Previously, there were only a handful of two-wheeler models available in the country. Currently, India is the second largest producer of two-wheelers in the world. It stands next only to China and Japan in terms of the number of two-wheelers produced and the sales of two-wheelers respectively. In the year 2005-2006, the annual production of two-wheelers in India stood at around 7600801 units.
The trend of owning two-wheelers is due to a variety of facts peculiar to India. One of the chief factors is poor public transport in many parts of India. Additionally, two-wheelers offer a great deal of convenience and mobility for the Indian family.
Bajaj auto began trading in imported Vespa Scooters in 1948. Meanwhile Automobile Products of India (API) commenced production of scooters in the country in the early 50's. Until 1958, API and Enfield were the only producers of two-wheelers in India. However, Bajaj signed a technical collaboration in 1960 with Piaggio of Italy to produce Bajaj Scooters. This deal expired in 1971.
The condition of motorcycle manufacturers was no different. Until the mid 80's, there were only three major motorcycle manufacturers in India namely Rajdoot, Escorts, and Enfield. The two-wheeler market was opened to foreign manufacturers in the mid 80's. The industry, which had seen a smooth ride before, faced fierce foreign competition.
Motorcycle companies like the Yamaha, Honda, and Kawasaki, set up shop in India in collaboration with various Indian two-wheeler companies. Companies like Escorts, Rajdoot and faced immense competition from smaller 100 cc Japanese technology motorbikes. Bikes manufactured by Hero Honda, the only company manufacturing four-stroke bikes at that time, gained massive popularity.
In the mid 80's, Kinetic introduced a variomatic gearless scooter in collaboration with Honda. This scooter became instantly popular with the younger generation, especially people who found it difficult to use geared scooters. The introduction of scooterettes created another segment for people such as women and teenagers who could not get used to driving either motorcycles or gearless scooters. Many companies such as Kinetc, TVS, and Hero also started manufacturing mopeds that proved immensely popular with people who wanted a simple riding machine.
The change in the government's policy owning to pollution control norms and the Kyoto agreement saw the phasing out of two stroke two-wheelers from production. Currently there are around 10 two-wheeler manufacturers in the country, they being Bajaj, Hero, Hero Honda, Honda, Indus, Kinetic, Royal Enfield, Suzuki, TVS, and Yamaha.
The latest trend in the two-wheeler market is the introduction of electrically operated vehicles from a range of manufacturers such as Indus and Hero. These can be recharged from convenient household electrical points. The only disadvantage is speed, which is restricted to around 25 miles per hour.
Currently, the motorcycle market is witnessing a demand for higher volume engines. Previously, the 100 c bikes were very popular owning to the high fuel efficiency offered. However, the market is maturing fast. Sensing this movement, Bajaj has introduced the Bajaj Pulsar, with 150, 180 and 200 cc engines with Dual Twin Spark Ignition (DTSi) technology.
The Indian two wheeler market is increasingly becoming a price warfield. Everyone and their competitor wants to win the title of the 'World's cheapest bike' and the cutsomer has become the King, actually more like God! But I often wonder if this price based competition is good for the health of the industry. Isn't everyone eating their own margins in the quest for greater marketshare and farther market expansion? And where does this leave smaller players like LML (going through some very tough times as of now), Kinetic (good scooters, questionable field network, trying hard in motorcycles) and even Yamaha and TVS? I am not even talking of Hero Motors.
A big guy like Hero Honda or Bajaj Auto can arm twist suppliers to deliver parts cheaper, which I am sure the suppliers won't mind doing considering the volumes that these two guys offer. Both the Munjal and Bajaj families are also typical in the way they promote companies run by their brothers, cousins, in-laws etc. etc. So Bajaj Auto can always ask for cheaper rates from a Varroc or Auragabad Electricals while Hero Honda can do the same with MAC or Munjal Showa or Omax Auto. But what happens to LML (still makes a lot of its components, very archaic), Kinetic (mostly independent suppliers), TVS (Sundram Group suppliers, who anyways act independenlt, very professional but is it the best way forward?), Yamaha (independent suppliers) or a new entrant like Suzuki (they will buy components from anyone except a Munjal family or a Sundram company)? Without volumes, one is not in a position to get the best prices.
Without the best component prices, the price of the final product goes up. But then you have to fight Bajaj Auto. So you reduce the selling price of the bike. Then your margins nosedive! This seems to be a vicious circle to me : Low volumes > High component prices > High final price > Still lower volumes > Low profitability or another way forward may be Low volumes > High component prices > Low final prices > Compromise on margins > Low profitability. Still another way forward may be like this Low volumes > Low component prices (I compromise on component quality) > Low final product price > High volumes > Low dependability > Low customer satisfaction > Low volumes > Low profitability. Thus the fat gets fatter while the small gets smaller and may eventually get wiped out.
The only way out seems to be technical innovation which can give a low volumes company advantage over a high volume one. Unfortunately low volumes low profitability also means that you don't have major money to invest in R&D. Or in some cases, like TVS, where R&D does get a priority, it is mostly copied very quickly by rivals as most of the R&D is supplier driven. So a Centra loses its technical advantage to a CT 100 very quickly. After all the battle field is of 100cc bikes, not battle tanks.
The other way out of this vicious circle is by concentrating on niches. Indian bike manufacturers till now have focussed on street commuters only. A high percentage of the market is shifting to a low margin, high volume game and smaller manufacturers need to get out of this rut to survive. So Kinetic should not be doing a Boss and TVS should not be putting its energies into a Star or even a Centra. Small companies should be focussing on 150cc + niches and experiment with new bodystyles. Performance and quality should be the marketing weapons rather than price.
Both Ashish Phanse & Deepesh Rathore are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.