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1. Indian Two Wheeler Market Analysis Indian Two Wheelers Market Analysis Autobei Consulting Group
(ACG) Indian Two Wheeler Market Analysis
2. Two Wheeler Industry overview The Indian two-wheeler (2W) industry registered sales volumes of 13.7
million units in 2012-13, a growth of 2.9% over the previous year FY 2011-12. Other automobile segments
like passenger car and commercial vehicle (M&HCV), shown de growth due to slowdown in overall economy.
Market sentiments are negative due to high inflation, fuel prices and interest rates - the 2.9% growth
recorded by the 2W industry which is less compare to last year growth of 14%. Feb 2013 data released by
MSO , manufacturing index was also does not show confidence in this sector. Scooter segment has shown
14.4% growth where Motorcycle has shown .1% growth only this year. Indian and foreign 2W companies are
focusing more on export from India specially Asia Pacific (Vietnam. Thailand, Indonesia etc) & Africa
countries where 2W market is having potential. Piaggio has launched its Vespa model and also plan for
export from India. Mahindra need to revive its brand position and product value specially brand image in
market. Increase in wages are important factor for this market and this year ACG does not see high
increment in wages over last year. Other factor to increase sale would be replacement market which mainly
consist of present 2W owners with an aspiration to upgrade. Autobei Consulting Group (ACG) Indian Two
Wheeler Market Analysis
3. Copyright ACG holds all copyrights of this analysis. It is forbidden to sell or publish in whole or in part
without prior permission from ACG. This information does not constitute an offer to exchange or sell or an
offer to exchange or buy any securities. Autobei Consulting Group (ACG) Indian Two Wheeler Market
Analysis
4. Two Wheeler Industry Overview FY 2012-13 Industry Overview 16,000,000 350.0% 3871700%
13,409,151 14,000,000 13,797,748 300.0% 12,000,000 250.0% 178.4% 10,000,000 200.0% 8,000,000
150.0% 6,042,902 5,912,538 6,000,000 100.0% 30.6% 2,566,757 4,000,000 -2.2% 2,000,000 -4.0%
1,996,294 2,606,841 2,463,863 1,895,480 53.7% 1,771,412 22.2% 50.0% 2.9% 2.1% -21.5% -6.5% 338,684
413,977 355,493 362,843 78,546 120,694 134,518 105,537 0.0% 0 38,718 476 1,325 0 -50.0% Hero Honda
Bajaj TVS Suzuki Yamaha FY 2011-12 FY 2012-13 Royal Enfield Mahindra Piaggio Harley-Davidson Total
Growth FY 2012-13 Source: SIAM, ACG analysis Hero Motor is still number one in two wheeler segment,
however registered de growth and lost 2% market share in FY 2012-13 compare to FY 2011-12, Honda
which is very aggressive in India now at Number two position with 19% market share. It is interesting to see
the two wheeler industry evolve after split of Hero Honda JV which had ideal synergies for Indian market
Source: SIAM, ACG Autobei Consulting Group (ACG) 3 Indian Two Wheeler Market Analysis
5. Industry Overview FY 2012-13 OEM wise Scooter segment Motor Cycle 56% 53% 49% 42% 25% 19%
16% 19% 15% 12% 11% 11% 5% 8% 2% Hero TVS Suzuki FY 2011-12 Mahindra Yamaha Piaggio FY
2012-13 6% 6% 0% 1% 3% 0% Honda 24% Hero Bajaj Honda TVS 4% 3% Yamaha FY 2011-12 1% 1% 0%
1% Royal Enfield Suzuki 0.00% 0.04% Mahindra 0.00% 0.01% Harley-Davidson FY 2012-13 Source: SIAM,
ACG Honda is market leader in scooter segment from couple of years, Honda Activa is main driver for this
market share. Bajaj is market leader in sports bike segment with around 50% market share and 24% market
share in Motorcylce segment Autobei Consulting Group (ACG) Indian Two Wheeler Market Analysis
6. Brand position Brand position*, Premium segment Mass Market Brand position* American, European
OEM are dominant Brands in FY 201-12 and FY 12-13 in premium segment Source: ACG Brandimage
study report 2012 * Motorcycle segment Autobei Consulting Group (ACG) Indian Two Wheeler Market
Analysis
7. Critical purchase criteria Purchase criteria Market size by Engine Purchase pattern 2020 2012 Style
&Look Price Entry level Brand Mid size Service Fuel economy Premium 0% 20% 40% 100-125cc 60% 80%
100% 120% More than 125cc Source: ACG market study report 2012 Entry level segment would overlap
with Mid size segment by 2020 Autobei Consulting Group (ACG) Indian Two Wheeler Market Analysis
8. Purchase cycle & Penetration Age Segment Key factors Upto 22 years Bike Power/Style 23- 30 years Mid
segment Bike Mileage 30-40 years Mid segment bike 40-50 years Scooter Comfort/Brand More than 50
years Scooter Comfort Scooter/ Premium bike Multi purpose/ Aspiration Source: ACG market study report
2012 Age wise Penetration ACG has studied on purchase behavior of Scooter and Bike vehicles There is

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strong fluctuation of vehicle choice as per age change. 30-40 people age group Prefer to buy Scooter
compare to bikes due to versatile use of scooter. Some people with higher aspiration level graduate to
premium segment. Upto 22 years 25 20 15 10 5 0 More than 50 years Two wheeler products would be
based on three main criteria by 2020: - Application - Safety - Age Product Portfolio 40-50 years 23- 30 years
30-40 years 2008 2012 Source: ACG market study report 2012 Autobei Consulting Group (ACG) Indian Two
Wheeler Market Analysis
9. Contact Purchase Full customized report: Arun Aravindan Customized Research - Global Market Senior
Manager Autobei Consulting Group (ACG) Phone - +91 9544061665 Email : arun.ka@autobei.com
Website : www.autobei.com About Autobei Consulting Group (ACG): Autobei Consulting Group - ACG is a
management consulting group which has leveraged on its expertise and proprietary databases to provide
"Customized Solutions" in areas such Sales Analysis, Business Planning, Market assessment and
Project Feasibility on Global Commercial Vehicle Industry. We are capable of providing exclusively State
wise, segment data like Tipper, Tractor and Haulage. With a strong network for primary data procurement,
we can get any tailor made research reports ready within a short interval of time. ACG also serve as a webplatform where one can find all the required information regarding Passenger vehicles, Commercial vehicle,
two wheelers etc across the globe. We provide a Global Platform for Truck and Bus Manufacturers, Dealers,
Vendors and Fleet Owners to come together and gather required information within seconds without jumping
websites. Declaration: This publication contains information in summary form and is therefore intended for
general guidance only. It is not intended to be a substitute for detailed research or the exercise of
professional judgment. Neither ACG nor any other member of the organization can accept any responsibility
for loss occasioned to any person acting or refraining from action as a result of any material in this
publication. Autobei Consulting Group (ACG) Indian Two Wheeler Market Analysis

Due to the recent increase in the number of multinationals in India, the income
levelof the employees have risen drastically and has made CC-segment cars an
entry levelcar for a lot of people. The average age of a CC-segment car owner has
also droppedfrom 35 years to 31 years in India.
5.Increase In Affordability
The demand for passenger cars is driven mainly by greater affordability, which in
turnincreases the aspiration level of the customers. Today with high amount of
disposableincome in the hand of Indian youth, who forms major portion of the
population, PVmarket has larger addressable market.
6.Demographic Drivers
Cars being aspirational products, purchase decisions are influenced by the
overalleconomic environment. Increase in per capita income increases the
consumptiontendency of the customer. Growth in per capita income and rising
aspirations andchanging lifestyle is leading to increased preference for carsover
two-wheelers, which is also having a positive rub off on car demand.
7.Availability Of Easy Financing Options

A majority of PV purchases are financed through financial institutions. Over the

past4-5 years car industry has been benefited through significant increase in
affordabilitydue to the decrease in EMIs. Car finance rates dropped from 17% in
2000-01 to 11%in 2005-06. However it has increased and averaged at 13.75% in
2006-07. The currenthardening of interest rates is expected to affect demand
byreducing affordability.8.
New Offerings

Car sales increase when a new model hits the market. Due to escalation
incompetition in Indian car market, frequency of new model launches has increased.
Inthe past one year only the Indian car market has seen many launches namely
SX4,Swift Diesel, Zen Estilo, Spark, Logan, etc.
9.Exports
The share of exports from domestic production is currently at 12-13%, which is
muchlower than current export hubs. Currently, Indias share of global passenger
carsexport volume stands at less than 1%. But India is fast emerging as a
manufacturinghub for leading global car makers, and several manufacturers have
already firmed up plans for setting up manufacturing bases in India, which will also
be used for exports.3

Supply Factors
1.Presence Across Segments
Manufacturers with presence across various product segments can ensure
higher volume and better capacity utilization by using the common manufacturing
capacity.Typically a customer upgrades from one segment to higher segment and
the presenceacross various segments ensures that the company retains its existing
customers.
2.Efficient Operations
Competition in PV segment is very intense and this requires the existing players
toinitiate steps to reduce their cost of production. Effective and successful
operationmethods like platform commonality, reduction in vendor base and
workforcerationalization can help a company immensely.
3.Wide Dealer Network And Availability Of Finance
A wide dealer network helps the company serve customers over wide
geographicalarea. For e.g. Maruti has used its available wide service network as

point of differenceover competitors. The companies are tying up with the financial
institutions havingrural presence to provide additional financing options to
customers in such areas.
4.Access To Latest Technologies
Indian PV segment is highly competitive with as many a 14 players operating in it
andmore than 80 models on the offering. But still any new model launch meets
withincrease in sales volume for the company. Moreover in a time when a
substantial portion of Indian customer is looking to upgrade in higher segment,
companies withlatest technologies and latest models will catch more attentions
5.Price Of The Car
Price of the car is one of the major factors that affect the supply as well as the
demandof a car. If the price of the car is high in the market, the manufacturer or the
supplier will want to supply more units in the market so he can earn more profits.In
the automotive industry where the market type is oligopoly, if one company dropsits
price for the car, there is a huge impact on the sales of the other cars as well as
thesame car. In the market the price of one car is inter-related to the price of the
other cars in the same segment. The best solution is that market equilibrium should
beachieved so that the amount of the quantity demanded should be equal to the
amountof the quantity supplied to achieve maximum profits. A Market Equilibrium is
achieved at the point of intersection of the demand line andthe supply line. The
point is the equilibrium point where the quantity demanded isequal to the quantity
supplied.4

6.Factors Of Production
There are some factors of production which influence the supply of a car likeCost of
Raw MaterialLabour CostMachineryInput CostThese factors influence the supply of a
car largely. If the cost of the raw material(Steel, Spare Parts, Rubber) increases
there will be an increase in the cost of production leading to decrease in profit
margins. Costs like labour costs, machineryand input costs also influence the supply
with the increase or decrease in these costs.7.
Government Policies And Taxes
If there is a change in the government policies regarding the increase in the road
taxcharged or the tax which is to be paid per unit sold, the supply of a car will
fluctuatewith the nature of the change.Recently the government has reduced the
custom duty on inputs and raw materialfrom 20% to 15% which has increased the
supply.
Conclusion

Market economies are assumed to have many buyers and sellers, high
competitionand many substitutes. Monopolies characterize industries in which the
supplier determines prices and high barriers prevent any competitors from entering
the market.Demand and supply refer to the relationship price has with the quantity
consumersdemand and the quantity supplied by producers. As price increases,
quantitydemanded decreases and quantity supplied increases. On the other hand,
elasticitytells us how much quantity demanded or supplied changes when there is a
change inany of the factor. The more the quantity changes, the more elastic the
good or service.By studying various demand and supply factors affecting the
automobile industry wecan conclude that an upturn or downturn in this sector is due
to an aggregate effect of multiple factors. These together govern the economies of
automobile sector