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Industry Overview of the Two Wheeler Industry - October 7th, 2010

India is the largest manufacturer of two wheelers in the world. It stands next only to Japan and China in terms of the number of two wheelers manufactured and sold respectively Initially the motorcycles segment had only three manufacturers Enfield, Ideal, jawa and Escorts. While bullet was a four –stroke bike, java and Rajdoot were the two strokes. Enfield 350cc bikes & escorts 175cc bike initially dominated motorcycle segment. The two wheelers mkt was opened to foreign competition in the mid-80’s and the then market leaders – Escort & Enfield were caught unware by the onslaughts of the 100 cc 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 (100 cc category), gaining a top slot. The 1st Japanese motorcycles were introduced in the early eighties. TVS Suzuki & Hero Honda brought in the 1st two stroke & four strokes engine motorcycles respectively. These two players initially started with assembly of Ckd kits, & later on progressed to indigenous manufacturing .In the 90’s the major growth for motorcycle segment was brought by Japanese motorcycles, which grew at the rate of nearly 25% CAGR in the last five years. The Indian two wheelers can be broadly classified into three major segments –scooters, motorcycles & mopeds. The domestic two wheeler sales of 3.800 mn in FY 2000 constitutes scooter sales of 33.4% (39%in FY 1999), motorcycles 47.7 %( 42% in FY 99) & mopeds 18 %( 20% in FY 99). The motorcycle segment has gradually increased its presence from 27% in the year 1992 to 48% in the year 2000, mainly at the expenses of the scooter and, to some extent, the moped segment.

The demand for scooters is on the wane and witnessed a 19% yoy fall in Fy 2000 .Sales in the scooters segment are expected to fail further , while on the other side motorcycle and scooterette segment will record continued growth in the future . This will translate into a demand fall of around 20% in scooters. with the ongoing expansion from Bajaj auto Ltd.,LML & TVS Suzuki , the capacity in the sector will increase from 2mn in fy 2000 to 2.15 mn FY 01 leading to a surplus situation. We expect the motorcycle segment to continue to grow at an average of 20% in FY 01 . This will increase demand for motorcycles from 1.800 mn in FY 2000 to 2.15mn in FY FY 01. The supply of motorcycle segment as per the present trend will increase from 2.08 mn in FY 2000 to 2.38 mn in FY 01. The segment will be witnessing several new entrants in FY 01, mainly in the four stroke sub segment. This will lead to an over supply situation and increase the competition in the Japanese segment..

In the last six years, the domestic two wheelers industry has seen structural changes. This can be seen from the change in composition of two –wheelers sales, where the motorcycles have consistently gained market share from the scooter and moped segments to corners a share of 41% of total two wheelers 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 an idea the strides made the motorcycle segment in the last six years.

The Indian motorcycle industry can broadly categorized in to Indian motorcycles and Indo Japanese motorcycles. The Indo – Japanese motorcycle segment is dominated by by Hero group, Bajaj and Escorts in collaboration with Japanese vehicle manufacturers Honda, Kawasaki & Yamaha respectively. The Indian motorcycles segment is dominated by Bajaj, Escorts & Enfield.

In the motorcycle sales western region leads with a market share of 40% of the total motorcycle sales. South & North regions come second & third with an mkt share of 28% & 17.5 % of total motorcycles sales respectively.

In terms of two wheelers...
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