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  • 1. ASSIGNMENT ON “AFTER SALE SERVICES PROVIDED BY TWO WHEELERS COMPANY IN ”SUBMITTED TO:AUVRAJ SINGH SUBMITTED BY: UNIVERSITY SCHOOL OF BUSSINESS STUDIES TALWANDI SABO
  • 2. INTRODUCTIONTwo wheeler automobile sector:Automobile is one of the largest industries in global market. Being the leader in product andprocess technologies in the manufacturing sector, it has been recognized as one of the drivers ofeconomic growth. During the last decade, well directed efforts have been made to provide a new lookto the automobile policy for realizing the sectors full potential for the economy. Aggressivemarketing by the auto finance companies have also played a significant role in boosting automobiledemand, especially from the population in the middle income group,so the Automobile industry inIndia is one of the largest in the world and one of the fastest growing globally. India manufactures over18 million vehicles (including 2 wheeled and 4wheeled) and exports more than 2.3 million every year1 It is the worlds second largest manufacturer of motorcycles; there are eight key players in the Indianmarkets that produced13.8 million units in 2010-112 At present the dominant products of the automobile industry are Two Wheelers with amarket share of over 75% and passenger cars with a market share of about 16%. Commercialvehicles and three wheelers share about 9% of the market between them. The industry hasattained a turnover of more than USD 35 billion and provides direct and indirect employmentto over 13 million people.The Indian two-wheeler industry has come a long way since its humble beginning in 1948when Bajaj Auto started importing and selling Vespa Scooters in India. Since then, thecustomer preferences have changed in favour of motorcycles and gearless scooters that scorehigher on technology, fuel economy and aesthetic appeal, at the expense of metal-bodiedgeared scooters and mopeds. These changes in customer preferences have had an impact onthe fortunes of the players. The erstwhile leaders have either perished or have significantlylost market share, whereas new leaders have emerged.With an expanding market and entry of new players over the last few years, the Indian twowheeler industry is now approaching a stage of maturity. Previously, there were only ahandful of two-wheeler models available in the country. Currently, India is the second largest
  • 3. producer of two-wheelers in the world. It stands next only to China and Japan in terms of thenumber of two wheelers produced and the sales of two-wheelers respectively. There are manytwo-wheeler manufacturers in India. The major players in the 2-wheeler industry are HeroHonda, Bajaj Auto Ltd (Bajaj Auto), TVS Motor Company Ltd (TVS) and HondaMotorcycle & Scooter India, Private Limited (HMSI) accounting for over 93% of the sale inthe domestic two wheeler market. It is noteworthy that motorbikes segment’s share is justbelow 80% of the total 2W market in India which is dominated by Hero Honda with1 http://www.imaginmor.com/automobileindustryindia.html2 Centre for monitoring Indian economy (CMIE)HISTORY OF TWO- WHEELERThe Encyclopedia describes a motorcycle as a bicycle propelled by an internal-combustionengine (or, less often, by an electric engine).The motors on minibikes, scooters, and mopeds, are usuallyair-cooled and range from 25 to 250 cubic cm (1.5 to 15 cubic inches) in displacement, the multiple-cylinder motorcycles have displacements of more than 1,300 cubic cm.The automobile was the reply to the 19th-century dream of self-propelling the horse-drawn carriage.Similarly, the invention of the motorcycle created the self-propelled bicycle. The first commercialdesign was a three-wheeler built by Edward Butler in Great Britain in 1884. This employed a horizontalsingle-cylinder gasoline engine mounted between two steer able front wheels and connected by a drivechain to the rear wheel.The 1900s saw the conversion of many bicycles, or pedal cycles by adding small, centrally mountedspark ignition engines. There was then felt the need for reliable constructions. This led toroad trial tests and competition between manufacturers. Tourist Trophy (TT) races were held onthe Isle of Man in 1907 as reliability or endurance races. Such were the proving ground for many newideas from early two-stroke-cycle designs to supercharged, multivalent engines mounted onaerodynamic, carbon fiber reinforced bodywork.The two-wheeler industry today has a significant role in the Indian Economy. With an annual turnover ofRs. 6,200 crores and a compounded average growth of 10 per -cent in the recent years, it is one if thefew industrial sectors in the growth phaseService.today. The reasons for this are not far to seek.The consumer’s who wants to be mobile today considers personal transportation as one of his basicneeds, In India, the two-wheeler is used in variety of purposes, particularly in urban areascommunicating to work, visiting people, carrying loads, outdoors jobs like selling andthe like. In rural areas, it enables people to travel more frequently to nearby towns for their daily needs.In other words, it has also become a valuable support for increasing productivity and profits, besideshelping personal transportation.
  • 4. The year 1997 was a difficult period for the automobile sector with the major sector with majorplayer hit by the recession. However, two- wheelers came through un- scratched with a modest threeper cent growth. One of the primary reasons for this has been the robust growth of the rural market. Aseries of good monsoons and high prices for agricultural commodities have increased thepurchasing power of rural customers. Today, the rural market of over six lakhs Indian villagescontributes 35 percent to total two wheeler sales. THE TWO-WHEELER INDUSTRY BASICALLY COMPRISES MOTOR CYCLES The motorcycles segment grew by 28% in terms of sales in 1995, which is remarkable by allstandards. In the 1980’s the only available motorcycles in the Indian market were the conventionalindigenously build Rajdoot, Bullet and Yezdi. This changed drastically when Japanese introduced theirmotorcycle in Indian market. The superior styling and better ergonomics led to increase in the marketshare. SCOOTERS In 94 - 95 the scooter segment accounted for 46 - 80% of two wheeler industries crossedthe one million mark. As such the scooters segment has grown by 34% - 37%, which is one of thesegment achievements of industry.The most important contribution to the segment is Baja Auto with an installed capacity of 12.72-lakhscooters per annum. In act the company is the largest manufacture of two-wheeler in thecountry and fourth largest in world. OtherCompanies, which involve in manufacturing scooter are LML with a capacity if 20,000 scooterper annum and Kinetic Honda. In both the companies (LML Limited and Kinetic Honda) foreign partnersenjoyed a majority stake. MOPEDS In 1972 Indian customers was introduced to the models of two-wheeler, which was popularlyknown as Mopeds. The segment was dominated by Luna, which become virtually to generic namefor mopeds and come to be identified with lower middles class people of the country because it was thecheapest available two wheeler with maximum offered mopeds are for this smallest chunk in theIndustry. However this segment has failed to grow especially compared to Motorcycles and Scooters. During the1980,s mopeds are quite popular in first half of the 1980’s, the scooters showed a phenomenalgrowth of 65% during 1980 – 85. During 1994 mopeds registered a growth of just 13% KineticEngineering is one of the leading producers of mopeds in India.A major part of growth on the two wheeler industry has come from Motorcycles especially theIndo – Japanese 100 CC motorcycles which are considered fuel efficient, reliable and suited forrough roads. Scooterettes are also growing at a fast pace and are being increasingly perceived as abetter option providing convenience and modern style, by urban customers. In this category, TVS Scootyholds a dominant market share. TVS Scooty, launched in 1994, with its elegant looks has definitelyspurred the growth of this segment. The two-wheeler industry has come a long way from a modestproduction of 150 units in 1950 to three million units per year in 1998.
  • 5. INDIAN TWO WHEELER INDUSTRY: AT PRESENT2000-2010The Indian two wheeler industry has shown rapid rate of growth in last one decade. Its sharein automobile industry has increased from 15% in 2001 to 17% in 2010 (Table 2). Annualsales by industry have increased from Rs. 7486 crore in 2001 to Rs. 30096.82 crore in 2010A snapshot of the 2W manufacturers operating in India across time shows that 15while the core that existed 10 years back continues to remain the same, there have beenseveral casualties along the way but at the same time there have been several new entrants.This is also the period which witnessed the end of Hero Honda’s 27 years old JV with Hondain 2010. Rising income levels, reducing excise duties, higher loan tenure and loan-to-valueoffered by the financing companies have all fuelled the growth of two-wheeler demand.Besides, mounting traffic chaos and limited parking space has also increased the demand fortwo-wheelers from households that can afford or actually do own a car. Furthermore, withincreasing women working population, changing social philosophy and broad-mindedness,the penetration of two-wheelers in target population has increased significantly during lastone decade especially in urban areas. However rural areas and smaller towns still remainsconsiderably underpenetrated market.In recent years, the Indian two-wheeler (2W) industry has shown a strong volume growthover the last two-years, having grown by 25% in 2009-10 and 27% in 2010-11 to reach 13.3million units. This strong double-digit growth has been driven by multiple factors. Onereason, of course, is statistical as this period of high double-digit growth has showed up aftera rather sedate previous two years, when the 2W industry volumes had shrunk by 5% in2007-08 and had grown by a mere 5% in 2008-09. In addition to the contribution of pent-updemand, the 2W industry growth over the last two years has been supported strongly byvarious underlying factors including India’s rising per capita GDP, increasing rural demand,growing urbanization, swelling replacement demand, increasing proportion of cash sales andthe less measurable metric of improved consumer sentiment.
  • 6. AFTER SALE SERVICESIn simple words, after market refers to any market where customers who buy one product orservice are likely to buy a related, follow-on product. In many industries, the initial purchasedecision of consumers can have long run effects on their future choices. This occurs whereconsumers purchase durable products that also require the purchase of some complementaryproducts at least some of which are purchased at a later date than the purchase of the durableproduct. The existence of an after-market is often a persuasive argument for manufacturers tostay in direct contact with end-users. Aftermarket service includes product support forwarranties, contracts, and parts sales. There are numerous industries in which this is the case.An ‘aftermarket transaction’, according to Shapiro and Teece (1994) has twocharacteristics:• The aftermarket product or service is used together with a primary product.• The aftermarket product or service is purchased after the primary product.The peculiar competitive feature of these types of industry lies in the competitive interactionbetween the primary durable product and the secondary or ‘aftermarket’ for associatedcomplementary products or services. Often due to technical differences between the durableprimary products, the choice of complementary products compatible with a particular make islimited. This implies that once the primary product has been purchased, consumer choice isconfined to those aftermarket products or services compatible with that industry product. Forexample, the owner of a Ford motor car needs to purchase spare parts which are compatiblewith that type of automobile. In the case of video games, once a consumer has purchased aparticular games platform, this can only be used to play games compatible with that platform.In other words, consumers are to a greater or lesser extent locked into certain aftermarketsuppliers. Where consumers are locked in this manner, this raises the possibility that the firmssupplying aftermarket products or services can profitably engage in anti-competitivebehaviour with regard to the supply of the complementary product. 50Like other durable consumer goods, two wheelers also have an after‐sales market in additionto the sales markets. It has been observed that a firm holding a market power in the after‐sales
  • 7. spare part market can exclude its competitors by tying its maintenance and repair serviceswith the spare parts sales, whereby it can affect consumers’ welfare. This ability gained bythe firm is resulted from switching costs, information asymmetries, insufficient reputationand other market failures.In Indian car industry, automakers (Honda, Hyundai and Volkswagen) have recently beenaccused of using their dominant position to abuse the consumers. The complaint states howthese companies make their spare parts available only through their authorised dealers atexorbitant rates.“This practice by the international car makers does not give the consumer a fair priceadvantage as he has no choice but to buy the spare parts from authorised dealers. Prima facieit makes a case and the DG has been ordered to probe the matter further,” an official of theCCI said. Interaction and some discreet inquiry with some two wheeler companies shows thattwo wheeler industry also carries similar feature. A detailed analysis is required in this regardto come toany conclusion. In this respect, the analysis shall comprise the stages of markedefinition, analysis of adominant position, and definition of abuse. In addition, the analysisof a dominant position is the mostcritical step.
  • 8. AFTER SALEWe at Mahindra 2 Wheelers offer you six free services and two paid services specificallyprogrammed to keep your vehicle in good running condition for daily use. Coupons for the samewould be accepted at all authorized Mahindra 2 Wheelers dealerships and service centers SERVICES SERVICE TYPE KMS. RANGE TIME PERIOD 1st Free 300 to 500 km. Within 45 days 2nd Free 2500 to 3000 km. Within 90 days 3rd Paid 5000 to 5500 km. Within 180 days Free 4th 7500 to 8000 km. Within 270 days 5th Free 10000 to 10500 km. Within 360 days 6th Paid 12500 to 13000 km. Within 450 days 7th Free 15000 to 15500 km. Within 540 days 8th Free 17500 to 18000 km. Within 630 daysBIKE HEALTH MAINTENANCE: CATEGORY DESCRIPTION REMARKS Must be serviced every 2500- Six free and two paid Free Service 3000 km. or within 3 months services from the date of previous service Must be replaced every Air Cleaner 12 months/ 12000km. whichever is earlier
  • 9. Must be replaced everySpark Plug 12 months/ 12000km. whichever is earlier Must be replaced everyDrive Belt 12 months/ 12000km. Standard limit- 18.0mm whichever is earlier Must be replaced everyClutch Shoe 12 months/ 12000km. Standard limit- 2.0mm whichever is earlier Must be changed after every Must be changed initiallyEngine Oil 2500-3000 km. or within 3 at 300-500 km. months Engine Oil change, while engine Engine Oil Grade SAE. 10W 30 SJ O/H 950 ml. at servicing 800 ml Transmission Oil/Gear Must be changed initially Must be changed after everyBox Oil at 300-500 km. 6000 km. or within 6 months Gear box O/H 110ml. while gear Gear Box Oil Grade 85W 140 Grade box oil change, 100ml.WARRANTYMAHINDRA TWO WHEELERS LIMITEDgives the following warranty in respect of all new Flyte scooters manufactured at theirworks and sold after pre-delivery inspection, to be free from any manufacturing defectand undertake to repair or replace free of charge, within a period of 24 months fromdate of sale or running of 20,000 kms., tyre and tube, which upon their examination willreveal to be having manufacturing defect to the entire satisfaction of the manufacturers.Proper care and precaution has been taken to ensure the best quality in respect of thematerial and workmanship in manufacturing.This warranty excludes any loss of or damage due to normal wear and tear for the partssuch as:Clutch Shoe, Brakeshoe, Variator Roller, Drive Belt, One Way Clutch andCylinder Piston etc.All parts failing, due to manufacturing defect and coming under the above terms ofwarranty, should be sent to Mahindra Two Wheelers Limited,Pithampur, through any oftheir authorized outlet duly accompanied by a proper warranty claim form.Battery Warranty: 12 months from the date of purchase Customer can directly claimbattery warranty from local dealer by presenting battery warranty card.THE WARRANTY BECOMES VOID IN THE FOLLOWING CASES:Failure due to misuse and non-observance of instructions given in Owners ManualFailure due to accidentRepairs by unauthorized workshopUse of non-genuine spare partsUse of non-genuine quality lubricantsService not availed as per specified schedule
  • 10. Any modifications, if carried outIf the maintenance of the scooter is not done as per maintenance schedule in themanualVehicle sold or transferred to another person within the warranty periodLoss of or damage to parts due to normal wear and tearFor painted parts: Only blistering, chipping, flaking covered under warranty for first 12months only. Company holds the final authority for decision.Any consequential loss or damage is specifically excluded.Under the warranty, onlyrepair or replacement of certain defective parts will be considered. Under anycircumstances, replacement of the vehicle is not warranted. Decision regardingwarranty settlement shall be taken by MAHINDRA TWO WHEELERS LIMITED andshall be final and binding on all concerned, subject to Pune jurisdiction only.