The 200-500cc constitutes just 2% of the market, but is growing at 41%; the 500cc-plus segment constitutes only 1% of the market, but is growing at 146%
India is a prominent market in the two-wheeler space, with motorcycles and scooters serving as viable entry-level propositions for first-time users—both in urban and rural settings.
The motorcycle industry has found mindshare with the single, urban, male consumer. The industry has leveraged a consumeristic lifestyle to become the leading transportation option amongst the youth, and also the need-based solution for transportation for a large part of working population.
But, as the motorcycle industry starts to mature (18.5 million units in 2015 from 15.4 million in 2012, at a CAGR of 6%), it is interesting to observe that home-grown industry has woken up to a newly-evolved category—the passionate and discerning Indian biker.
This may be the next wave of growth. Hence, OEMs will need to start thinking about ‘smart marketing’ and ‘smart distribution strategies’ which will be pivotal to shaping propositions, especially with the entry of MNCs that seem to be looking for a piece of the growing ‘luxury motorcycle’ pie.
There are four clear macro trends that are expected to drive growth in the luxury space, across purchase categories.
* Rising population of HNIs (high networth individuals). There were as many as 117,000 HNIs in 2014, which are expected to grow to 343,000 in 2019, with a proportionate increase in HNI asset base;
* The world’s largest youth population already (65% of population under the age of 35) and 50% under 25 years of age;
* Rapid pace of urbanisation, which stood at 31% (as per 2011 Census) and is expected to grow at 2.5% per annum;
* Dipping dependency ratios, especially in urban areas.
These macro trends, along with increased access to lifestyles of developed, high-income countries—either through travel or global media—are likely to result in three key behavioural and consumption mix changes in young consumers:
* Increasing consumerism;
* Appetite for experimentation;
* Brand consciousness.
Cutting across to the motorcycle market in India, we briefly examine some industry facts before we explore its interplay with the new-age luxury consumers that we discussed earlier. The motorcycle market can be broadly segmented on the basis of engine displacement in four segments:
* 500cc-plus (ultra-luxury and sports bikes)
* 200-500cc (premium/entry-sport)
* 110-200cc (prestige and upwardly mobile)
* 75-110cc (value/workhorses).
Focusing on the premium/entry-sport segment and the ultra-luxury/sports bike segment, the 200-500cc constitutes just 2% of the market, but is growing at 41%, and upgrades (from lower engine capacities) are typically based on experiential, lifestyle, emotional connect and brand choices, especially among urban youth. In this segment, the market is divided between cruisers and sports bikes—with cruisers and sport-street bikes dominating this category.
The 500cc-plus segment constitutes only 1% of the market, but is growing the fastest, at 146%, with the arrival of reputed international brands. This is beyond the presence of Japanese players and also includes players from Europe and the US. The 1,000cc-plus super bikes segment has seen the entry of marquee brands, with prices ranging from Rs 12-35 lakh.
It is interesting to note that even within the 500cc-plus segment, the 500-800cc market (consisting of 77% of the 500cc-plus market) is growing at 177% year-on-year. The 1,600cc-plus market segment (consisting of 4% of the 500cc-plus market) is growing at 62% year-on-year. The other two sub-segments—800-1,000cc and 1,000-1,600cc—have been growing modestly over the past year.
We feel there are a few key imperatives that OEMs need to watch out for as they look to gear up and target these premium and ultra-luxury segments.
Identifying the key consumer segments and their needs will be the key. The current forums and tools for engaging buyers (launch parties, free accessories, etc) are different proposition from the types of things that may be needed to be done to target ‘passion enthusiasts’. The typically encountered engagement initiatives include exotic biker trails, regular biker cafes, interest groups, etc.
Focused network strategy
Identifying ‘luxury clusters’ in India and the key HNI ‘micro-markets’ within these clusters will be crucial for understanding the physical footprint required in terms of biker cafes and dealership presence.
Rich customer experience
* Dealerships/stores which focus on building the experience, both around the product and also the biking experience, uniquely addressed to each of the identified customer segments;
* Tie-ups will be critical through stalls in upmarket malls, partnerships with privileged memberships across hospitality and travel partners, etc;
* Continuous engagement beyond the store will have to be built by creating multiple platforms;
* Building brand exclusivity by focusing on brand development;
* Digital engagement encompassing awareness-building, influencing (through partnerships with blogs, magazines, TV shows), customisation of buying experience, after-sales engagement and loyalty that can create a fan base.
Training on the entire range of products and consistent communication for specific customer segments and focus on selling experiences rather than getting into product technical features.
It will be interesting to see how Indian home-grown majors treat the premium segment and the strategies they adopt for growth (both organic and inorganic). What is clear is that they will need to gear up to take on the heavy hitters from both the West and the East, as this market heats up in India in 2016 and beyond.
Didyala is managing director for Automotive and Industrial Equipment; Chakrabarty is principal, Accenture Strategy in India.