8/2/2019 58611342-Bikes

1/19

8/2/2019 58611342-Bikes

2/19

Automobile industry is one of the largest industriesin global market. Two-Wheeler segment is one of the mostimportant components of the automobile sector which hasbeen in existence in the country since1955. India is the

second largest two-wheeler market in the world, itstands next to Japan and china in terms of number of two-wheelers produced and sold. In India there are 7 scootersmanufacturers, 9 motorcycle manufacturers and 3 mopeds

manufacturers. In earlier days Two-wheeler industryhad three segments one is bike and other two beingScooters and mopeds, but in present we can see mostlybikes since there is not that much of scooters and mopedsare produced nowadays, due to new technologies

and innovation. Recently the biggest seller of scooters thatis Bajaj Auto has stopped producing or selling scooterssince there is no demand in the market for the scooters. So,we are mainly going to look at the bikes in two-wheelers

industry. Bikes are also divided in to two groupsautomatic ear bikes and ear two-wheelers a ain ear

8/2/2019 58611342-Bikes

3/19

INDUSTRY COMPARISON:According to SIAM (Society of IndianAutomobile

Manufacturers),the domestic market share in2008-09fortwo-wheelers industry is76.49% which is highest whencomparedto thecategorywise market sharewith passengervehicles, commercial vehicles and three wheelers whichhas market share of 15.96, 3.95and 3.6 respectively asshown in below:

DOMESTICMARKET SHAREFOR 2008-09 PassengerVehicles-15.96% CommercialVehicles-3.95% Three wheeler-3.6%

Two wheeler-76.4%

8/2/2019 58611342-Bikes

4/19

areHeroHonda MotorsLtd (HHML), Bajaj Auto, Yamahaand TVs motorcompanyLtd.In 2008-09Hero-Honda ispositionedat number one interms of maximum number ofvehicles soldina year. Since bikes are available with gearsand without gears,two strokes andfour stroke andalsobikes are available indifferent kindofcc (Cubic Capacity)(which implies speedof the bike intechnical terms) whichvaries from 100ccto3 50cc. Because there is lot ofdifference givento four people it attracts more segments ofpeople,it attracts both the gender since bikes are availablewith gears and without gears andit attracts age groupfrom12to56. But in India as perdriving rules license isgiven

to the people only

when

they attain

the age of18. Butnowadays evenpeople aged before12are used

todrive bike andalso above the age of 56. Since lot oftechnologies has developedintwo-wheelers like pushstart, maximum mileage bike,alloy wheels, disc-breaketcit makes most of the people to go for the two-wheeler

8/2/2019 58611342-Bikes

5/19

2001-02 2002-03 2003-04 2004-05 2005-06

28332 32566 53687 60699 83873

2001-02 2002-03 2003-04 2004-05 2005-06

18971 23391 24078 28585 43181

companies like the TVS motor company have put an extra thrust on exports. Thecompany exports its products to some 38 countries in the world. The company hasseen a 48% increase in exports from 120 crores in 2004/2005 to 177 crores in2005/2006. The company is keen to focus on exports as an area of growth.Not to beleft behind Bajaj Auto which is also one of the largest two-wheeler manufacturers inthe country exported nearly 8% of the total sale of its two-wheelers. The company is a

market leader in two-wheelers in Bangladesh and Srilanka and in places like theGuatemala and Columbia it is one of the leading brands of two wheelers.hero honda which claims to be the largest two wheeler producer in the world hasexported more than 92,000 bikes during 2005/2006 thus registering a growth of over45% from the previous fiscal.The company has exported bikes to Bangladesh, Sri Lanka, Bhutan and Nepal. Modelslike Glamour, Super splendor and CD Deluxe have become quite a rage in thesecountries. In fact the CD Dawn is the most popular brand of motorcycle in Columbia.The company also wants to add a scooter in it's' export portfolio to further strengthenits position in the foreign market.The export trend according to the Society of Indian automobile ManufacturersAssociation (SIAM) is presented in a table below.motorcycles

Scooters have also picked up in volumes lately thanks to the increasingpopularity of ungeared scooterettes; however the metal bodied scooters aresoon becoming a thing of the past.

OF MAJOR PLAYER IN TWO

8/2/2019 58611342-Bikes

6/19

OF MAJOR PLAYER IN TWO-WHEELER INDUSTRY:HERO-HONDA:Up to100cc- CD Dawn, CD-Deluxe, Splendor plus,Splendor-NXG, Passion plus.100to135c-Glamour, SuperSplendor.More than150cc- Achiever, CBZ- extreme, Hunk andKarizma.

BAJAJ:Up to100cc- Platina,100to135cc - XCD-125 DTS Si, Discover135, KristalDTSi.More than 150cc- Pulsar-150,180,200, 220-DTSi, AvengerDTSi.

TVS MOTORS: - -

8/2/2019 58611342-Bikes

7/19

Population information is an important part of "DemographicSegmentation"click here to see Demographic information on the population in Torontohttp://www.city.toronto.on.ca/ourcity/profile02.htm#2

Table 4: Origin of Toronto's Immigrants (1991-1996)Place of Birth GTA Toronto % in TorontoTotal Recent Immigrants 446,515 315,470 71Hong Kong 48,730 25,355 52Sri Lanka 36,835 32,175 87China 35,460 26,260 74

India 33,575 17,215 51Philippines 33,560 25,780 77Poland 19,120 11,485 60Jamaica 17,050 12,500 73Guyana 13,310 10,145 76Viet Nam 12,425 10,045 81

Trinidad & Tobago 11,695 7,500 64Iran 11,060 8,930 81Pakistan 10,760 6,750 63

Other Countries 162,935 121,330 74Source: Statistics Canada, 1996 Census

8/2/2019 58611342-Bikes

8/19

Demographic Segmentation"

. Since Toronto is one of the most international cities in theworld, it is helpful to know what countries our new Canadians

come from so that services and facilities can be available tomatch the need. Many companies and Non-profit organizationsuse demographic information to be better able to provideservices that are language and culture appropriate.

Sometimes, certain ethnic groups under-report their truepopulation due to fear of dealing with government officials(which may be based on experiences in the country they camefrom). When an ethnic group makes efforts to hide their truepopulation this often turns out to be a disadvantage because

they are then not able to get government services andlanguage services proportionate to their need. The need isbased on reported numbers which turn out to be lower than theactual real numbers. This effects many things such asproviding language assistance for municipal governmentservices, calculating employment equity for large government

agencies and service providers, etc..

8/2/2019 58611342-Bikes

9/19

8/2/2019 58611342-Bikes

10/19

Criteria for Segmentation- things you have to think about in order to decide if a potentialgroup is worthwhile being considered a "segment"

1. Homogenous- are the people in the proposed segment all similar without toomany differences- you could say right handed people is a segment, but.... if halfthe right handed people were women, and half were men, thenthis might not work if the gender also was an issue.

. CriteriaforSegmentation

2. Heterogeneous

- the people between the segments should be very different- right handed and left handed might not be worthwhile if you aretalking about a market segment for a product like pull-on boots

8/2/2019 58611342-Bikes

11/19

8/2/2019 58611342-Bikes

12/19

5. ResourcesA company should make sure the segment relates

to the resources of the company. If the companycan mfg. variations to fit its key demographics,great, but it should not take on additionaldemographics if it does not have the capability

example- a lingerie company taking on plus sizes - whichwould mean reconfiguring the fabric pattern cut-out which would effect fabric cost, waste amounts,

etc.

8/2/2019 58611342-Bikes

13/19

STRENGTHSHighly experienced management.Product design and developmentcapabilities.Extensive R & D focus.

Widespread distribution network.High performance products across allcategories. High export to domesticsales ratio.Great financial support network (Forfinancing the automobile)High economies of scale.High economies of scope.

WEAKNESS

Still has no established brand to matchHero Honda's Splendor incommuter segment.

Not a global player in spite of hugevolumes.Not a globally recognizable brand (unlike

the JV partner Kawasaki)

OPPORTUNITYDouble-digit growth in two-wheelermarket.

Untapped market above 180 cc inmotorcycles.More maturity and movement towardshigher-end motorcycles.The growing gearless trendy scooters

THREATThe competition catches-up any newinnovation in no time.Threat of cheap imported motorcyclesfrom China.Margins getting squeezed from both thedirections (Price as well as Cost)

8/2/2019 58611342-Bikes

14/19

PEST ANALYSISA scan of external macro-environment in which the firmoperates can be expressed in terms of the following factors:

POLITICAL

ECONOMICAL

SOCIAL

TECHNOLOGICAL

8/2/2019 58611342-Bikes

15/19

Environmental regulations, Trade Restriction and Tariffs,Political stability etc constitute political analysis. The

government in 2001-02 had lowered the excise duty on two-wheelers (with engine capacity in excess of 75 cc) from 24%to 16%.The government in 2005 provides for a weighteddeduction of 150% for investments in R&D. Automatic

approval is proposed to be granted to foreign equityinvestment up to 100% for manufacture of automobiles and

components.The weighted average tax deduction under theIncome Tax Act, 1961 for automotive companies is proposedto be increased from current level of 125% (The weightedaverage deduction for R&D was increased to 150% in the

Union Budget 2004-05). Further, the policy proposes toinclude vehicle manufacturers for a rebate on the applicableexcise duty for every 1% of the gross turnover of thecompany expended during the year on R&D. The correctionin excise duty on electric vehicles which will enable the

manufacturers take cen-vat credit exemption of customs duty

8/2/2019 58611342-Bikes

16/19

ECONOMICAL FACTOR:Economic growth, interest rates,exchange rates, inflation rate etc constitute economicfactor. Low interest rate, availability of credit and a low

based effect helped two wheeler sales to grow strongly inthe financial year 2010. But high inflation rate may affectthis industry. The cost of steel, aluminum etc have eitherincreased the cost of the two wheeler or reduced the marginof the producer. Abundant and low cost labour coupled withlocal availability of raw material like steel, aluminum andnatural rubber has placed India amongst the low costproducing centers of two- wheelers.

SOCIAL FACTORS:It includes health consciousness,population growth rate, age distribution, career attitudes,emphasis on safety etc. Indian population growth rate is

around 1.55% in 2010.Two wheeler industry can beoptimistic with this growth rate. In many cultures,motorcycles are the primary means of motorized transport.In rural India many family depends on it. India is thesecond largest motorcycle markets in the world nextto China.

8/2/2019 58611342-Bikes

17/19

TECHNOLOGICAL FACTOR:It includes R&D activity,automation, technology incentives, and rate of technologicalchange. Technical Aspects in Two-wheeler industry includesconstruction, fuel economy, electric motorcycles, dynamicsand accessories. Two-wheeler construction is theengineering, manufacturing, and assembly of componentsand systems for two-wheelers which results in performancecost and aesthetics desired by the designers.

Construction of two-wheeler includes steel, aluminumframe, telescopic forks and disc brakes.

8/2/2019 58611342-Bikes

18/19

PORTERs 5 FORCES ANALYSISPorters five forces Model ofCompetitionare as follows:

Rivalry amongcompeting sellersPotentialnew entrantsSubstitute products

Competitive pressures from supplier - sellerrelations:Bargaining powerCompetitive pressures from seller-buyerrelations:Bargaining power.

Our recommendation to the two wheeler industry:

8/2/2019 58611342-Bikes

19/19

Our recommendationto the two-wheeler industry:Nowadays designing of two-wheelers industries seems tobe aiming only at youngsters; they have to aim atproviding some technology which also convinces people

who are aged above 40. Many of them are affected withback pain while riding low or middle cost two-wheelerand also shock-ups life is very minimum. They have tothink on these technologies and give some

added on facilities to their products. Sometimes there isvariation between the mileages too, i.e. they promises usthat their product would give 80 Km/per liter butproduct will result in giving lesser than that even afterfollowing their guidelines. Because of the different

segments in two-wheeler industry, 100cc segment two-wheelers demand falls down which has traditionallyenjoyed the maximum market share. The two-wheelerindustry should concentrate on reducing their bike prices

because there is not that much difference of pricebetween hi h end bikes and low end cars e : Tata Nano