catch the market share of major
players. In addition to domestic competition, another competitive threat took shape
in the form of cheap Chinese imports when import restrictions were lifted in 2001.
A relatively unknown company named Monto Motors in Alwar (Rajasthan) was
the first to import Semi-Knocked- down (SKD) kits form one of the top
motorcycle manufactures in Chine. A 72 cc motorbike form China cost the
customer Rs. 27,000 on road, a 125 cc would cost Rs. 33,000, and a 250cc
motorbike would cost Rs. 36,000. the Indian models seemed frightfully expensive
in comparison. In early 2002, a moped cost around Rs. 22,000, a 100 cc motorbike
cost around Rs. 45, 000, and a 125 cc motorcycle cost around Rs. 50,000. The
domestic tow wheeler industry was bounds to feel the pinch, especially in the mid
and lower price segments of the motorcycle, scooter, and moped segments.
THE Indianautomobile two-wheeler industry reported a strong double digit
volume growth of 17 percent in Q1, 2011-12 (YoY); even as several other
automobile segments showed signs of a cyclical dip in growth during this period.
While the northward movement in macro-economic variables including inflation,
fuel prices and interest rates has been the nemesis of the automobile industry at
large, the two-wheeler industry has been relatively less impacted so far. ICRA
believes that the resilience shown by the two-wheeler industry volumes is likely to
persist, a large base not withstanding, with the industry looking on course to
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record yet another year of double- digit growth. However, the situation may
change in the event of higher than expected decline in Indias GDP growth or
persistent inflationary pressures over a longer period.
Overall, ICRA expects the two-wheeler industry to report a volume growth of ~13
percent in 2011-12 and a volume CAGR of 10-12 percent over the next five years
to reach a size of 21-23 million units by 2015-16. Our growth outlook is built on
the strength of the various structural growth drivers associated with the two-
wheeler industry comprising of favorable demographic profile, moderate two-
wheeler penetration levels (in relation to several other emerging markets), under
developed public transport system, growing urbanization and expected strong
replacement demand, besides moderate share of financed purchases.
Segment-Wise Analysis
The strong double-digit volume growth of 17.5 percent recorded by the
motorcycles segment in Q1, 2011-12 was not consistent across segments Entry,
Executive and Premium. The volume growth was a blend of: The flattish growth
(~three percent) of the entry segment (bikes having price less than `40,000) which
accounts for around 16percent of the total domestic motorcycles sales volumes.
The steady growth (~17 percent) of the executive segment (bikes in the `40,000-
50,000 price range), which accounts for around 65 percent of the total domestic
motorcycles sales volumes.
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Chapter-4
CUSTOMER SATISFACTION TOWARDS
TWO WHEELER
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About customer satisfaction
The two-wheeler market in India is the biggest contributor to the automobile
industry, with a size of `100,000 million. Today's customers are becoming harder
to please. They are smarter, more price conscious, more demanding, less
forgiving, and collect information about many more competitors with equal or
better offers. The interaction between consumer expectations and actual product
performance produces either satisfaction or dissatisfaction. At the higher levels of
satisfaction, customers are likely to re-purchase and even speak well of the
company and its products. The study aimed to assess expectations, perceptions,
and post purchase behaviour of Mahindra scooter customers, which will enable
both the manufacturer and the distributors to know about the customers'
expectations, perceptions, and post purchase behaviour, that in turn helps to
reduce the post purchase dissonance and aids in enhancing customer satisfaction.
Customer satisfaction occurs when the experience obtained from transaction match
expectation. Customer may forget experience that match expectation although,
customers will generally notice and also remember those experience that deviated
from expectation.
This stage is particularly known as dissatisfaction results in to a feeling of dissonance
in case where an experience obtains from product/sendee falls short of expectations.
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In opposite situation i.e. state of satisfaction it may result in to repurchase of product
/service as case may be.
One has to accept the fact that people i.e. employee in an organization play a crucial
role in determining, and delivering of the level of service quality and ultimately
consumers satisfaction. It has been observed that even manufacturing organization
have gradually realized the fact that along with tangible offering, intangible customer
service the only possible distinct way to cerate a point of differentiation and
positioning in to the competitors. It is needless to state companies need to manage
customer contact effectively where the desired outcome is a satisfied customer.
Customer's satisfaction data customer data provides early warning sing of problems
before they show up in revenue and down in profit.
Customer satisfaction
Customer satisfaction is the to success. Getting your customer to tell you Whats
good about your products or services, and where you need improvement Helps
you to ensure that your business measures up to their expectations. The Attached
file contains a customer satisfaction survey form designed to help gather. This
important information . it was designed to make it easy for customer to fill out and
To make it easy for you to quickly customize to exactly match your company
activities.
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It also includes suggestion for distributing the form. Ensuring that customer that
will Return the form, and following up on comments.
Here are a few principles given by Steve smith.
The goal is to exceed customer expectation.
The more the employee satisfaction, the more the customer satisfaction.
Customer satisfaction is necessary, but not sufficient how many times do
satisfied customer switch brands? Answer, a lot.
All initiative must be derived from defined problems. For instance ,
dissatisfied customers dont buy. Thats an example of a clear problem.
Initiative must produce either measurable or conceptual benefits.
Distinguish between the two benefits types.
The plan must be clear and congruent.
The plan must be resonate with the VP and at least a minority of managers
who agree with the objective and initiative.
The following items amplify customer satisfaction given by stevesmith
Quality of a companys product and service.
Quality of the relationship between the co agent the customer.
Responsiveness
Thoroughness
Creativity
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Customer satisfaction: Honda leaves other brands
sniffing the dust
Honda ranks the highest in customer satisfaction with after-sales service in
Thailand, according to the JD Power Asia Pacific 2013 Thailand Customer Service
Index (CSI) Study.
Among the 10 brands included in the study, Honda ranks highest in overall
customer satisfaction for the first time since the study's inception in 2000, with an
overall CSI score of 902. Honda performs particularly well in service initiation,
service advisory and service facility, the study stated.
The 2013 CSI Study, now in its 14th year, measures overall satisfaction among
vehicle owners who visit an authorised dealer/service centre for maintenance or
repairs during the first 12 to 24 months of ownership. The study is based on
responses from 3,463 new-vehicle owners who purchased their vehicles between
January 2011 and April 2012 and took their vehicles for service to an authorised
dealer or service centre between July 2012 and April 2013. The study was fielded
between January and April 2013.
According to JD Power, the process of initiating the service experience and
handing the vehicle over to service-centre staff has become the second most
important area for overall customer satisfaction with after-sales service at
authorised service centres. The study measures new vehicle owner satisfaction
with the after-sales service process by examining dealership performance in five
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factors: service initiation; service advisory; service facility; vehicle pick-up; and
service quality. Dealership service performance is reported as an index score based
on a 1,000-point scale. The contribution of the service initiation factor to the
overall CSI index has increased to 26 per cent in 2013 from 12 per cent in 2012.
Service quality, while remaining a factor with the most impact on overall
satisfaction, decreases to 29 per cent from 42 per cent in 2012.
"As service quality improves and the traffic at service centres dramatically
increases as a result of market growth, customers are concerned about long queues
and have therefore become increasingly interested in the appointment process, a
dealer's flexibility to accommodate their schedule and how prompt and thorough
the handover process is," said Loic Pean, senior manager at JD Power Asia
Pacific.
Overall customer satisfaction averages 889 in 2013, a 43-point improvement from
2012. Across the industry, satisfaction has increased year over year in all factors,
particularly in service advisory (+48 points) and service quality (+47). Satisfaction
scores for all nameplates have also improved, compared to 2012.
"Despite the growing number of customers, service centres have improved at
attending to customers more promptly, putting them at ease and fully
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understanding their service needs, ensuring a more efficient service," said Pean.
"On the other hand, cost estimates are provided less often in 2013, and insufficient
seating space in the service centre waiting area during peak service hours has
become an issue. Dealers may be able to avoid this situation and increase
satisfaction among their customers by notifying them in advance and encouraging
them to come during off-peak hours, particularly on weekdays or later in the
morning."
The study also finds that among the reasons customers select their service centre is
that vehicle owners are increasingly considering mechanics' skills, speedy service
and the use of original equipment and parts, and also positive recommendations
from acquaintances and their own past experience.
"Customers have alternative servicing options, and delivering a superior service
experience is starting to pay off for dealerships," said Pean. "As overall
satisfaction with after-sales service dramatically increases, we indeed observe that
a much greater number of customers are not only likely to revisit their service
centre for post-warranty service and recommend it to their friends and family, but
are also willing to travel a longer distance to get there."
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Against this backdrop, Honda has developed word-less service information
(in the form of a pair of leaflets) for customers in emerging nations as well
as picture-based training materials as part of an effort to value customer in
these markets.
The leaflets, which comprise maintenance and repair editions, are designed
so that they can be easily understood, even by customers who cannot read,
so that they can enjoy their motorcycle with peace of mind over the long
term. In fiscal 2013, Honda Manufacturing (Nigeria) distributed a hanging,
laminated chart that could be displayed even where there were no walls. In
addition to arranging for it to be hung at motorcycle taxi stations for viewing
by motorcycle taxi drivers, a key customer group, the company sent the
charts to repair shops.
The picture-based training materials consist of a careful compilation of the
minimum necessary work procedures so that instructors can offer training
anywhere even electricity infrastructure is poor in the field.
Honda Manufacturing (Nigeria) includes a leaflet with each motorcycle sold.
Working with associations of local repair shops, the company has also held
45 training tours during 2012, reaching a total of 1,830 mechanics so far.
During 2013, it plans to continue the program, offering 30 tours for 1,200
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mechanics.
In addition to providing educational opportunities to the market in order to
create an environment in which customers can receive maintenance and
repair service whenever and wherever they need by going beyond dealer
service, these activities help customers maintain the performance of their
motorcycles and use them safely.
They also help make ownership more economical by improving fuel
economy, lowering CO2emissions, and lengthening the motorcycle service
life. Going forward, Honda will strive to improve customer satisfaction by
providing higher-quality service to offer peace of mind and trustworthiness
to customers worldwide.
A roadside service business working on motorcycles, a common sight in
emerging nations
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Picture-based training
Checking training materials an actual motorcycle
A motorcycle taxi rider looks at a hanging chart
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Chapter-5
RESEARCH METHODOLOGY
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Objective of the study
The following were the objectives of the study;
To study the customer perspective about Honda two wheeler.
To generate a demographic profile of Honda owners.
To know about the satisfaction level of Honda users.
To explore the reasons for preferring Honda two wheeler.
Data was collected from both sources relating to the objectives of study
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NEED FOR THE STUDY
There exists a severe competition in the automobile industry, especially in two
wheeler sector. All the companies are trying to get dominant market share and new
models are introduced into the market with new features.
The company wants to know the preference level of their customer and gauge the
future expectation. The company wants to know the brand preference in
themotorcycles with a special reference to Honda, to lead them in product design,
the modification of product attributes and consequent benefits to the user, with
reference to the models on offer as well as now models.
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Scope of Project
This project deals with over all working of Honda Motors. The only thing Honda
Motors needs to worry about is the goals it has to achieve. Honda Motors
primary goal is to achieve the overall satisfaction of the customers by introducing
new & advantageous for customers so as to gain more & more profit for the
company. The scope of Honda Motors wide & growing with a rapid rate.
The basic scope of the project deals with study of market by offering Value Added
Services and retention of the Customer.
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Chapter-6
Analysis and Interpretation
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Q-2 Gender /sex..
No of male No. of female
90 10
90% two-wheeler users are male and only 10% users are female
Fig .1-Showing Gender
90%
10%
male
female
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Q.3- What kind of 2-wheeler do you own?
Type of 2-
wheeler
Scooter/Scooty Motorcycle Total
No. of 2-
Wheeler
66 34 100
Fig: 2Showing % of kinds of two-wheelers
20%
80%
Scooter/Scooty Motorcycle
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Q.4 - Please mentioned the Model
Name of the brand No. of Motorcycle Percentage
Honda Activa 47 47%Honda Dio 19 19%
Honda Unicorn 7 7%
Honda Shine 9 9%
Honda CBF Stunner 14 14%
Honda CB Unicorn Dazzler 4 4%
Total 100 100%
Fig.3- Showing % of Motorcycle brand
47%
19%
7%
9%
14%4%
Honda Activa Honda Dio Honda Unicorn
Honda Shine Honda CBF Stunner Honda CB Unicorn Dazzler
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Q.5 What was the mode of purchase?
Cash down Financed Total
80 20 100
Fig. 5Showing % of Mode of purchase
80%
20%
Cash down Financed
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Q. 6- In case of (ii) who finance the purchase of two-wheeler? (For Honda
Motorcycle)
Family
member
Bank Dealer Total
40 30 30 100
Fig.7- Showing % of Mode of Finance of Honda Users
Around 40% financed by family member, 30% financed by bank and
around 30% financed by dealer.
40%
30%
30%
Family member Bank Dealer
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Q 8- please indicate your satisfaction using the following scale:
Statement Total 100 users
H.S. S. N.S.N.D D. S.D
Overall performance 20 30 20 20 10
After sale service 14 26 20 30 20
Behaviourism ofDealer
15 20 25 30 10
Behaviours ofdealers Staff
20 30 25 15 10
Fig.12- Showing satisfaction levels among Honda owners
20
30
20 20
10
14
26
20
30
20
15
20
25
30
10
20
30
25
15
10
0
5
10
15
20
25
30
35
H.S. S. N.S.N.D D. S.D
Overall performance
After sale service
Behaviourism of Dealer
Behaviours of dealers Staff
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.
Q-9 What is your primary occupation?(a) Businessman (b) Govt. Employee (c) Private Employee(d) Housewife (e) Student (f) Other (Please specify)
0%
100%
Scooter/Scooty 20
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Q-10 Will you suggest anybody to purchase Honda two wheeler?(a) Yes (b) No
Honda Unicorn
44%
Honda Shine
56%
Chart Title
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Q-11 According to your opinion which companys two wheeler arebetter at present.
(a) Honda (b) Bajaj (c) Yamaha (d) Hero(e) Others (Please specify)
63%
21%
5% 11%
Honda Bajaj Yamaha Hero
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Q-12 Do you want any changes in Honda two wheeler?(a) Yes (b) No
100%
40
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Q-13 Why are you choose Honda two wheeler?(a) Good quality (b) Good features (c) Affordable Price(d) High brand name (e) Others
30%
40%
10%
10%
10%
Good quality Good features Affordable Price
High brand name Others
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Limitation
1. Mostly people who may be right responded were not interested because
they had less time to show their feeling /experiences thus the responses may
not be genuine.
2. Relatively medium sample size was chosen due to time constraints.
3. It is particularly impossible for a smaller segment of a population (100
respondents) to exactly represent the population.
4. There are no specific criteria for the selection of companies or brand except
the availability of complete information from a variety of sources such as
magazines journals and Internet etc.
5. As the project involves marketing research using questionnaire, views
expressed by respondents are confined to the elements of questionnaire.
6. The data emerged from the study may not be the true picture as study was
restricted only to certain parts of Aligarh.
7. Some respondents were not interested in the questionnaire so they filled the
information with less interest.
8. Time and cost were two other important factors.
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Analysis
THE Indianautomobile two-wheeler industry reported a strong double digit
volume growth of 17 percent in Q1, 2011-12 (YoY); even as several other
automobile segments showed signs of a cyclical dip in growth during this period.
While the northward movement in macro-economic variables including inflation,
fuel prices and interest rates has been the nemesis of the automobile industry at
large, the two-wheeler industry has been relatively less impacted so far. ICRA
believes that the resilience shown by the two-wheeler industry volumes is likely to
persist, a large base not withstanding, with the industry looking on course to
record yet another year of double- digit growth. However, the situation may
change in the event of higher than expected decline in Indias GDP growth or
persistent inflationary pressures over a longer period.
Overall, ICRA expects the two-wheeler industry to report a volume growth of ~13
percent in 2011-12 and a volume CAGR of 10-12 percent over the next five years
to reach a size of 21-23 million units by 2015-16. Our growth outlook is built on
the strength of the various structural growth drivers associated with the two-
wheeler industry comprising of favorable demographic profile, moderate two-
wheeler penetration levels (in relation to several other emerging markets), under
developed public transport system, growing urbanization and expected strong
replacement demand, besides moderate share of financed purchases.
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Segment-Wise Analysis
The strong double-digit volume growth of 17.5 percent recorded by the
motorcycles segment in Q1, 2011-12 was not consistent across segments Entry,
Executive and Premium. The volume growth was a blend of: The flattish growth
(~three percent) of the entry segment (bikes having price less than `40,000) which
accounts for around 16percent of the total domestic motorcycles sales volumes.
The steady growth (~17 percent) of the executive segment (bikes in the `40,000-
50,000 price range), which accounts for around 65 percent of the total domestic
motorcycles sales volumes.
The fast growing (~30 percent) premium segment (bikes having price greater than
`50,000) which accounts for around 19 percent of total domestic motorcycles sales
volumes.
The Indianautomobile motorcycles segment continues to be dominated by Hero
MotoCorp (erst while Hero Honda) which has been recording sequential gains in
market share over the last three quarters. The top three players accounted for 88.2
percent of the industrys volumes in Q1, 2011-12 (92 percent in 2007-08), with
Honda Motorcycles having overtaken TVS since Q1, 2010-11 as the third largest
player, behind Hero MotoCorp and Bajaj Auto.
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Chapter-6
Conclusion and Suggestions
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Recommendation:
After 2000 the market share of mopeds has been decreasing and preference
for motorcycles and scooters/ scooty has been on the rise.
Around 66% respondents were scooter owners.
After Honda, Bajaj is the second largest motorcycle company in Aligarh.
Honda Shine is competitor of Bajaj pulsar DTSi in the primium segment.
Bajaj, Yamaha, TVS are the main competitors of Honda.
Fuel efficiency, looks, sitting comfort safety featured, pick up maintenance
cost of two wheeler, engine technology, strength of material handling are
very important features for Honda users.
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Suggestions
Most of the Honda owners are satisfied with their vehicles over all
performance and after sales service being offered by the company..
Most of the customers were found to be talking along with them, their
father as well as friends during the final visit for purchase.
Few customers are not satisfied with the behaviour of dealer / staff so
company should brief / instruct than that how to behave with the customer.
There should be training program for employees of the dealer where they
should be taught the benefits of creating their customers well.
We have to take some actions to create new changes for innovation Honda
two wheeler.
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Conclusion
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Conclusion
The growth of the Indian middle class along with the growth of the economy over
the past few years has attracted global auto majors to the Indian market. India
provides trained manpower at competitive costs making India a favoured global
manufacturing hub. There has been a steady economic revival in the market
complimented by high disposable incomes. An amalgamation of increasing per
capita incomes, growing working population and growth of Indian middle class
has been the major growth drivers for the two wheeler industry.
There has been an increasing demand for automobiles and auto components in the
Indian and globally automobile segment. In India, there is a constant focus of
research and development and product development. There has been a steady entry
of global players in the automobile market introducing many products in various
segments of automobiles namely, the two wheelers, three-wheelers, four-wheelers
etc.
The two wheeler industry per say has recorded a healthy volume growth in 2012-
13, largely due to favourable demand and supply factors. The most important
factor that the two wheeler industry should emphasise on is sustaining this growth
over a longer period of time. Since, the industry landscape has been evolving,
there will be many competitors entering the market by positioning and
repositioning product portfolios, innovating products to serve new market segment
and emphasising more on the rural and semi-urban markets.
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Hero Honda Motors Ltd is one of the major players in the two wheeler segment.
The company has been conferred the title of being the largest two wheeler
manufacturing company in India and the Worlds No. 1 two wheeler company in
terms of volume growth. The company claims that its motorcycles are one of the
most preferred motorcycles in the country. Along with striving constantly to
innovate and differentiate with respect to its competitors, the company has been
committed to provide customer satisfaction, quality and cost effectiveness.
Hero Honda, being the largest motorcycle manufacturer in India and the second
largest across the globe, it is vital to maintain a good relationship with its suppliers
and also its customers. With a view to meet the objective of improving
information exchange, streamlining operations and effective business
relationships, the company has implemented powerful self-service features of
mySAPTM Supplier Relationship Management (mySAP SRM) plus the e-
commerce capabilities of mySAP Customer Relationship Management (mySAP
CRM)
Honda has been aggressive in respect to its innovation to introduce new two
wheelers every year and caters to a wide variety of requirements across all the
segments. It claims to be the technology pioneer in the two wheeler industry. Its
growth is largely due to the capability of reaching a wide market, new geographies
and growth markets. The company has been pumping considerable amount of
finances in branding building and promotional activities. These activities mainly
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emphasise product launches and new campaign launch opportunities. The
company is a part of many innovative marketing campaigns that revolve around
sports like cricket, hockey, golf etc along with sponsoring the recent Common
Wealth Games 2010. Furthermore, the company has also been aggressively
involved in the arena of entertainment with sponsorships of highly watched reality
shows, television award events etc.