The mid-capacity motorcycle category (bikes with engine size of 250-750cc) is literally stepping on the gas, having shown 28% growth in the first quarter of FY18. Not surprising, given that incomes as well as aspirations are rising, as pointed out by an Edelweiss report: “Within the premium motorcycle segment (150cc and above), demand has markedly shifted towards the over 250cc segment (up from 8% in FY16 to 27% in FY17 of the premium motorcycle market). We attribute this to rising income levels versus cost of vehicle. Another reason is the changing consumer preference, style and brand quotient, as most existing 150-250cc bikes are look-alikes or copies.”
Market leader in the segment, Enfield, with a market share of 95%, acknowledges that others are emulating them, but vow to remain strong. Siddhartha Lal, managing director of parent company Eicher Motors, had said, “Our success in the mid-size motorcycling segment has attracted many other players from within and outside the country. While their entry will help to develop the leisure motorcycling segment further, I am confident that with our extremely strong value proposition and a highly differentiated brand, we will maintain our stronghold on the market.”
In January 2017, Bajaj Auto launched the 373cc Dominar 400. The motorcycle immediately made a dent in the market share of Royal Enfield. In the 350cc-plus but less than or equal to 500cc segment, Royal Enfield’s market share fell to 54% in Q1FY18 from 87% in the same period last year. In August, Bajaj Auto announced a worldwide partnership with the UK-based Triumph Motorcycles. Through the alliance, the company plans to develop mid-capacity motorcycles for the Indian and global markets.
And Mahindra (M&M), which currently sells the ‘Mojo’ in the middle-weight segment, reported losses of Rs 471 crore from its two-wheeler subsidiary, Mahindra Two Wheelers Limited (MTWL), in FY16-17. MTWL is now planning a turnaround by shifting focus to the premium motorcycle segment in the country. For this, M&M through its subsidiary Classic Legends, had in October last year acquired famous British motorcycle brand BSA Company, which would help the company enter the premium motorcycle market and enable it to venture into new international markets. With BSA, the company also acquired the Jawa brand of motorcycles, which has a cult following in the domestic market. MTWL has, however, not disclosed a tentative launch date for the brand in India as of now. The company’s two-wheeler business has seen a significant drop in domestic sales in the quarter ended June 2017. Its motorcycle business saw an 80% decline at 2,727 units in sales for the period. The company told analysts that by the end of this fiscal, MTWL is hoping to trim its losses to Rs 100 crore.
Other players are also slowly finding interest in the mid-weight segment. TVS, for instance, has tied up with German luxury carmaker BMW to launch a motorcycle in this segment, which is expected to roll out in Diwali. Pawan Munjal, chairman and CEO, Hero MotoCorp, had earlier said the company is going to have an ‘enhanced focus’ on the premium category of motorcycles to drive growth in the current fiscal.
While many players are foraying into this segment, experts feel that Royal Enfield is going to continue to have an upper hand in the space. “Due to the first-mover advantage, Royal Enfield continues to remain at the top of this segment,” said an analyst. Abdul Majeed, auto sector lead, PwC India, said, “It will take at least four quarters for other players to even come close to Royal Enfield, provided the other OEMs are able to differentiate themselves and add some more value to their product.”
By Deepak Kumar