Two Wheelers Industry in India –
Future Growth and Prospects
Dr. Goldie Zaki1
Dr. Sarita Rana2
Assistant Professor, St. Paul Institute of
Professional Studies, Indore
ABSTRACT
The study entails the promising future of two
wheeler companies in India. The
modern era is characterized by speed, urbanization and effective time
management. Employment too is playing a significant role in the economy.
Evidently, two wheelers play an important role in solving to an extent the time
management problems of the working class and business holders. In a developing
country like India, where a sizeable proportion of the population comprises of
the middle class, and pressure of urbanization, a two-wheeler is considered to
be the most suitable vehicle. India is a growing economy and thus claims to be
the largest two-wheeler market in the world. The country witnesses hundreds of
new two wheelers rolling on the roads every single day. The two-wheeler
industry has a reasonable share in the Gross Domestic Production (GDP) of the country.
Thus, this research aims at studying the production and sales of two wheelers,
performance and share of two wheeler companies and problems faced thereof and
prospects of the industry.
Keywords: Two Wheelers, Significant Role,
Production, Sales, Prospects
INTRODUCTION
Fast
modes of transportation, being able to travel faster and reducing the time
spent on covering distances, are a few of the many aspects that have been
playing a significant role in the present modern era which is highly characterized
by urbanization. Speed, time management and aspiration for higher stand of
living are the need of the hour. Two wheelers play a very significant role in
solving these problems. Speed and two wheelers are synonyms to each other. On
the cowed roads of India, two wheelers are the best option. Effective time
managements are also a significant aspect. Public transport system often tends
to take more time to reach the destination. Here too two wheelers play a
crucial role. In a growing economy like India where the people are aspiring for
a higher standard of living and the employment opportunities are available at
distant places, two wheelers have helped to overcome the problem.
JUSTIFICATION
OF THE STUDY
Economic
development in India and a favorable economic environment are indicative that
the country has achieved the status of one of the fastest growing economies in
the world. With growing employment opportunities and boom in the businesses,
the two wheeler industry in India has experienced a considerable growth. The
scope of the industry in India is very promising and bright. With increasing demand,
the industry has registered a growth of 11768910 units sold in the FY 2010-11
to 20192672 units in 2017-18. *
Although
the road ahead is promising yet, there are many challenges that need to be
tackled and handled effectively. The contemporary business environment is
becoming increasingly dynamic. Thus, the rationale of this research is to study
the production, sales, growth and performance of various two wheeler companies
in the industry and provide an insight into the aspects that would assist in
overcoming the challenges and increase the prospects.
OBJECTIVES
OF THE STUDY
·
To
study the production, sales, growth and performance of various two wheeler
companies.
·
To
throw light on problems faced by the industry and Future Perspective.
REVIEW
OF LITERATURE
R. A. S. Weerasiri and A. S. M. G.
Mendis (2015) in a
study titled ‘Factors Affecting Purchase Decision for Indian Two Wheelers in
Sri Lankan Market’, strived to study the major factors affecting the purchase
decision of the consumers of Srilanka alongwith the causes behind edge of
Indian two wheelers over others in the foreign market. The research disclosed a
number of presumption for the marketers which included better market
segmentation and the impact of demographic factors such as
age, gender, income level, education level on the purchasing decisions.
Sunila George, RaghbendraJha and
Hari K. Nagarajan (2000) performed
a research to study the competitive structure of the growth of Indian
two-wheeler’s industry. Kendall’s Index of Rank Concordance coupled with the
Evans-Karras test of convergence were the basis of study. The research indicate
that the industry has an oligopoly market structure with economic reforms being
initiated. Accordingly, large dissimilarity in the industrial structure is not
evident. Sales and capacity level of the firms pooled together is crucial.
Saillaja.V (2015) in a ‘Study on Two Wheeler Market
Segmentation and its Strategy in India’ explicated that the gigantic Indian
Two-Wheeler Industry recorded an inclusive growth rate of 9.5 percent between
the years 2006 and 2014. The growth in Indian Automobile Industry is owed to a
sharp rise observed in the two-wheeler segment till 2014. The study concluded
that the 'Make in India' campaign of the Government of India is paving way for
more foreign direct investment in the industry thus augmenting further
developmental chances in the years to come.
Mohd. Akbar Ali Khan,
DatrikaVenkata Madhusudan Rao, Rayalaseema (2018) conducted a study to examine the
effect of selected exogenous and demographic variables on Customer Satisfaction
of top four brands, namely Hero, Bajaj, Honda and TVS brands. Tests were conducted in order to find out the
impact of independent and demographic variables on customer satisfaction. The
results indicated no significant effect of mentioned variables on the consumer
satisfaction. The research was a preliminary attempt to address an issue that
has important implications for services marketing theory and practice.
TOP
PLAYERS IN INDIAN TWO WHEELER INDUSTRY
According
to a report published by financialexress.com* ‘Top 10 two-wheeler manufacturers
in India’, it was surveyed and concluded that 44 units of bikes and scooters
sold every minute in our country. Additionally, as India is the largest two-wheeler
market in the world, hundreds of new vehicles land on the roads every day.
During
the Financial Year 2018-19, the Indian automotive industry sold a total of
14,155,758* units of vehicles in India against 12,756,611* units when compared
to the same period last year, hence accounting for a growth of 10.97 percent*. Out
of these, 11,569,770* units contributed as two-wheelers and the sector saw a
growth of 10.07 percent when compared to the same period last year.
The
top 10 two-wheeler manufacturers and their sales numbers during the period
April - September 2018 are as follows:
|
S.No. |
Brand Name |
Motorcycle Sales |
Scooter Sales |
Moped Sales |
Total Sales |
|
1 |
Hero MotoCorp
Ltd |
3744181 |
391019 |
- |
4135200 |
|
2 |
Honda Motorcycle
& Scooter India (Pvt) Ltd |
1113801 |
2182860 |
- |
3296661 |
|
3 |
TVS Motor
Company Ltd |
529721 |
645020 |
445148 |
1619439 |
|
4 |
Bajaj Auto Ltd |
1287133 |
- |
- |
1287133 |
|
5 |
India Yamaha
Motor Pvt Ltd |
227002 |
198385 |
- |
425387 |
|
6 |
Royal Enfield
(Unit of Eicher Ltd) |
424805 |
- |
- |
424805 |
|
7 |
Suzuki
Motorcycle India Pvt Ltd |
39167 |
291857 |
- |
331014 |
|
8 |
Piaggio Vehicles
Pvt Ltd |
- |
42289 |
- |
42289 |
|
9 |
Mahindra Two
Wheelers Ltd |
780 |
1683 |
- |
2463 |
|
10 |
UM Lohia Two
Wheelers Pvt Ltd |
2115 |
- |
- |
2115 |
Source:https://www.financialexpress.com/auto/bike-news/top-10-two-wheeler-manufacturers-in-india
GROWTH DRIVER OF TWO WHEELERS
With increased industrialization and mechanization on
one side and effective time management on the other side, the wheels are
appearing to take the form of scooters and India is heading closer personalized
transport option that is two wheelers.
The growth drivers for two wheelers indicate a sharp
TURNAROUND due to WOMEN DRIVE. Rising
urbanization, improved roads and a increasing number of women consumers are aiding
in turning the wheels in favour of two wheeler. In the past five years alone,
the share of scooters in the overall market in the country has risen from 20%
to 33%.
MARKET SIZE OF
COMPANIES
The figures mentioned underneath indicate that India
is having a very promising two wheeler. Year after years, the industry is
showing a sharp up rise.
·
Hero
MotoCorp - India's
largest two-wheeler manufacturer sold a total of 41,35,200 units of
two-wheelers during April - September 2018.
·
Honda
Motorcycle and Scooter IndiaThe
sales of Honda during the aforesaid period accounted to 32,96,661 units.
·
TVS
Motor Company - A
wide variety of product range along with the recent launches helped TVS Motor
Company achieve a growth of 10.04 percent. During the period April to September
2018, the company sold a total of 16,19,439 units of two-wheelers.
·
Bajaj
Auto - Bajaj Auto during
the period 12,87,133 units of two-wheelers showing an impressive growth of
27.37 percent compared to the same period last year.
·
India
Yamaha Pvt Ltd - The
company sold a total of 425387 units of two-wheelers during the period.
·
Royal
Enfield - Royal
Enfield, the brand known for thumping cruisers sold a total of 4,24,805 units
of its motorcycles during the period April to September 2018, thereby
registering a year on year (YoY) growth of 12.29 percent.
·
Suzuki
Motorcycle India Pvt Ltd - Suzuki
has shown the maximum growth in the list at 37.13 percent as it sold a total of
3,31,014 units of two-wheelers during the first half of the current financial
year.
·
Piaggio
Vehicles Pvt Ltd - Piaggio
sold 42,289 automatic scooters during the first half of the current fiscal,
thereby reporting a growth of 25.62 percent when compared to the same period
last year.
Source:https://auto.economictimes.indiatimes.com/news/two-wheelers/
motorcycles/top-10-two-wheeler-makers-in-fy19-bajaj-
PROBLEMS AND
FUTURE CHALLENGES
Goods and Service
Tax
The
top Indian two wheeler companies have been urging the government to lower down
the GST on their products from the current rate of 28%. They defend saying that
their product is aimed at assisting the daily mobility needs of the masses and
thus 28% is a higher levy specially when the industry is confronted with a
series of challenges.
Insurance
adversity
September
2018 saw a double insurance whammy in the form of compulsory personal accident
cover rising from ₹1 lakh to ₹15 lakh resulting in higher
payouts for third-party premiums.
Income
realities
India
is a country with a diverse landscape and yet another problem is purchasing
power of the people. Income realities need to be reckoned with in India where
there are people who cannot afford to buy a two-wheeler. It is very difficult
for them to absorb price hike shocks.
Existential
problem
India’s
two wheeler industry is struggling with a peculiar existential problem, placing
a question as to which option is better, more for less or less for more. The
shrinking margin problem has become a focal point for the two wheeler producers
and has become an important calculus.
Flood
of cheap imports
The
cheap imports of the contemporary product in the form of e-bikes area hard fact
that needs to be factored in first. For instance, the present battery cost of
$250/kWh would not make it viable for the end-user and would have to come down
to $100/kWh. Additionally, if battery makers are assured of two million units
annually from two-wheeler companies, their investments would be justified. If
this is not in place, the Government may have to cough up huge subsidies to the
tune of ₹1 lakh/vehicle; on an estimated 25 million two-wheelers in
2025, it would be ₹250,000 crores.
FUTURE
OUTLOOK AND PROJECTIONS
A report titled “India Used Two Wheelers Market
Outlook to 2023 – By Unorganized and Organized Sector, By C2C and B2C
Distribution Channel, By Stock Piece and Customized Two Wheelers By Motorcycles
and Scooters” presents an analytical overview of pre-owned two
wheelers services in India. The report focuses on sales volume, industry
revenue and segmentation by unorganized and organized sector. The report also
covers the overall competitive landscape; government role and regulations,
growth restraints, drivers, trends and developments. The report concludes with
market projections for future for the market described above highlighting the
major opportunities and challenges.
It
is anticipated that the used two wheelers market in India will continue to grow
in the coming years as used vehicles are much cheaper to purchase than a new
one. Projections for the future suggest that the overall market for used two
wheelers in India is likely to showcase a vibrant growth in terms of sales
volume in FY’2023. Individuals mostly in smaller cities and towns who wish to
own a vehicle begin with buying a second hand two-wheeler to get hold of it. In
addition, local dealers who have been facing tough competition from the online
classifieds will be seen associating with the online players to reach out to
greater audiences.
Market
outlook of Indian Scooter and Motorcycle
Future
of the two-wheeler industry in India gives critical information about Two
Wheeler Industry. ACG expect that over next coming year the three-tier
structure of the industry which was 20 percent* for the entry-level segment, 60
percent* in value for the mid-level and 20 percent* at a premium level for the
time and the current trend has moved to 30-50-20 percent and it is on its way
to moving to 35-40-25 percent* structure. This means the middle-level market is
getting squeezed out, which in turn is very good for companies like, Yamaha,
Bajaj, Suzuki. Hero Motocorp and Honda need to introduce new innovative product
range in this segment since these companies are the major players of value plus
segment.
Indian Two-Wheeler Industry has seen 13%, Scooter
segment 9%, and Motorcycle segment 16% growth in the year 2018 compare to the
year 2017.
In Scooter segment, Suzuki and TVS gained 2% market
share and market leader Honda lost 1% and Yamaha and Hero lost 2% market share
in 2018. The Hero is trying to penetrate this segment with mix product and
marketing strategy but could not achieve the desired result. The companies
shall enter the electric vehicle segment with new motorcycles and scooters in
India.
Source:
https://www.autobei.com/autoreports/two-wheeler/future-of-two-wheeler-industry-in-india
CONCLUSION
In
a developing country like India, where a sizeable proportion of the population
comprises of the middle class, and where 70% lives in rural areas, a
two-wheeler (particularly bikes) is considered to be the most suitable vehicle.
The Indian consumers’ brand preference for two-wheeler bikes is based on
mileage, price and maintenance cost and road conditions. Amongst the different
media that are used, television is the most effective in influencing the
consumers’ buying decisions. Keeping in view the ever increasing “growth rate”
of population, prevailing standards of living and cost of vehicles, two-wheeler
bikes would continue to dominate the automobile industry in India.
REFERENCES:
Books
and Journals
1. Kothari, C.R. & Gupta, K. K. Research Methodology. New Delhi: New Age International (p) Ltd.
2. Anandalakshmy, A. & Brindha, K.
(2017). Women’s Preference of Two Wheelers with Special Reference to Coimbatore
City. International Journal of Current
Research and Modern Education,
2(1), 79-84.
3.
Khan,
A. A. & MadhusudanRao D.V. (2018). A study on Two –Wheeler Consumers
Behaviour Towards Customer Satisfaction. International
Journal of Research Granthaalayah, 6 (2).
4. Kotler, P. Marketing Management, (11th edition). New Delhi, India : Prentice Hall of India Pvt. Ltd.
5. Weerasiri, R. A. S. & Mendis, A.
S. M. G. (2015). Factors Affecting Purchase Decision for Indian Two Wheelers in
Sri Lankan Market . Kelaniya Journal of
Management, 4(2), 10-22.
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Saillaja,
V. (2013). Study on Two Wheeler Market Segmentation and its Strategy in India. International Journal of Science and
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the Two-wheeler Industry in India. ASARC Working Papers 2002-02, The Australian National University, Australia
South Asia Research Centre.
Websites
and Links:
1.
www.tvsmotor.com
2.
www.hondamotor.com
4.
https://auto.economictimes.indiatimes.com
› ... › Motorcycles
8.
https://www.thehindubusinessline.com/specials/auto-focus/two-wheeler-companies-seek-lower-gst-as-challenges-mount/article25962164.ece
Reports
1.
Auto
India-March &June 2006
2.
Motor
India-Feb &June 2006
3.
The
Hindu Survey of Indian industry, 2003
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