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This is the project report on Automobile industry. The purpose of this project study is to know more about automobile industry and do research on that what is growth and progress in particular industry.

PREPARED BY: Jignesh Shingala




The satisfaction and joy that accompanies the successful completion of a task is incomplete without mentioning the name of the person who extended his help and support in making it a success. We are greatly indebted to Prof.Rutwa Mehata and Dr.Meeta Joshi (Faculty of MEFGI), my Project Guide and Mentor for devoting her valuable time and efforts towards my project. We thank her for being a constant source of knowledge, inspiration and help during this period of making project.

Jignesh Shingala Marwadi Education Foundation Group of Institutions-PGDM (2010-2012)


Table of Contents
1.1 INTRODUCTION AND HISTORY ................................................................................................................................... 5 1.1.1 HISTORICAL BACKGROUND .................................................................................................................................. 6 1.1.2 INTRODUCTION.................................................................................................................................................... 8 Scooter Moped Motercycle .8 9 10

1.2 VISION AND MISSION ............................................................................................................................................... 11 1.2.1 VISION .............................................................................................................................................................. 12 1.2.2 MISSION............................................................................................................................................................ 12 1.3 GLOBLE, DOMESTIC AND CURRUNT SCENARIO 1.3.1 GLOBLE SCENARIO 1.3.2 DOMESTIC SCENARIO 1.3.3 CURRUNT SCENARIO 1.4 INDUSTRY ANALYSIS 1.4.1 GOVERNMENT POLICY TOWORD INDUSTRY 1.4.2 A GROWTH PRESPECTIVE 1.5 PORTER FIVE FORCE MODEL 1.6 PEST ANALYSIS 1.7 SWOT ANALYSIS 1.8 MARKET ANALYSIS 1.8.1 DEMAND 1.8.2 SUPPLY 1.8.3 MARKET SHARE OF 2008-09 TO 2010-11 1.9 PRODUCTION, SALES AND EXPORT 1.10 GOVERNMENT POLICY 1.11 MAJOUR PLAYER 1.12 CONCLUSION 1.13BIBLIOGRPHY 4 ..13 .14 ..14 ...14 15 ..16 .17 .18 .22 .25 ..28 .29 .30 .31 ..33 37 .38 .46 .47

Two Wheelers:-

ndia is the second largest manufacturer and producer of two-wheelers in the world. It stands next only to Japan and China in terms of the number of two-wheelers produced and domestic sales respectively. This distinction was achieved due to variety of reasons like restrictive policy followed by the Government of India towards the passenger car industry, rising demand for personal transport, inefficiency in the public transportation system etc. The Indian two-wheeler industry made a small beginning in the early 50s when Automobile Products of India (API) started manufacturing scooters in the country. Until 1958, API and Enfield were the sole producers. In 1948, Bajaj Auto began trading in imported Vespa scooters and three-wheelers. Finally, in 1960, it set up a shop to manufacture them in technical collaboration with Piaggio of Italy. The agreement expired in 1971. In the initial stages, the scooter segment was dominated by API, it was later overtaken by Bajaj Auto. Although various government and private enterprises entered the fray for scooters, the only new player that has lasted till today is LML. The motorcycles segment was no different, with only three manufacturers viz Enfield, Ideal Jawa and Escorts. While Enfield bullet was a four-stroke bike, Jawa and the Rajdoot were twostroke bikes. The 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. And the then market leaders - Escorts and Enfield were caught unaware by the onslaught of the 100cc bikes of the four Indo-Japanese joint ventures. With the availability of fuel efficient low power bikes, demand swelled, resulting in Hero Honda - then the only producer of four stroke bikes (100cc category), gaining a top slot.

The first Japanese motorcycles were introduced in the early eighties. TVS Suzuki and Hero Honda brought in the first two-stroke and four-stroke engine motorcycles respectively.

The 90s the major growth for motorcycle segment was brought in by Japanese motorcycles, which grew at a rate of nearly 25% CAGR in the last five years.

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.

The entry of Kinetic Honda in mid-eighties with a variometric scooter helped in providing ease of use to the scooter owners. This helped in inducing youngsters and working women, towards buying scooters, who were earlier, inclined towards moped purchases. In the 90s, this trend was reversed with the introduction of scooterettes. In line with this, the scooter segment has consistently lost its part of the market share in the twowheeler market.

In 1990, the entire automobile industry saw a drastic fall in demand. This resulted in a decline of 15% in 1991 and 8% in 1992, resulting in a production loss of 0.4mn vehicles.

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 company either reporting losses or a fall in profits.

The total number of registered two-wheelers and three-wheelers on road in India, as on March 31, 1998 was 27.9mn and 1.7mn respectively. The two wheeler population has almost doubled in 1996 from a base of 12.6mn in 1990.

The two wheelers have played a pivotal role in the surging growth of the Indian automobile industry. Over the years the domestic sales of various brands of two wheelers have grown in large numbers. Even, in exports, the two wheelers have been able to maximize the profit margin of various two wheeler manufacturers. There are mainly three models of two wheelers namely,

1. motorcycles 2. scooters 3. mopeds In recent years, the two wheeler industry has witnessed a sea change. During the yesteryears the scooters used to have about 50% of the market share and the rest were divided between the motorcycles and mopeds. But now the trend indicates that people are preferring motorcycles more than the scooters. At present there is a huge demand for the motorcycle models in India.

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 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.

Exports are made mainly to South East Asian and SAARC nations.
Bajaj Auto

Hero Honda

Kinetic Honda

Bajaj Avenger Bajaj CT 100 Bajaj Discover Bajaj Platina Bajaj Pulsar DTSi Bajaj Pulsar 200CC Bajaj Wind 125 Sonic DTSi

Hero Honda Achiever Hero Honda CD Dawn Hero Honda CD Deluxe Hero Honda Glamour Hero Honda Karizma* Hero Honda Passion Plus Hero Honda Splendor Hero Honda Splendor NXG Hero Honda CBZ XTreme

Kinetic Boss Kinetic Challenger Kinetic Comet Kinetic GF Kinetic Stryker Kinetic Velocit Kinetic Aquila

Innocenti of Italy were the original owners of Lambretta brand of scooters. In 1975, the company was bought by Indian government and Scooters India Limited was set up near Lucknow. The company manufactured the first scooter of India with the brand name of Vijai Super. The scooter and the scooterette share in the Indian two wheeler market is 13.4%. The exports in this segment are mainly South East Asian countries and occupy a one-fourth share in the total two wheeler exports from India. Bajaj Auto

Bajaj Chetak Hero Honda

Honda Eterno Kinetic Motor

Kinetic Blaze LML India


Automobile Products of India was the only company in India that started manufacturing mopeds from 1955. TVS Motors launched India's first 50cc, 2 seater moped: TVS Moped 50. TVS also launched India's first indigenous scooterette: Scooty in 1994. This segment has about one-fourth share in the Indian two wheeler industry. The moped exports account for about 8.4% of the total two wheeler exports from India.

Bajaj Auto

Hero Honda Kinetic Motor

Bajaj Wave Bajaj Kristal DTSi Bajaj Blade DTSi

Hero Honda Pleasure

Kinetic Kine Kinetic 4S Kinetic Nova Kinetic Zoom Kinetic V2 Range Kinetic King 100 Kinetic Luna Super Kinetic Luna TFR



This is the vision statement of Automotive Mission Plan 2006-2016, which was prepared by Ministry of Heavy Industries & Public Enterprises and released by the Honable Prime Minister of India, Dr. Manmohan Singh on 29th January 2007 To emerge as the destination of choice in Asia for the design and manufacture of automobiles and automotive components. The output of India s automotive sector will be USD 145 billion, contributing to more than 10% of India s Gross Domestic Product and providing employment to 25 million persons additionally by 2016?. Developing a supply base in terms of technical and human capabilities, Achieving economies of scale and lowering manufacturing costs

The Mission Plan aims to make India emerge as the destination of choice in the world for design and manufacture of automobiles and auto components, with output reaching a level of US$ 145 billion (accounting for more than 10% of the GDP) and providing additional employment to 25 million people by 2016. It envisages increase in production of automotive industry from the current level of Rs. 169000 crore to reach Rs. 600000 crore by 2016. This is involved in improving the automobiles in the Indian domestic market, providing world class facilities of automotive testing and certification as well as ensuring a healthy competition among the manufacturers at a level playing field. The future challenges for the Indian auto industry in achieving the targets defined in the Automotive Mission Plan would primarily consist of developing a supply base in terms of technical and human capabilities, achieving economies of scale and lowering manufacturing costs, as well as overcoming infrastructural bottlenecks.



GLOBAL scenario

Automobile Exports registered a growth of 22.30 percent during the current financial year. The growth was led by two wheelers segment which grew at 32.31 percent. Commercial vehicles and Passenger Vehicles exports grew by 19.10 percent and 9.37 percent respectively. Exports of Three Wheelers segment declined by 1.85 percent.


Two Wheelers registered a negative growth rate of 7.92 percent during this period, with motorcycles and electric two wheelers segments declining by 11.90 percent and 44.93 percent respectively. However, Scooters and Mopeds segment grew by 11.64 percent and 16.63 percent respectively. Three Wheelers sales fell by 9.71 percent with sales of Goods Carriers declining drastically by 20.49 percent and Passenger Carriers declined by 2.13 percent during April- March 2008 compared to the last year.


The two-wheeler market grew by 13.6 per cent with 70, 56,317 units against 62,09,765 units in 2004-05. The Indian automobile industry crossed a landmark with total vehicle production of 10 million units. Car sales was 8,82,094 units against 8,20,179 units in 2004-05 Commercial vehicles segment grew at 10.1 per cent with 3,50,683 units against 3,18,430 units in 2004-05.

Overview Snippets

India, sourcing base for global auto majors. Passenger car and motorcycle segment is set to grow by 8-9%. The two-wheeler segment will clock 11.5% rise by 2007. Commercial vehicle to grow by 5.2 per cent. Estimated component market size is US$ 6.7 bn.



Government Policies Towards industry

Automobile industry in India also received an unintended boost from stringent government auto emission regulations over the past few years. This ensured that vehicles produced in India conformed to the standards of the developed world. Though it has an advantage in India, thanks to low costs and government policies it soon faces stiff competition from it multinational competitors all eyeing for a share in the ever growing Indian auto sector. The policies adopted by Government will increase competition in domestic market, motivate many foreign commercial vehicle manufactures to set up shops in India, whom will make India as a production hub and export to nearest marke Bring in a minimum foreign equity of US $ 50 Million if a joint venture involved majority foreign equity ownership Automatic approval for foreign equity investment up to 100% of Manufacture of automobiles and component is permitted FIIs including overseas corporate bodies (OCBs) and NRIs are permitted to invest up to 49 per cent of the paid-up equity capital of the investee company, subject to approval of the board of directors and of the members by way of a special resolution. Investments in making auto parts by a foreign vehicle maker will also be considered a part of the minimum foreign investment made by it in an auto-making subsidiary in India. The move is aimed at helping India emerge as a hub for global manufacturing and sourcing for auto parts.

Specific component of excise duty applicable to large cars and utility vehicles will be reduced to 15,000 rupees per vehicle from 20,000 rupees earlier. The Proposal by the Govt. to set up an expert group to advice on a viable and sustainable system of pricing petroleum products, as this will surely had an impact on the Automobile Industry. The announced reduction on the basic customs on bio-diesel is great news for all companies working on environmental saving technologies.


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. National Council of Applied Economic Research had forecast twowheeler demand during the period 2002-03 through 2011-12. The forecasts had 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 socioeconomic 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 twowheeler industry. The most likely scenario assumed annual growth rate of Gross Domestic Product to be 5.5 per cent during 2002-03 and was anticipated to increase gradually to 6.5 per cent during 2011-12. 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. 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.


Porter's Five Forces Analysis


Porter's Five Forces model

Porter s five forces Model of Competition are as follows:

o o o o o Rivalry among competing sellers Potential newentrants Substitute products Competitive pressures from supplier - seller relations: Bargaining power Competitive pressures from seller buyer relations: Bargaining power.


The key players in two-wheeler industries are Hero Honda motor ltd. (HHML), Bajaj Auto ltdand TVS motor Company ltd. The other players are Kinetic, Lml, Yamaha, Majestic auto ltd, Royal Enfield ltd and Honda motorcycle &scooter India. Two-wheelers domestic market growth rate for 2008-09 is 76.49% which is very high when compared to that of three wheelers, Passenger and commercial vehicles. The Standardized product used in manufacturing of two-wheelers is steel, aluminum and rubber, because there are many industries in India for manufacturing those standardized product the production is going smooth. Sales of two-wheelers are very high when c o m p a r e d to that of three wheelers, P assenger and commercial vehicles. Indian Auto policy 2002 gives addedadvantage to two-wheeler manufacturers to enter even other countries outside India. Since big manufacturer plant with high technology and good R&D team needed many of them dose not enter in two two-wheeler Industries. Only the companies which are in automobile line will expand their product line like Mahindra.

Potential New Entrants:

Capital investment is very huge in two-wheeler industries since large plant and large machineries need w i t h skilled labours and good R&D team needed for producing two wheelers. Since high technology and raw material resources are abundant to produce the production cost is less in producing two- wheelers. Since each company i n industry change the model ongoing basis to show differentiation among their competitors because of this there is more learning a nd experience in this field. Each company in industry not only makes differentiation in their product strategy but also makes differentiation in the promotional strategy to create brand preference and loyalty . Because of low - cost production, this industry enjoys good growth rate and profitability.

Substitute Product:
Substitute products for two- wheeler industries are bus transportation, Auto transportation and even low-end cars, but people using two- wheelers can only use the service of buses and auto as a substitute product.


Sometimes low-end car is a substitute product for the people using high-end motorcycles. Because nowadays there is lot of segment buses in urban areas and the private companies also influenced very much, buses are available from normal buses to hi-tech ac buses which is threat to two-wheeler industry. Since only two people can travel in a bike most of them uses auto when they go out with their family and if they are affordable to buy car will use car instead of auto. Since bus service has increased w hen compared to five years back people who are aged above 45 years uses buses because of their health condition. These are the substitute product available to two-wheelers.

Supplier Seller Relations:

Since their selling u nits are very high in two-wheeler industry and because of many competitors supplier are very high. Since they change their models ongoing basis they create good relationship between their suppliers. Some of the components in two-wheeler industry are very common for all the twowheeler industries like steel, aluminum, tyres and tubes, these material are available in abundant . This makes them to drive a smooth production of their finished products.

Seller Buyer Relations:

Buyer has addedadvantage than seller because there are five to six big popular brands of two-wheelers are available in India, so that they can switch brand from one another. Since full information is available to the buyers about their product details and their prices buyers are fully aware of seller costs and products. Buyers are very conscious in spending their money to purchase two-wheeler, because it attracts most of the middle-income groups seller cannot price their product very high Nowadays people go to unique brand because of the goods revise they provide after purchase. Because service centers and spare parts shop available to their customer Very near to their place buyer sometimes do not mind spending little money extra. These factors create good relationship between them.


Pest Analysis



Political, economic, social and technology are those factors which affects the external environment.

Political Aspects
Tax policies, trade regulation, political influence a nd some of the rules and regulation of government policies which is considered in political analysis. The corrections i n Excise duty on electric vehicles which will enable the manufacturers take CENVAT c redit and exemption of customs duty on Electric v ehicles parts and also weighted education for in-house R&D to200% from15 0 % and outsourced R&D from125 % to175 %. This would encourage industry that much because this price hike isn t expected to impact sales in a significant way as a majority of two-wheeler buyers were prepared, and to certain extend braced up and ready to shell out extra money for their favorite set of wheels.

Economic Aspects
Economic factor are those which is influenced by economic growth, interest rate, exchange rate and inflation rate. Abundant and low -cost labour coupled w i t h local availability of raw material like steel, aluminum and natural rubber has placed India amongst the low - cost producing centers of two-wheelers. Consequently, CARE Research a nticipant s buoyant growth in two-wheelers exports as well. Abundance of low labour and raw material gives India an upper hand in the export. Since many auto finance company laid easy installment rules with less interest rate it makes more segment people to go for it.

Social Aspects
Social aspects of two-wheelers industry are Popularity, Subculture, Mobility and safety. In numerous cultures, motorcycles are the primary means of motorized an sport.


India is the second largest motorcycle markets in the world next to China. Socially many motorcycle organization raise money for charities through organized ride and events. Many people ride motorcycle for various reasons, those reasons are increasingly practical, w ith riders opting for a powered two-wheeler as accost-efficient alternative to infrequent and expensive public transport system, or as a means of avoiding or reducing the effect of urban c ongestion. Motor-cycle gives a great advantage to the specified d esignation w here other buses cannot enter. Since there is a rule in some of the main states and cities in India to wear helmet while riding two-wheelers to make them safe from accidents makes two-wheeler riders to have a safe journey.

Technical Aspects
Technical Aspects in Two-wheeler industry includes construction, fuel economy, electric motorcycles, d ynamics and accessories. Two-wheeler construction is the engineering, manufacturing, and assembly of components and systems for two-wheelers which results in performance, cost and aesthetics desired by the designers. Construction of two-wheeler includes steel, aluminum frame, telescopic forks and disc brakes. Motorcycle is the best fuel economy mode of transport, N owadays twowheelers is designed to give more than 8 0km mileage per liter with low maintenance cost. Invention of Electric motorcycle gives an added advantage since the two-wheeler users can avoid using petrol. Different types of two-wheelers have different dynamics and these plays a vital role in their performance. Since sufficient bike accessories are available in many place t wo-wheeler riders has a Privilege to change the broken parts very easily.



SWOT-two wheelers industry

v Skilled low cost manpower. v Decentralized Management. v Total in-house manufacturing and testing with the latest precision instruments. v A Technocrat MD, in touch with new technology and fast adaptation of this to the industry.

v Supplier to one of the largest Two-Wheeler manufacturers in the world has resulted in exposure to good manufacturing & functional quality systems. v Machines of International std. v Capital Reserves.


v Strong Lineage with last 29 years experience in the field of Ignition Coils.

v Low thrust marketing. v Over dependence on 2 key players. v Low in exports.

v Price war in the market is putting pressure on cutting costs. Our QCD advantage namely>> -High Quality Machinery, -Lean Organization Structure -Quality Systems in place, >> mean an ability to contribute to the success of our customers v Technically driven management adds value to conventional processes and products. v Globally tuned organization open for Foreign Collaborations.

v Foreign players. v Slow growth in domestic auto sales. v Government policies.



Segmental classification and characteristic The three main product segments in the two-wheeler category are scooters, motorcycles and mopeds. However, in response to evolving demographics and various other factors, other sub segments emerged, viz. scooterettes, gearless scooters, and 4-stroke scooters. While the first two emerged as a response to demographic changes, the introduction of 4-stroke scooters has followed the imposition of stringent pollution control norms in the early 2000. Besides, these prominent sub-segments, product groups within these sub-segments have gained importance in the recent years. Examples include 125cc motorcycles, 100-125 cc gearless scooters, etc. 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 FY1998, 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 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. 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 suspension offered by motorcycles, they are well positioned to capture the rising demand in rural areas where these characteristics matter most.

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). Bajaj Auto was the undisputed market leader till FY2000, accounting for 32% of the twowheeler 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 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. Technology Hitherto, technology transfer to the Indian two-wheeler industry took place mainly through: licensing and technical collaboration (as in the case of Bajaj Auto and LML); and joint ventures (HHML). A third form - that is, the 100% owned subsidiary route - found favour in the early 2000s. A case in point is HMSI, a 100% subsidiary of Honda, Japan. Table 2 details the alliances of some major two-wheeler manufacturers in India. Besides the below mentioned technology alliances, Suzuki Motor Corporation has also followed the strategy of joint ventures (SMC reportedly acquired equity stake in Integra Overseas Limited for manufacturing and marketing Suzuki motorcycles in India).


Domestic Market Share for 2008-09

Market share


4% 4%
Passanger vehicls Commercial vehicles Three wheeelers Two wheelers


Domestic Market Share for 2010-11

Passanger vehicls, 16.25 commercial vehicles, 4.36 Three wheelers, 3.39 Two wheelers, 76


Two Wheeler Statistics

The automobile industry in general and two wheeler industry in particular has shown a tremendous growth over the recent years. According to the Society of Indian automobile Manufactures (SIAM) the industry has grown by 16% in the year 2003/2004.Two Wheeler segment as a whole during the year 2004/05 grew by over 15%.This growth has been due to the Government's initiative on rural roads and better connectivity with major towns and cities, improved agricultural performance, upward trend of purchasing power in the hands of rural people. The two wheeler industry was able to achieve the record performance of crossing 6 million two wheelers with exact sales standing at 6,208,860 during the year 2004-05 2001-02 937506 2002-03 848434 2003-04 935279 2004-05 987498 2005-06 1020013

Though the metal bodied geared scooters have fallen out of favour of the Indian two-wheeler user their upward trend in growth has been due to rise in the sales of scooterettes and Motor scooters. Bajaj Auto has been able to sell 152,936 units in the year 2004/2005 of two wheelers which don't include motorcycles. They have shown a negative trend in the two wheeler segment other than the motorcycles. This goes on to show that Bajaj Auto has lost its supremacy in the scooter and moped segment as they have shifted focus to motorcycles. 2001-02 2906323 2002-03 3876175 2003-04 4355168 2004-05 5193894 2005-06 6201214


Demand Drivers

The demand for two-wheelers has been influenced by a number of factors over the past five years. The key demand drivers for the growth of the two-wheeler industry are as follows: Inadequate public transportation system, especially in the semi-urban and rural areas; Increased availability of cheap consumer financing in the past 3-4 years; Increasing availability of fuel-efficient and low-maintenance models; Increasing urbanization, which creates a need for personal transportation; Changes in the demographic profile; Difference between two-wheeler and passenger car prices, which makes two-wheelers the entry-level vehicle; Steady increase in per capita income over the past five years; Increasing number of models with different features to satisfy diverse consumer needs.

While the demand drivers listed here operate at the broad level, segmental demand is influenced by segment-specific factors.


8,418,626 34


9,000,000 8,000,000 7,000,000 6,000,000 Axis Title 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Two wheelers 2004-05 6,529,829 2005-06 7,608,697 2006-07 8,466,666 2007-08 8,026,681 2008-09 8,418,626

As per our analysis you can see above production chart of two wheelers automobile industry as year on 2004 to 2009. In 2004-05 production of two wheelers bike is 6,529,829. In 2005-06 production is 7,608,697 so you can see clearly production is increase 1,078,868 as compare to 2004-05 The production of two wheelers increase gradually up to 2008-09 so it is good for automobile industry



Two wheelers
8,000,000 7,000,000 6,000,000 Axis Title 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Two wheelers 2004-05 6,209,765 2005-06 7,052,391 2006-07 7,872,334 2007-08 7,249,278 2008-09 7,437,670

Two wheelers industry is growing very well because most of people use two wheelers in India so its market share is also high. As per over analysis in 2004-05 sales is 6,209,765. In 2006-07 no of vehicles are sold 7,872,334. Here we are clearly seen that the sales of two wheelers increase gradually and so profit goes up and instead of market share of two wheelers is also go up. And sales reach at 7,437,670 in 2008-2009



Two wheelers
1,200,000 1,000,000 800,000 Axis Title 600,000 400,000 200,000 0 Two wheelers 2004-05 366,407 2005-06 513,169 2006-07 619,644 2007-08 819,713 2008-09 1,004,174

For the first nine months of FY2005, two-wheeler exports increased by 37% over the corresponding previous, led mainly by motorcycles even as exports of other two-wheelers were healthy. While motorcycle exports increased by 40%, scooter and moped exports increased by 29% and 27% respectively.
Motorcycle exports by Bajaj Auto, HHML and TVS have reported a to bust growth in

FY2005 and are expected to increase further in the medium term. Bajaj Auto's tie-up with Kawasaki to jointly market Bajaj products in Philippines is a case in point. Under the tie-up, M/s Kawasaki Motors Philippines Corporation has been appointed as exclusive distributors to market select Bajaj two-wheelers that include Byk, Caliber 115 and Wind 125. These vehicles are being sent to Philippines in the completely built unit.


Government policy
Fiscal Policy
The Union Budget for 2001-02 had lowered the excise duty on two-wheelers (with engine capacity in excess of 75 cc) from 24% to 16%. The manufacturers responded to this by passing on a relatively large part of the excise cut to customers. The Union Budget thereafter have left the excise duty on two-wheelers unchanged. But the Union Budget 2004-05 provides for a weighted deduction of 150% for investments in R&D. This may facilitate increasing R&D allocations and allow for improvement in the technical as well as product development skills of the Indian companies

Indian Auto Policy 2002

The Government of India approved a comprehensive automotive policy in March 2002, the main proposals of which are as under: Foreign direct investment Automatic approval is proposed to be granted to foreign equity investment up to 100% for manufacture of automobiles and components.

Import tariff: Import tariffs are proposed to be fixed at a level such that they facilitate the development of manufacturing capabilities as opposed to mere assembly . Incentives for R&D: The weighted average tax deduction under the Income Tax Act, 1961 for automotive companies is proposed to be increased from current level of 125% (The weighted average deduction for R&D was increased to 150% in the Union Budget 2004-05). Further, the policy proposes to include vehicle manufacturers for a rebate on the applicable excise duty for every 1% of the gross turnover of the company expended during the year on R&D. Environmental aspects: Adequate fiscal incentives are proposed to promote the use of low-emission auto fuel technology. The auto policy states the Government's intent to align domestic policy with the international practice of imposing higher road tax on old vehicles so as to discourage their use.



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 consists of three segments viz. scooters, motorcycles and mopeds. In India there are some MNC s and Indian company dealing in automobile sector. The main key players who are dealing in this sector are Hero Honda, Bajaj, Yamaha, Honda, and TVS. Hero Honda is the biggest player in this sector in India as well as in the world and playing a very important role in two wheeler automobile sector. Hero Honda, Bajaj and TVS are the Indian companies and Yamaha & Honda are international automobile brand.


Bajaj is the first Indian two wheeler automobile company in the market since 1945 with the name M/s Bacharj trading corporation private limited. In 1959 M/s Bacharj trading corporation private limited change its name as Bajaj Auto Ltd. Bajaj Auto obtains license from the Government of India to manufacture two- and three-wheelers vehicle in 1959 Bajaj Auto sold 269,488 units of two-wheelers in May 2010 (Up by 63% over last year) It s (Bajaj Auto s) motorcycle sales in May this year (2010) jumped by 63.28 per cent to 2,69,488 units from 1,65,049 units in the year-ago (2009) period. BAL attributed the growth in bike sales to its Pulsar and Discover range of motorcycles, which sold 75,974 units and 1,07,076 units, respectively, last month. The company s exports in May surged by 63.53 per cent at 95,964 units as against 58,682 units in the corresponding month of 2009, it said.

Hero Honda Motors Limited was established in 1984, as a joint venture between India's Hero Group (world's largest bicycle manufacturers) and Japan's Honda Motor Company. And created the world's single largest two wheeler company and also one of the most successful joint ventures worldwide. During the 80s, Hero Honda became the first company in India. Over 19 million Hero Honda two wheelers running on Indian roads today. Hero Honda sold 435,933 units in May 2010 (Up by 14% over last year) The country's largest two-wheeler maker Hero Honda today reported its highest monthly sales ever at 435,933 units in May, registering 13.92 per cent increase over the same month last year. In a statement, Hero Honda said that it had sold 382,678 units in May last year. The previous highest monthly sales record at 415,137 units was set in August 2009, the statement said.

TVS Motors is the third largest company in the two-wheeler industry with a market share of 16%. Infect, it is the only Indian company without a foreign collaboration in the two-wheeler industry. When the company opted out of the collaboration with Suzuki in 2002, many believed that TVS was headed towards extinction. But the company proved the doomsayers wrong and came out with a very successful `TVS Victor'. TVS Motors Ltd. originally incorporated in 1982 to manufacture two-wheelers in collaboration with Suzuki Motors of Japan, TVS was one of the leaders in two-wheeler industry. TVS Motor sold 154,667 units of two-wheelers in May 2010 (Up by 30% over last year) Chennai-based TVS Motor Company today reported a 30.44 per cent increase in two-wheeler sales in May to 1,54,667 units on the back of good growth across all segments. The company had sold 1,18,574 units in the corresponding month last year, TVS Motor Company said in a statement. Motorcycle sales last month rose 26.94 per cent to 67,906 units from 53,495 units in the yearago period, it added. Two-wheeler sales in the domestic market in May stood at 1,36,621 units, up 27.16 per cent, over 1,07,439 units in the same month in 2009. The company said its exports in May surged 62.07 per cent to 18,046 units against 11,135 units in May 2009. So that TVS is better competitor of any other company


Yamaha Motor Corporation is the auto mobile company of Japan (1953) which works in India since 1955 and providing latest technology in India from last two decades. Yamaha Motor India was incorporated in august 2001 as a 100% subsidiary of Yamaha motor corporation, Japan. Yamaha India sold 25,033 units of twowheelers in May 2010 (Up by 17% over last year) Two-wheeler manufacturer India Yamaha Motor today reported a 17.04 per cent increase in its May sales, at 25,033 units. The company had sold 21,388 units in the same month last year, it said in a statement. Domestic sales of the company rose by 3.91 per cent to 17,614 units in May, from 16,952 units in the same month of 2009, it added. During the last month, the company exported 7,419 units against 4,436 units in the year-ago period, a jump of 67.25 per cent.

Honda motors of Japan is not a new name in the two wheeler scenario in the country, they were in a tie up with the Firodias owned Kinetic group. However in the late 90s they parted ways after problems arose over issues like introduction of new models, advertising expenditure, marketing strategies and other related issues. In the mid 80 Honda motors of Japan joined hands with the largest bicycle maker of India the Hero cycles to create Hero Honda which in a couple of decades or so have gone on to become the single largest motorcycle company in the world. Though Honda has come on its own on the Indian market yet it will be providing technological support to Hero Honda for the next ten years. Thus presenting a unique situation in which the company will be in direct competition with the company which it has been associated for nearly two decades. Honda Motorcycles and Scooters India limited, a 100% subsidiary of Honda motor company Japan eventually entered the Indian market with Honda Unicorn in 2004.


Honda Motorcycle & Scooter India has sold 132,090 (scooters + motorcycles) units of two-wheelers in May 2010 Domestic Motorcycle sales of Honda Motorcycle & Scooter India (HMSI) jumped 52.24% to 55,110 units.

HMSI s scooter sales increased 28.03% at 76,980 units.

Royal Enfield w a s t he n a me u n d e r w h ic h t h e E n f i e l d Cycle Company (a division of the British arms-making company Royal Small Arms Factory in Enfield Lock ),mademotorcycles,bicycles,lawnmowersandstationar y e n g i n e s . T h i s l e g a c y o f w e a p o n s m a n u f a c t u r e i s r e f l e c t e d i n t h e l o g o , c annon, and their motto "Made like a gun, goes like a bullet". Use of the brand na me R o ya l E n fi e l d w a s l i c e n s e d b y t h e C r o w n i n 1 8 9 0 . T h e original Red ditch, Worcestershire based company was sold to E. & H. P. Smith in 1963 and then to Norton-Triumph-Villiers (NVT). Production ceased in 1970and the company was dissolved in 1971. In 1955 Enfield of India started assembling Bullet motorcycles under licencefrom UK components, and by 1962 was manufacturing complete b i k e s . I n d ia b o u g h t t h e r i g h t s t o us e t he R o y a l E n f i e l d na me i n 1 9 9 5 . R o ya l Enfield production, based in Chennai, continues and Royal Enfield is now the oldest motorcycle brand in the world still in production with the Bullet model enjoying the longest motorcycle production run of all time. The Two-wheeler industry is known for its inherent cyclical feature with 18m o n t h s o f growth followed by 18 months of degrowth. The industry had outperformed the broader market in the latter half of FY (Financial Year) 06.F Y 0 7 wa s a p e r io d o f c o ns o l i da tio n wi t h t he bi g pla ye rs c a p t u ri n g a la rg e r market share among their niche segments. Thereon it continued to underperform the broader market with the exception of Q3FY09. BSE Auto Index has seen a fall of >30% in the last quarter and has hit an all-time low of 2444 points which has not been seen in the past 4 years. We believe the industry is ready to pick up f ro m a lo we r ba s e , w h ic h k e e ps i ts do w ns i d e c a p pe d. S a le v o l u me s o f the industry would continue to replicate a seasonal trend. Though the sale volumes have witnessed a decline for more than a year, its revival would be a slow and steady process, which would be delayed on account

of the unfavorable macroe c o no m ic c o n d it io ns a n d de p re s s e d c o ns u me r s e n t im e nts . O n o ne ha n d t he slackening growth in the GDP and IIP would put pressure on the demand factor, whereas the fall in inflation, input costs and crude prices would ease the cost constraints. We can expect the scenario of FY07 to be repeated, wherein the sales and margin would be inversely co-related. Sector incentives and government policies would determine the sector movement going forward. Overall Sales Analysis

Total May 2010 sales for HMSI have not been made public so far. The domestic numbers have been shown in the above graph as total sales. The HMSI May 2010 export numbers might not be included as shown in the above graph.


The monthly sales figures include domestic sales as well as exports. Also it includes sales of all types of 2 wheelers (Motorcycles, Scooters, and Mopeds etc.)


The growing mobility needs of the people in India augur well for two and four wheeler industry. The cost advantage that India offers with respect to product development is fast establishing the country as an R&D hub. In addition, the credibility that India has gained as a cost effective manufacturing base for both small cars and two-wheelers is fuelling creation of capacities by all major manufacturers in the country. Likewise, economic growth and the Golden Quadrilateral project will also increase demand for road freight movement and this is bound to sustain the commercial vehicle industry's growth.

The two-wheeler segments are expected to grow to 12 million units and passenger car segment to 2 million units by the end of this decade. However, this industry cannot be insulated from global trends where the state of industry provides pointers for caution. In conclusion, to survive and grow, the Indian Auto industry has to ensure product innovation and overall cost competitiveness.