Mixed fortunes for bike makers

Written by Yogima Seth | Updated: Jun 1 2008, 05:13am hrs
The 2007-08 downturn in the motorcycle industry in India has been a boon for some and bane for some others. Despite a decline of 12.03% in the overall sales of motorcycles at 57,32,313 units against 65,16,816 units in 2006-07, the market share of Hero Honda Motor Ltd, Honda Motorcycle & Scooters India Ltd (HMSI) and Suzuki Motorcycle India Ltd grew substantially. This, however, had come at the cost of market shares of Bajaj Auto Ltd, TVS Motor Company and Yamaha Motor India Ltd.

According to the figures released by the Society of Indian Automobile Manufacturers (Siam), market share of Hero Honda went up by 6.56% in 2007-08 vis--vis 2006-07, HMSI witnessed a jump of 1.9% in its market share and the market share of Suzuki Motorcycles grew marginally by 0.07%. This is contrary to a dip of 2.96% in the market share of Bajaj Auto or a decline of 4.18% the in market share of Chennai-based TVS Motors and a fall of 1.28% in market share of Yamaha Motors.

The launch of 18 models, including the variants, in last 24 months has been a key building block for growth in the sluggish two-wheeler industry. This coupled with the companys increased focus on brand building efforts and multi focus approach across all segments, helped us to enhance our market share in 2007-08, says Anil Dua, vice-president, Hero Honda. The last few launches from the two-wheelers major, in the 100cc, 125cc and 150cc segments, includes CD Deluxe, Glamour, CBZ Extreme and Hunk.

In 2007-08, the market share of Hero Honda went up from 48.29% to 54.85% at 31,44,101 units compared with 31,47,219 units in 2006-07.

According to Dua, the companys focus on ground level activities also helped to outperform its peers. Hero Honda has expanded its network by 50% to around 2,000 dealers across the country and another 1,000 are in the pipeline with greater emphasis on semi-urban areas that are largely untapped, he says.

For Honda Motorcycle and Scooters India Ltd, the increase in market share was largely due to the success of its face-lifted Honda Shine and Honda Unicorn launched at the beginning of 2007-08 along with the fact that the company is completely absent from the entry-level 100cc segment that was badly hit by a year-long turmoil in the motorcycle industry.

HMSI is present in India in the 125cc and 150cc segments where products are priced in a range of Rs 45,000 to Rs 60,000 and buyers of this segment are not impacted by the unavailability of finance and high interest rates in a big way as compared to buyers of entry-level bikes, says NK Rattan, vice-president, adding that the face-lifts of 125cc Honda Shine and the 150cc Honda Unicon have added to the overall performance of the company. In the last fiscal, HMSIs market share went up from 2.52% in 2006-07 to 4.42% at 2,53,355 units compared with 1,63,997 units in 2006-07.

According to industry experts and analysts, the decline in market share of some of the leading industry players was because of reasons more than one unlike the new model launches that largely contributed to the growth in market share of other players. For instance, while the dominance of 100cc bikes in TVS Motors portfolio led to a dip in its market share, Bajajs increasing focus on exports led to a dip in its domestic market share.

The entry-level segment, which was worst hit in 2007-08 after major banks withdrew from several pockets, especially in northern and western India due to high delinquencies, constitutes over 80% to the total sales of TVS Motors and this brought down the market share of TVS Motors in a big way, says a Mumbai-based analyst, adding that the 350-400 basis point hike in interest rates since December 2006 also added to the decline in total sales of country's third largest two-wheeler manufacturer in a big way.

TVS Motors saw the steepest fall in its market share at 8.77% in 2007-08 against 12.95% in 2006-07. The company sold 5,02,788 units last fiscal compared with 8,44,174 units in 2006-07. Moreover, the controversy over its 125cc Flame disrupted the sales and this further fuelled the decline as the TVS Motors was betting big on the product and was eyeing a substantial increase in its market share through this new offering.

Sensing a dip in sales in the domestic market, the countrys second largest two-wheeler maker, Bajaj Auto, shifted its focus to the overseas markets in a big way. While this resulted in a whopping increase in its total exports from the country, its domestic market share took a beating and came down to below 30% in 2007-08, says an industry expert.

Bajaj Autos total market share in the motorcycle segment came down from 31.89% in 2006-07 to 28.93% in 2007-08 at 16,58,084 units as against 20,78,860 units in the preceding fiscal. Its exports, however, grew by a robust 61.96% at 4,82,089 units in the last fiscal compared with 2,97,659 units in 2006-07.

For Yamaha, the lack of exciting products from the portfolio of Japanese giant and little brand visibility over the last few years could not excite the bike enthusiasts in a significant manner and hence, there was a dip in demand for Yamaha bikes, explains the industry expert, adding that now, with greater emphasis from the company on building brand awareness, for instance coming up with showrooms in malls, it is expected that the sales of Yamaha bikes will pick up in future.