Growth of Two Wheeler in India A Case Study The two wheeler segment was the fastest growing segment

in the Indian Automobile Industry. India happens to be the 2nd largest user and 3rd largest manufacturers of two wheelers in the world. In view of the restrictive policies of the Government of India towards passenger cars before liberalization policies were brought into effect, the poor public transport system and the need for personal transport were some factors responsible for strong growth in the two wheeler segment. This segment can be classified into further three categories Scooters, Motorcycles & Mopeds. Bajaj Auto in the year 1948 laid the foundation for two wheelers in India by selling imported Vespa scooters, Enfield India in 1952 started manufacturing motorcycles followed by Escorts in 1960 named Jawa. The motorcycle segment registered a healthy growth during the sixties and accounted for 36% of the total two wheeler sales in 1971-72 for nearly two decades the Industry operated in a sellers market with Bajaj Auto & Automobile products of India as the main players. During the above period little attempt was made to control cost or offer new innovative products thus restricting the choice of the consumer. In 1980 delicensing of the sector brought in hordes of new manufacturers and the focus shifted to branding and product features, till 1990 the

scooters dominated the two wheeler market and registered a share of 60% of the total sales. Bajaj Auto was the leader of scooter manufacturer followed by LML & Kinetic between 1980-1990 the scooter segment registered a healthy growth of 14%.
Up to 1980 Enfield, Escorts and Ideal Jawa were the only major players in the motorcycle segment, in mid 80s the segment picked up momentum and its high growth potential forced all the major players to focus on Motor Bikes.

In the early 80s the motor cycle segment reported a sharp decline in growth on account of high running and maintained cost and the thought that motorcycles were good for rural areas besides they were costlier then scooters & mopeds. Almost all leading players entered into joint ventures for motorcycles for technical collaborations e.g. Honda Suzuki, Yamaha & Kawasaki etc. Motorcycle market was segmented based on price the premium segment Rs. 45,000/- & above the mid segment (Rs. 40-45000) and the entry segment up to Rs. 40,000/Major players in the premium segment were Hero Honda, Enfield, Escorts Yamaha; TVS Suzuki & Bajaj. Hero Honda was the market leader with 35% share followed by Bajaj & TVS Suzuki. In the entry segment Bajaj ruled followed by Hero Honda, Suzuki and Escorts. Intense competition was visible in the mid segment. A healthy growth was visible in the motorcycle sector during late 1980s, but due to rise in fuel prices, high input costs, reduced purchasing power, significant rise in general price

level and credit crunch in consumer financing the industry witnessed a recession. In 1992, due to the entry of new players most of the manufacturers either reported losses or fall in profits. In 1993 the recession eased out, besides 100 CC motorbikes were launched by various companies which were fuel efficient, lighter, and comparatively cheaper, soon the motorcycle segment garnered the largest share of 2 wheeler sales, between 1993 and 1999 it grew at a CAGR of 14.6% and the motorcycle segment grew at a CAGR of 24.3% compared to 11% & 8.6% of scooters & mopeds respectively:Until 1993 all the three segments grew in size but 1999 onwards motorcycles started eating into scooter sales in a big way which was mainly due to fuel efficiency, styling and designing which the scooter manufacturers failed to provide to their consumers. Good monsoons, in the 90s saw a rise in motorcycle demand from the rural or semi urban customers which were 60% of the total demand. In 1999 Hero Honda launched CBZ and just two years after CBZ, over 15 other brands were introduced this was equal to the total number of brands launched in the 4 year period prior to 1999. In 1992 out of five vehicles sold in India 1 used to be a motorcycle. In 2001 one out of every 2 vehicle was a motorcycle between 1993 & 2001 motorcycle industry recorded a compound growth rate of 25% which was unbelievable. By the end of 2001 most of the joint ventures in the motorcycle segment broke due to various diversified opinions between the two parties at various levels or failing

to meet the ever changing taste of the customers both aesthetically and technically Hero Honda succeeded from Honda in 2004 this forced Indian companies to invest heavily in R&D for manufacturing indigenously developed models. In 2001 there were over 30 motorcycle brands but the top 5 brands accounted for 60% of the total sales, the remaining 25 brands had to contend with 40% share of the total sales, although there were numerous models to choose from yet companies were under pressure to cut costs, enhance technology, up gradation and styling. It is felt to sustain the same growth and sales in the motorcycle segment, this segment will have to totally eat into the market of scooters and mopeds, but with the high demand from female customers for scooterettes and mopeds it seems highly unlikely in future, since the motorcycle industry grew steadily for 8 years stages in the product life cycle would apply to the field sooner. Rather then later and the decline stage would invariably come some day. 1.
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What do you understand by a sellers market? What is product life cycle? What do you think is future of the motorcycle segment in India? Explain the relevance of C.A.G.R? Why were the maximum numbers of models launched between (2000-2001)? Which companies amounted to 60% of the total sales of motorcycles and in which year?