Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

New bike on block: US co UM to ride into Hero & Bajaj’s mass markets

Apr 13 2014, 01:28 IST
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UM will first launch the ‘Renegade’ series in October, which includes the 230 cc Commando and 200 cc Renegade Sport. UM will first launch the ‘Renegade’ series in October, which includes the 230 cc Commando and 200 cc Renegade Sport.
SummaryDomestic two-wheeler majors Hero MotoCorp, Bajaj Auto and Royal Enfield will soon face a new challenger in the mass and premium bike segments.

Domestic two-wheeler majors Hero MotoCorp, Bajaj Auto and Royal Enfield will soon face a new challenger in the mass and premium bike segments. US-based UM Global, a major player in South America and Africa, plans to ride into India — the world’s largest bike market — with its range of bikes starting from 100 cc and going up to 400 cc.

UM will first launch the ‘Renegade’ series in October, which includes the 230 cc Commando and 200 cc Renegade Sport. Priced around R1-1.5 lakh, these models will directly compete with Royal Enfield’s Bullet and Thunderbird models, Bajaj’s Pulsar and KTM’s Duke, apart from Hero’s Karizma. These will be followed by more premium 300 cc and 400 cc bikes, which will be priced competitively around R2 lakh.

Rajeev Mishra, director, UM India, told FE that the company is in talks with two companies in the National Capital Region, one of which will be finalised as the local JV partner this month. This partner will set up an assembly plant, in which UM and the company will invest R100 crore. Dealers, of which the company plans to have about 25 across 15 major cities initially, will be appointed from July onwards.

“We want to create our own niche. In India, there is space in the cruiser segment where you only have Royal Enfield today. The Harley and Triumph models are too expensive. This segment of bikes, priced over R1 lakh, is growing at 45% and is currently at two lakh units a year. We expect this to touch four lakh units in five years, with our company having a 10% share,” Mishra said. UM will start with a production capacity of up to 5,000 units a month, taking it to 15,000 a month in three years, when it aims to export a third of the production to south-east Asia.

While, initially, the bikes will be assembled from imported CKD kits, the company is aiming at a localisation of 40-50% to keep costs low.

In the third stage, UM will introduce products in the mass bike market of 100 to 125-cc bikes where Hero’s Splendor and Passion brands are the market leaders and Bajaj’s Discover is also a strong player. About 84% of volumes from India’s 104 million-unit annual bike market (up about 3% in FY14) came from the mass 100 to 125-cc segments. Meanwhile, premium bikes in the segment over 200 cc accounted for 3.5% of the market, the remaining volumes coming from the 135-cc and 150-cc segments.

“The 100-cc and 125-cc models are largely sold in Africa and manufactured out of China. In small numbers, we also sell them in South America. We will launch these models in two to three years when we have the brand equity in place and once we achieve the critical volumes and establish our production base. That will help us challenge the major players at their price points,” Mishra added.

UM has already set up a research and development centre in Delhi, which is currently developing two all-new engines for the Indian market, including a 350-cc, water-cooled V-twin engine – a first in the market.

The $800-million UM Global is a relatively young player in the global two-wheeler industry, with manufacturing starting only in 2000. The Miami-based company was started by Colombian businessmen and, today, it has plants in China, Venezuela and Angola, with a sales network in 45 countries.

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