The increasing preference for Japanese brands has led to a marked change in the two-wheeler market in India, with domestic companies struggling to tackle the onslaught of their multinational counterparts.
Today, every fourth two-wheeler sold in India is manufactured by either Honda, Suzuki or Yamaha. As of November, the combined market share of these companies rose to about 25 per cent, against 15 per cent five years earlier. These companies have capitalised on the demand for scooters and are scaling up presence in this segment.
As of March 2012, the Indian two-wheeler market nearly doubled to 13.43 million units from 7.2 million units in March 2008, according to data from the Society of Indian Automobile Manufacturers.
The motorcycle segment accounts for about three quarters of the two-wheeler market in India.
Bajaj Auto is the only Indian company to have has expanded its share in the motorcycle market, even as its share in the overall market was hit. Earlier, the company had decided to move out of the scooter category to streamline its focus on the motorcycle segment.
As of November last year, Bajaj Auto's share in the motorcycles market stood at 25.2 per cent, compared with 21.9 per cent in March 2009. However, due to its absence in the scooter segment, Bajaj slipped to the third spot in the two-wheeler market. In the last three years, the company has aggressively pushed its Pulsar and Discover brands, launching several refreshed and all-new models under these brands. Its association with KTM and Kawasaki also helped it introduce stylish and performance-oriented products.
The loss in Delhi-based Hero MotoCorp's market share in the two-wheeler segment was the highest - in November 2012, it stood at 42.2 per cent, against about 49 per cent in March 2009. During the same period, its share in the bike segment fell from 60 per cent to 52.5 per cent. The company's new products such as Xtreme, Impulse and Ignitor failed to attract buyers. In the April-November period, Hero MotoCorp's domestic sales fell 2.3 per cent to 3.89 million units.
Chennai-based TVS Motors slipped to the fourth spot in the two-wheeler market in India. Its share in the motorcycle market stands at just 5.5 per cent, compared with 7.9 per cent in March 2009. Its range of scooters, which contributes 22 per cent to its two-wheeler sales, has been under pressure due to increasing competition from Honda. Recently, the company had launched the Flame and the Jive, which didn't receive a warm response from the market.
Honda Motorcycle and Scooter India (HMSI) climbed two slots to become the second-largest domestic two-wheeler company in the country. About 51 per cent of HMSI's sales is accounted for by scooters; for Suzuki, it is 78 per cent, while for Hero MotoCorp, scooters account for nine per cent of total sales.
Yadvinder Singh Guleria, vice-president (sales and marketing), HMSI, said, "Customer demand for Honda products remains strong. Both our plants are operating at full capacity and we are going ahead with the opening of our new plant in the South by first quarter of FY14. We are also on track to increasing our sales 31 per cent to 2.75 million units this year."
Despite a weak outlook, Hero MotoCorp would go ahead with plans to raise capacity to 10 million units in the next four to five years, against the current seven million units. The company is also keen to explore foreign markets. "We have a long-term target of 10 million units in volume sales by 2016-17 and are working towards achieving that milestone. Our vision is to get 10 per cent of our total sales from our international business in five years," said a Hero MotoCorp spokesperson.
In the next few years, competition for domestic brands is expected to intensify further, with foreign brands set to launch many products in every sub-segment of the motorcycle and scooter categories.
"Launching new products plays a very important role in gaining market share. It is one of the key reasons behind the success of HMSI and Suzuki Motorcycle India. New products launched by these companies were well accepted by the market and helped these companies gain strong market share," said a report from brokerage firm Nirmal Bang.