INTERNATIONAL MARKETING

Group Members:Rajkumar S.

Md. AlamAshish C.

Presented to Prof. Gautam

Trehan

Sector- Automobile(2 Wheeler)

Overview:CAGR 10-12%Sales-3.4 million units in Q3, 2011-12YoY- 11%

MARKET OVERVIEW

• Domestic volume growth has been strong over the past five years growing at 11% CAGR. • Exports have been a significant contributor to overall volumes with a growth of 27% CAGR over the last 5 years. • Year to date, the volume growth in two wheelers has surpassed all other automobile segments.• The initial investment to set up a new plant isn't very large. But the time taken can be anywhere between 18-24 months. • Brownfield investments are faster and less capital intensive as compared to Greenfield.

Conti Nigeria accounts for 40% of all two wheelers sold

with annual demand of 1.2mn. Huge export opportunity for Indian OEMs as

economy and affordability levels grow. Indian OEMs face stiff competition from Chinese

counterparts. Indian products are perceived to be of a better

quality at the same time, though slightly higher priced.

Factors that will drive growth in the sector

Extra money in hand Fuel economy & Demand Rising population Changing preferences of Indians Untapped rural market

Procedures

Manufactured at plant Export the bikes on ship Sell the bike under the company

name in the foreign market. Offices in the foreign countries

DATA

Export

15.07% 4.6

6%

2.95%

77.32%

Sales

Passenger VehiclesCommercial VehiclesThree WheelersTwo Wheelers

COUNTRY wise data

China India Japan USA(june 2012)

0200000400000600000800000

100000012000001400000160000018000002000000

604,000

1,947,198

479,163

35,306

Export(units)

Current Stats In developed markets, two wheelers are seen as a

luxury rather than a necessity. The reverse is true for developing/emerging economies.

India is one of the lowest penetrated markets for two wheelers even amongst emerging economies.

According to OECD, as per capita income and penetration levels increase, there is a shift in consumer preference toward high end/premium motorcycles.

India is at an inflexion point where penetration is low and per capita income is rising. Although income distribution is skewed, the potential demand opportunity for two wheelers is large.

Competitive market Year Company 2008 Mahindra & Mahindra enters two wheeler.

space buy buying out 80% share in Kinetic Motors

2010 Harley Davidson launches a line of models for India

2011 Ducati launches its showrooms in India 2011 Aprilla in collaboration with Piaggio to

bring in Vespa 125cc and RSV4 2011 Hyosung re-enters the market after JV

with Kinetic 2012 Triumph to unveil its India plans at Auto

Expo 2012

The dynamics of most markets (except Africa) are similar to India where two wheelers are predominantly used for transportation rather than lifestyle products.

Duty Entitlement Pass Book (DEPB) Scheme:

The DEPB scheme allowed exporters of two wheelers to claim reimbursements at 8-9% of the Free On Board (FOB) value of exports.

The Government has announced a withdrawal of this scheme (effective Sept 2011) moving to the Duty Drawback scheme where reimbursement rates would be around 1-5% of FOB value.

The likely impact of this would be for two wheeler exporters to increase prices and/or reduce dealer margins; both affecting demand

in export markets, impacting margins and lowering profitability.

Two wheeler manufacturers are showing an increased focus on exports to contribute to their top line.

EXPORT MARKETS

POSITIVES Exports to be a major focus for OEMs – Key

markets include Africa and Latin America. Increasing awareness of Indian OEM

manufacturers. Price competitive in comparison to bigger

global brands. Indian two wheelers are perceived to be of a

better quality than their Chinese counterparts.

Conti

RISKS & CONCERNS Drawback of fiscal benefits (DEPB) affecting

prices and Dealer margins Increasing focus on exports leading to

slowdown in Domestic business.

Entry into International market:

M&M- Ideal Group in Sri Lanka M&M will be selling their products under their name in upcoming year Sri Lanka is largest export market for M&M

Hero MotoCorp Exported to Sri Lanka only before 2010 New market- Nigeria, Latin America, Brazil, Nepal, Bangladesh and other

countries So far, they exported 144,000 units which 2.6% of total sales Setting up hubs in Nigeria, Brazil to meet the demand.

BAJAJ AUTO Export to developed countries like JAPAN & European Countries Tie up with KTM of Japan Exported 1 M bikes in 2012

INDIA YAMAHA Export to Japan Price- In India:1.15k, In Japan: 2.45k or ¥3.42k

Thank youfor listening