COVER PAGE
Title
:
Two-wheeler Industry
Subject
:
Strategic Management
Level
:
Mba-II
Batch
:
9-Oct
Program
:
GPBL
Subject tutor
:
Mr. L. Surender
Name of Student
:
Arun Prakaash V.G
Register no.
:
GPBL-B/009-003
Date of submission
:
March31 2010
Word count
:
2114
Word Limit
:
2000
1
TABLE OF CONTENT Pg: No:
Topic COVER PAGE
1
TABLE OF CONTENT
2
INTRODUCT ION
3
INDUSTRY
TO TWO-WHEELER INDUSTRY
COMPAR ISON
3
TABLE: 1 - Domestic market share
3
CHART: 1 - Domestic market share
3
Table: 2 - Automobile Export trends
4
CHART:2 MARKET SHARE OF MAJOR PLAYERS IN TWO-WHEELER INDUSTRY:
4
WHY SO MUCH GROWTH???
4
PRODUCT SEGMENTAT ION OF MAJOR PLAYERS IN TWO-WHEELER IINDUSTRY:
5
PEST ANALYS IS OF TWO-WHEELER INDUSTRY:
6,7
PORTER¶S 5 FORCES ANALYS IS
7,8
CONCLUSION
9
REFERENCES
10
2
INTRODUCT ION
TO TWO-WHEELER INDUSTRY:
Automobile Industry Industry is one of the of the largest industries ndustries in global market. TwoTwowheeler segmen segment is one of the of the most importan important compon omponents of the of the automobile sec sector whic 55. India India is the sec hich has been been in existenc existence e in the coun ountry sinc since e 1955. second largest twowheeler market in the world, orld, it stand stands s next to Japan apan and chi chin na in terms of n of number of two-w o-wheelers prod produced and sold sold. In India India there are 7 scooters man manufac ufacturers, turers, 9 motor cycle man manufac ufacturers and 3 moped mopeds man manufac ufacturers. In earlier d earlier day¶s TwoTwo-w wheeler industry ndustry had had three segmen segments one is bike and other two bein being Scooters Scooters and moped mopeds, but in presen present we can see mostly bikes sinc since e there is not that muc much of s of scooters and moped mopeds are prod produced no nowadays, ays, due due to new tec technologies and innovatio nnovation n. Recently the biggest seller of s of scooters that is Bajaj Auto ajaj Auto has stopped stoppe d prod producing or selli or sellin ng scooters sinc since e there is no demand emand in the market for the for the scooters. So we are main mainly goin going to look at the bikes in two-w o-wheelers industry. ndustry. Bikes are also divid ivided in to two groups automatic automatic gear bikes and gear two-w o-wheelers, heelers, again again gear bikes are classified lassified in to two-stroke engin gine and four stroke engin gine. INDUSTRY
COMPARISON:
Acc Accor or ding to SI AM AM (So (Society of Ind of India ian n Automobile Man Manufac ufacturers), turers), the domestic omestic market share in 2008-09 for t for two-w o-wheelers industry ndustry is 76. 76.49% whic hich is highest when hen compared ompared to the category wise market share with passen passenger vehi ger vehic cles, les, commer commer cial 3.95 and 3. 3.6 respec vehic vehi cles and three wheelers whic hich has market share of 15.96, 3. respectively as shown shown in Table Table no.1. TABLE: 1 Passen assenger V ger Vehic ehicles Commer cial Vehic ehicles Three wheelers Two Two wheelers CHART: 1
DOME DOMESTIC STIC MARK MARKE ET SH AR ARE FOR 2008-09 15.96%
3.95% 3.6% 76. 76.49%
Passenger Vehicles Commercial Vehicles Three wheelers Two wheelers
3
Aggressive marketin marketi ng by the auto fin finance nce compan ompany have also played played enormous and sign signific ificant role in boostin boosti ng automobile dema emand, bec because it highly influenc fluence ed the midd middle le income ncome group people to go for the for the two wheeler. Sometimes even even low low income ncome group people affor d to buy two-w o-wheelers bec because of easy installmen stallment option options. Even Even in Automobiles Export trend trends s two-w o-wheeler Industry Industry captures the first position position in terms of n of number of vehi of vehic cles sold sold in a year when hen compare compared d to that of passen passenger vehi ger vehic cles, les, commer commer cial vehic vehicles and three wheelers. From seein seeing Table no.2 o.2 we can clearly clearly see that two-w o-wheeler has played played major role in all the three years and also market share of key of key players have given given in chart chart no.2 o.2 whi whic ch show shows her 0-hond -honda a coverin overi ng major portion portion compare compared d to all others. Automobile Export trends ± Table: 2
YEAR
2006-07
Passenger vehicles
2007-08
198452
218401
335739
49537
58994
42673
Three-wheelers
143896
141225
148074
Two-wheelers
619644
819793
1004174
Commercial vehicles
CHART: 2 MARKET SHARE OF MAJOR PLAYERS IN TWO-WHEELER INDUSTRY:
14%
18%
Tvs motors Bajaj auto ltd
41%
27%
Hero honda Others
WHY SO MUCH GROWTH??? In India India major key players in two wheeler i heeler industry ndustry are Hero Honda nda Motors Ltd (HHM (HHML), Bajaj Bajaj Auto Auto,, Yamaha Yamaha and TVs TVs motor compan ompany Ltd. In 2008-09 Hero Honda nda is position positioned at number one in terms of maximum number of vehi of vehic cles sold sold in a year. Since nce bikes are available with gears and without without gears, gears, two strokes and four stroke four stroke and also bikes are available in differe differen nt kind kind of ³cc´ of ³cc´ (whi (whic ch implies speed speed of the of the bike in tec technical terms) whic hich varies from 100cc to 350cc. cc. Because there is lot of d of differenc ifference e given given to 4
2008-09
people it attrac attracts more segmen segments of people of people,, it attrac attracts both the gend gender er sinc since e bikes are available with gears and without without gears and it attrac attracts age group from 12 to 56. 56. But in India India as per d per drivin riving rules lic license is given given to the people only when hen they attain attain the age of even people aged aged before 12 are used used to drive bike and also above 18. But nowadays even the age of 56 of 56.. Since nce lot of te of tec chnologies has developed eveloped in two-w o-wheelers like push start, start, maximum mileage bike, bike, alloy wheels, heels, dis disc c break etc« etc« it makes most of the of the people to go for the for the two-w o-wheeler and also it attrac attracts low low midd middle le income ncome group people to high income ncome group people sinc since e bikes are available from low low-end -end to very high-end high-end in terms of tec technology and mon money. Apart from this the fac factor w tor whic hich influenc fluence e the grow growth of t of two-w o-wheeler i heeler industries ndustries are as follow follows: y y y y y y
Lower interest rates Easin Easi ng liquid liquidity situation situation Mod Moder nization izatio n of you of youn ng gen generation eration A well-equipped ell-equipped midd middlele- class tran transport Fuel-Effic uel-Effi cien ient Comfort level.
PRODUCT SEGMENTAT ION OF MAJOR PLAYERS IN TWO-WHEELER INDUSTRY: HERO HONDA: HONDA: Up to 100cc ± CD Da Dawn, CD Deluxe Deluxe,, Sple Splend ndor or plus plus,, Sple Splend ndor or NXG, Passion assion plus. 100
to 135cc ± Glamour Glamour , Super Super Splend plendor. or.
More than than 150cc - Ac Achiever , CBZCBZ- extreme, extreme, Hu Hunk and Karizma. Karizma.
BAJAJ: BAJAJ: Up to 100cc ± Plati Platin na, 100
to 135cc ± XCDXCD- 125 DTS Si Si, Dis Disc cover 135, Kristal Kristal DTSi. DTSi.
More than than 150cccc- Pulsar- 150, 180, 200, 220 DTSi DTSi, Aven Avenger DTS ger DTSi. i.
TVS MOTORS: MOTORS: Up to 100cc ± Scooty Scooty pep+, pep+, Star Star C City 100
5
to 135cc ± Flame Flame,, Vi Victor GLX tor GLX
More than than 150cccc- Apac Apache RTR. RTR. PEST ANALYS IS ON TWO-WHEELER INDUSTRY: Politic olitical, al, economic, omic, soc social and tec technology are those fac factors whic hich affec affects the exter nal environ vironmen ment. Political Aspects ± Tax Tax polic policies, ies, trad trade regulation, regulatio n, politic politi cal influenc fluence e and some of the of the rules and regulation regulatio n of gover of gover nmen ment polic policies whic hich is consid sidered ered in politic politi cal analysis. The correc orrection tions in Exc Excise duty on elec electric tric vehic vehicles whic hich will enable the man manufac ufacturers take CENV AT AT cre cred dit and exemption exemption of c of customs duty on Elec Electric tric Vehi Vehic cles parts and also weighted eighted de deduction tion for i for in-house R&D to 200% from 150% and outsour ced R&D from 125% to 175%. This would ould encourage ncourage industry ndustry that muc much bec because this pric price hike isn isn¶t expec expected ted to impac impact sales in a sign signific ificant way as a majority of t of two-w o-wheeler buyers were prepared, prepared, and to certain ertai n extend extend brac braced up and read ready to shell out extra mon money for their for their favorite favorite set of w of wheels. Economic Aspects ± Economic omic fac factor are tor are those whic hich is influenc fluence ed by economic omic grow growth, th, interest rate, rate, exc exchan hange rate and inflation flation rate. Abund Abunda ant and low low cost cost labour c labour coupled oupled with with loc local availability of ra of raw w material like steel, steel, alumin aluminum and natural natural rubber has plac placed India India amon amongst the low low cost cost prod producing centers of t of two-w o-wheelers. Consequen sequently, tly, C AR ARE Resear ch antic ticipan ipants buoyan buoyant grow growth in two-w o-wheelers exports as well. Abund Abunda ance nce of lo of low w labour a labour and raw raw material gives India India an upper ha upper hand nd in the export. Since nce man many auto fin finance nce compan ompany laid laid easy installmen stallment rules with less interest rate it makes more segmen segment people to go for it. for it. Social Aspects ± So Social aspec aspects of t of two-w o-wheelers industry ndustry are Popularity, opularity , Sub Subc culture, ulture, Mobility and safety. In numerous numerous cultures, ultures, motor cycles are the primary mean means of motorized motorize d tran transport. India India is the sec second largest motor cycle markets in the world orld next next to Chin hina. Socially man many motor cycle organ organization ization raise mon money for c for charities through organ organized ized rid ride and even events. Man Many people rid ride motor cycle for various for various reason reasons, those reason reasons are increasi ncreasin ngly prac practic tical, al, with with rid riders optin opting for a for a pow powered ered two-w o-wheeler as a cost-effic ost-effi cien ient alter native to infrequen frequent and expen expensive public public tran transport system, system, or as or as a mean means of avoi of avoid ding or red reducing the effec effect of urba of urban n co congestion gestion. Motor-c Motor-cycle gives a great advan vantage to the spec specified ified desig design nation ation where where other buses cannot nnot enter. Since nce there is a rule in some of the main main states and cities cities in India India to wear helmet ear helmet while rid riding two-w o-wheelers to make them safe from acci ccidents makes two-w o-wheeler ri heeler rid ders to have a safe jour ney.
6
Technical Aspects - Technical Aspe al Aspec cts in TwoTwo-w wheeler i heeler industry ndustry inclu nclud des construc struction, tion, fuel economy, omy, elec electric tric motor cycles, les, dy dynamic amics and accessories. ccessories. TwoTwo-w wheeler construc struction tion is the engin gineerin eering, man manufac ufacturin turing, and assembly of compon omponents and systems for t for two-w o-wheelers whic hich results in performanc performance e, cost cost and aesthetic aestheti cs desired esired by the design esigners. Construc struction tion of t of two-w o-wheeler i heeler inclu nclud des steel, steel, alumin aluminum frame, frame, telesc telescopic opic forks and dis disc c brakes. Motor cycle is the best fuel economy mod mode of tra of tran nsport, sport, No Nowadays two-w o-wheelers is design esigned to give more than than 80km mileage per liter per liter with low low main mainten tenance nce cost. Inve Inven ntion tion of Ele of Elec ctric tric motor cycle gives an adde dded advan vantage sinc since e the two-w o-wheeler users heeler users can avoid avoid usin using petrol. Differen ifferent types of two-w o-wheelers have differen ifferent dynamic amics and these plays a vital role in their performanc performance. e. Since nce suffic sufficien ient bike accessories ccessories are available in man many plac place two-w o-wheeler ri heeler rid ders has a privilege to chan hange the broken broken parts very easily. PORTER¶S 5 FORCES ANALYS IS Porter¶s five for ces Mod Model of C of Competition ompetition are as follow follows: y y y y y
Rivalry amon among competin ompeti ng sellers Poten otential new entran trants Substitute prod products Competitive pressures from supplier - seller relation relations: Bargain argai ning pow power Competitive pressures from seller ± seller ± buyer relation relatio ns: Bargain argai ning pow power.
RIVALRY: The key players in two-w o-wheeler i heeler industries ndustries are Hero Honda nda motor lt motor ltd d. (HHM (HHML), Bajaj Bajaj Auto Auto ltd ltd and TVS motor Compan ompany ltd ltd. The other players are Kinetic, etic, Lml Lml,, Yamaha, amaha, Majestic Majesti c auto ltd, ltd, Royal Royal Enfield fiel d ltd ltd and Ho Honda nda motor cycle & scooter India. India. TwoTwo-w wheelers domestic omestic market grow growth rate for 2 for 2008-09 is 76. 76.49% whic hich is very high when hen compare compared d to that of three of three wheelers, heelers, Passe Passen nger a ger and commer commer cial vehic vehicles. The stand standar ar dized ized prod product used used in man manufac ufacturin turi ng of t of two-w o-wheelers is steel, steel, alumin aluminum and rubber , bec because there are man many industries ndustries in India India for ma for man nufac ufacturin turi ng those stand standar ar dized ized prod product the prod production tion is goin going smooth. Sales of t of two-w o-wheelers are very high when hen compare compared d to that of three of three wheelers, heelers, Passe Passen nger a ger and commer commer cial vehic vehicles. India Indian n Auto polic policy 2002 gives adde dded advan vantage to two-w o-wheeler man manufac ufacturers to enter even even other coun ountries outsid outside India. India. Since nce big man manufac ufacturer plan plant with high tec technology and good good R&D team need eeded man many of them of them dose not enter i ter in two two-w o-wheeler Industries. Industries. Only Only the compan ompanies whic hich are in automobile lin line will expand expand their pro their prod duct lin line like Mahind Mahindra. ra.
7
Potential New Entrants: Capital investmen vestment is very huge in two-w o-wheeler i heeler industries ndustries sinc since e large plan plant and large mac machin hineries need eeded with with skilled skilled labours and good good R&D ducing two-w nce high tec team need eeded for pro for prod o-wheelers. Since technology and raw raw material resour ces are abund abunda ant to prod produce the prod production tion cost cost is less in prod producing twowheelers. Since nce eac each compan ompany in industry ndustry chan hange the mod model on goin going basis to show show differen ifferentiation tiation amon among their c their competitors bec because of this of this there is more lear ning and experienc experience e in this field field. Eac Each compan ompany in industry ndustry not only makes differen ifferentiation tiation in their prod product strategy but also makes differen ifferentiation tiation in the promotion promotio nal strategy to create´ reate´ brand brand preferenc preference e and loyalty´ loyalty´. Because of lo of low w cost cost prod production, tion, this industry ndustry en joys good good grow growth rate and profitability. Substitute Product: Substitute prod products for t for two-w o-wheeler i heeler industries ndustries are bus tran transportation, sportatio n, Auto Auto tran transportation sportatio n and even even low low-end -end cars cars,, but people usin using twowheelers can only use the servic service of buses of buses and auto as a substitute prod product. Sometimes low low-end -end car car is is a substitute prod product for the for the people usin using high-end high-end motor cycles. Because nowadays there is lot of segme of segmen nt in buses in urban urban areas and the private compan ompanies also influenc fluence ed very muc much, buses are available from normal buses to hi-tec hi-tech ac buses whic hich is threat to two-w o-wheeler industry. ndustry. Since nce only two people can travel in a bike most of them of them uses auto when hen they go out with their family and if they are affor dable to buy car w ar will use car i ar instead stead of auto. of auto. Since nce bus servic service has increase ncreased d whe when n compared ompared to five years bac back people who are aged aged above 45 years uses buses bec because of their of their health health conditio ndition n. These are the substitute prod product available to two-w o-wheelers. Supplier ± Seller Relations: Since nce their sellin selling units are very high in two-w o-wheeler industry ndustry and bec because of ma of man ny competitors supplier are very high. Since nce they chan hange their mo their mod dels on goin going basis they create good good relation relationship betw between een their suppliers. their suppliers. Some of the of the compon omponents in two-w o-wheeler i heeler industry ndustry are very common ommon for all the twowheeler i heeler industries ndustries like steel, steel, alumin aluminum, um, tyres and tubes, tubes, these material are available in abund abunda ant. This makes them to drive a smooth prod production tion of their of their fin finished ished prod products. Seller ± Buyer Relations: Buyer has adde dded advan vantage than than seller bec because there are five to six big popular brand brands s of two-w o-wheelers are available in India India,, so that they can switc itch brand brand from one another. Since nce full information formation is available to the buyers about their pro their prod duct details and their pri their pric ces buyers are fully aware of seller of seller costs and prod products. Buyers are very conscious in spend spendiing their mon money to pur chase two-w o-wheeler , bec because it attrac attracts most of the of the midd middle-i le-inc ncome ome group¶s seller cannot nnot pric price their prod product very high. Nowadays people go to unique brand brand bec because of the of the good good servic service they provid provi de after pur chase. Because servic service centers and spare parts shop available to their customer very near to ear to their plac place buyer sometimes do not mind mind spend spendiing little mon money extra. These fac factors create good good relation relationship betw between een them.
8
CONCLUSION: My rec recommend ommendatio ation n to the two-w o-wheeler i heeler industry: ndustry: Nowadays design esigning of t of two-w o-wheelers industries ndustries seems to be aimin aiming only at youn youngsters; they have to aim at provid providing some tec technology whic hich also convinc vinces es people who are aged aged above 40. Man Many of them of them are affec affected ted with with bac back pain pain while while rid riding low low or mi or midd ddle le cost two-w o-wheeler a heeler and also shoc shock-ups life is very min minimum. They have to thin think on these tec technologies and give some adde dded on fac facilities to their pro their prod ducts. Sometimes there is variation variation betw between een the mileages too, too, i.e. they promises us that their prod product would ould give 80 Km/per liter but prod product will result in givin giving lesser than than that even even after follow following their guid guidelin elines. Because of the of the differen ifferent segmen segments in two-w o-wheeler i heeler industry ndustry,, 100cc segmen segment two-w o-wheelers demand emand falls down whi whic ch has trad tradition itionally en joyed joyed the maximum market share. The two-w o-wheeler i heeler industry ndustry should should co conce ncentrate on red reducing their bike pric prices bec because there is not that muc much differenc ifference e of pri of pric ce betw between een high-end high-end bikes and low low-end -end cars (e.g.: Nano).
9
REFERENCES:
www.siami www .siamind ndia. ia.c com www.fa www .fad dawebs. ebs.c com Thompson, hompson, AA AA (2005) Craftin rafting and Exec Executin uting Strategy, trategy, McG cGra raw w Hill Hill,, Ne New York York,, 14th Edition ition http://www http:// www.tvsmotor.i .tvsmotor.in n/ http://www http:// www.heroho .herohond nda. a.c com/ http://www http:// www.bajajauto. .bajajauto.c com/
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