1ObjectivesTo focus on competing in a marketplace this already exists.To focus on beating the competition.To focus on the value analysisTo focus on exploiting existing demand.To focus on execution (better marketing, lower cost base etc).
31.1 About The IndustryThe Automotive industry in India is one of the largest in the world and one of the fastestgrowing globally. India manufactures over 18 million vehicles (including 2 wheeled and4 wheeled) and exports more than 2.3 million every year. It is the worlds second largestmanufacturer of motorcycles; there are eight key players in the Indian markets thatproduced 13.8 million units in 2010-11. At present the dominant products of theautomobile industry are Two Wheelers with a market share of over 75% and passengercars with a market share of about 16%. Commercial vehicles and three wheelers shareabout 9% of the market between them. The industry has attained a turnover of more thanUSD 35 billion and provides direct and indirect employment to over 13 million people.The Indian two-wheeler industry has come a long way since its humble beginning in1948 when Bajaj Auto started importing and selling Vespa Scooters in India. Since then,the customer preferences have changed in favour of motorcycles and gearless scootersthat score higher on technology, fuel economy and aesthetic appeal, at the expense ofmetal-bodied geared scooters and mopeds. These changes in customer preferences havehad an impact on the fortunes of the players. The erstwhile leaders have either perished orhave significantly lost market share, whereas new leaders have emerged. With anexpanding 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 secondlargest producer of two-wheelers in the world. It stands next only to China and Japan interms of the number of two wheelers produced and the sales of two-wheelersrespectively. There are many two-wheeler manufacturers in India. The major players inthe 2-wheeler industry are Hero Honda, Bajaj Auto Ltd (Bajaj Auto), TVS MotorCompany Ltd (TVS) and Honda Motorcycle & Scooter India, Private Limited (HMSI)accounting for over 93% of the sale in the domestic two wheeler market. It is noteworthythat motorbikes segment’s share is just below 80%of the total 2W market in India whichis dominated by Hero Honda with a market share of 59%. Scooter segment’s marketshare is about 18% which is led by Honda Motorcycle & Scooter India, Private Limited(HMSI) with a market share of 43%.Three-fourth of the total exports in the two wheelerautomobile industry are made in the motorcycle segment. Exports are made mainly toSouth East Asian and SAARC nations. The level of technology change in the Motorvehicle Industry has been high but, the rate of change in technology has been medium.Investment in the technology by the producers has been high. However, furtherinvestment in new technologies will help the players to be more competitive. Currently,India’s increasing per capita disposable income which is expected to rise by 106% by2015 and growth in exports is playing a major role in the rise and competitiveness of theindustry. Consumers are very important for the survival of the Motor Vehiclemanufacturing industry. In 2008-09, customer sentiment dropped, which burned on theaugmentation in demand of cars. The key to success in the industry is to improve labourproductivity, labour flexibility, and capital efficiency. Having quality manpower,infrastructure improvements, and raw material availability also play a major role. Accessto latest and most efficient technology and techniques will bring competitive advantage tothe major players. Utilising manufacturing plants to optimum level and understanding
4implications from the government policies are the essentials in the Automotive Industryof India. This report gives insight of the industry encompassing its evolution in India,demand drivers, influence of supply side factors, commentary on industry players andcompetition and the trends in domestic sales and exports. The report also shows theoligopolistic nature of the Indian two wheeler industry and the propensity of the majorplayers to increase their share. In this paper we assess the degree of imperfection in thetwo-wheeler industry by using Hirschman-Herfindahl Index (HHI). In a rapidly growingtwo wheeler industry, especially in developing economies like India, it is extremelyimportant to analyse the state of competition to check whether a few firms may increasetheir dominance and also the implications of after sale services provided by the twowheeler firms to consumers. An important point also remains to look that why even afterbeing the world’s largest two wheeler industry, the Chinese two wheeler firms haven’tbeen able to enter the Indian markets successfully? What challenges a new entrant has toface in the industry?1.2 INDIAN TWO WHEELER INDUSTRY: AT PRESENT 2000-2010The Indian two wheeler industry has shown rapid rate of growth in last one decade. Itsshare in automobile industry has increased from 15% in 2001 to 17% in 2010 (Table 2).Annual sales by industry have increased from Rs. 7486 crore in 2001 to Rs. 30096.82crore in 2010 (Table 2). A snapshot of the 2W manufacturers operating in India acrosstime shows that while the core that existed 10 years back continues to remain the same,there have been several casualties along the way but at the same time there have beenseveral new entrants.This is also the period which witnessed the end of Hero Honda’s 27years old JV with Honda in 2010.Rising income levels, reducing excise duties, higherloan tenure and loan-to-value offered by the financing companies have all fuelled thegrowth of two-wheeler demand. Besides, mounting traffic chaos and limited parkingspace has also increased the demand for two-wheelers from households that can afford oractually do own a car. Furthermore, with increasing women working population,changing social philosophy and broad-mindedness,the penetration of two-wheelers in target population has increased significantly duringlast one decade especially in urban areas. However ruralareas and smaller towns stillremains considerably underpenetrated market. In recent years, the Indian two-wheeler(2W) industry has shown a strong volume growth over the last two-years, having grownby 25% in 2009-10 and 27% in 2010-11 to reach 13.3 million units. This strong double-digit growth has been driven by multiple factors. One reason, of course, is statistical asthis period of high double-digit growth has showed up after a rather sedate previous twoyears, when the 2W industry volumes had shrunk by 5% in 2007-08 and had grown by amere 5% in 2008-09. In addition to the contribution of pent-up demand, the 2W industrygrowth over the last two years has been supported strongly by various underlying factorsincluding India’s rising per capita GDP, increasing rural demand, growing urbanization,swelling replacement demand, increasing proportion of cash sales and the lessmeasurable metric of improved consumer sentiment.
61. HondaThe wholly owned subsidiary of Honda Motor Company, Japan, Honda Motorcycle &Scooter India has amassed impressive numbers and credibility over the past decade withsome very succesful models like the Activa scooter and the Honda Shine 125ccmotorcycle. HMSI is currently the third largest two-wheeler company in India and issteadily climbing up the ranks. And now with its third plant getting operational, the longwait for its products also seems to be dropping effectively.1.1 ProductsTwisterThe Honda CB Twister is a motorcycle manufactured and marketed in India by theHonda subsidiary Honda Motor and Scooter India (HMSI). It was introduced inDecember 2009.
7It was given "the most awarded motorcycle of the year" in 2011.It is available in the Philippines as the Honda CB110, and in India as the CB Twister.CBRThe Honda CBR models are a series of Honda sport bikes several of which (400RR,600RR, 900RR, 929RR, 954RR and 1000RR) are marketed as race replicas, having thesuffix RR after the engine size designation. With the exception of the single cylinderCBR125 and CBR150, all CBR motorbikes have inline engines (as compared to the V-twins in the VT, VTR and VF/VFR series). Less sporting models with inline enginesmake up the CB Series.Honda ShineThe Honda Shine is a motorcycle developed by Honda Motorcycle & ScooterIndia (HMSI). It was introduced in India in 2006. It is a 125 cc motorcycle.Honda
8claimed the Shine accelerated from 0 to 60 km/h (0 to 37 mph) in 5.30 secondsand had a top speed of 95–100 km/h (59–62 mph).[1.2 Product OfferingExchange OfferFree gifts1.3 USPExtremely powerful engine and sporty design used in motorsports1.4 Marketing StrategyThe markets are different in terms of the way we reach out to them. As we are expectingDream Yuga to generate good volumes from Tier II and Tier III towns, we need to workon both front end and back end. So we are working on what we call the 3C strategy atHonda. The first C is communication; we have to communicate in such a way that weare understood by customers belonging to Tier II and Tier III towns. We want to translateour global slogan ‘Power of Dreams’ into a language that is followed by the masses inIndia - ‘Sach kar denge sapne’ is being used in local languages as per the region. Thesecond C is Connect; we have seen that that the Indian buyer has a very good balance ofemotional and rational connect. He evaluates the product on looks and price, as well asemotional connect through messages and communication of the brand. That’s why wehave roped in Akshay Kumar. We feel that he has very wide acceptability amongst themasses. We are also increasing our own network - from 1500 touchpoints last year, wewant to take it to 2000 by the end of this fiscal year. The product is a mass segmentproduct and it should be available closer to the masses. We are also increasing the reachof our regional offices; every
92. BajajIndias second largest motorcycle company, Bajaj Auto has been at the helm of theperformance brigade in the country with its Pulsar and Avenger range of motorcycles.Churning out non-stop upgrades and upping the bar in the premium motorcycle category,Bajaj Auto has definitely struck a chord in the hearts of million bikers in the countrywhile at the same time bringing up the commuters up to pace with higher capacitycommuter products like the Boxer 150 and the Discover range.2.1 Product OfferPulsarBajaj Pulsar is a motorcycle brand owned by Bajaj Auto in India. The two wheeler wasdeveloped by the product engineering division of Bajaj Auto in association with TokyoR&D,and later with motorcycle designer Glynn Kerr. Currently there are five variantsavailable, with engine capacities of 135 cc, 150 cc, 180 cc, 200 cc, and 220 cc. previouslyit was also offered with 200 cc DTS-i oil cooled engine, which now has beendiscontinued. Instead a new version Pulsar 200NS was launched in 2012.[
10PlatinaBajaj Platina is a 100 cc motorcycle manufactured by Bajaj Auto. The Platina waslaunched in April 2006 at an ex-showroom price of Rs 35,000 and crossed sales of500,000 units within eight months of its launch. A 125 DTS-Si variant with the sameengine as the XCD was introduced in September 2008 with sales of more than 30,000units per month but subsequently discontinuedDiscoverThe Bajaj Discover is a motorcycle brand by Bajaj Auto. Currently there are fourvariants of Discover- Discover 100 DTS-Si,Discover 125 DTS-i,Discover 125ST andDiscover 150 DTS-i.The bike initially launched in the year 2004 has been a success in theIndian two Wheeler segment since then.
112.2 Product offeringCash BackExchange OfferFree accessories2.3 USPProduct USPPulsar Powerful engine and good pickupPlatina Durable stylish and good performanceDiscover Good mileage2.4 Market StrategyThe focus of BAL off late has been on providing the best of the class models atcompetitive prices. Most of the Bajaj models come loaded with the latest features withinthe price band acceptably the market. BAL has been the pioneer in stretching competitioninto providing latest features in the price segment by updating the low price bike with thelatest features like disk-brakes, anti-skid technology and dual suspension, etc.
123. HeroHero Motocorp Ltd., formerly Hero Honda, is an Indian motorcycle and scootermanufacturer based in New Delhi, India. Hero Honda started in 1984 as a joint venturebetween Hero Cycles of India and Honda of Japan. The company is the largest twowheeler manufacturer in India.The 2006 Forbes 200 Most Respected companies list hasHero Honda Motors ranked at #108.In 2010, when Honda decided to move out of the joint venture, Hero Group bought theshares held by Honda. Subsequently, in August 2011 the company was renamed HeroMotoCorp with a new corporate identity. On 4 June 2012,Hero Motocorp approved aproposal to merge the investment arm of its parent Hero Investment Pvt. Ltd. into theautomaker. The decision comes after 18 months of its split from Honda Motors.3.1 Product offerKarizma ZMR
13Hero Honda bike at last has released the long awaited Tourer - ZMR Karizma Fi in theIndian market. Karizma ZMR will be sold alongside the old model Karizma. They dontwant to end the competition for Apache 180 & Pulsar 220 as Karizma R is priced aroundRs. 80,000.The position remains the same as the old Karizma still considered the best touring bike inIndia, with smooth, refined and relaxed Honda engine at the top. The most important andmuch needed change is is the addition of the programmed fuel injection (PGM-FI) intothe engine. In addition, Hero Honda also replaced the rear disc brake, gas charged rearshock absorber, a little more power and torque. Hero Honda also began giving teaseradvertising on leading TV channels in which they show some insights into the front panelof the New ZMRs, headlight and taillight. And now they have launched full commercialwith Hrithik Roshan in Karizma ZMR ads. ZMR looks quite stunning in white shades inthe commercial with ZMR Label in the red hue.Hero ImpulseHero MotoCorp had showcased their new Impulse at the brand identity changeceremony few months ago in London. They chose to remain silent about the bike untilnow. Hero today launched the 150cc.
14Hero SplenderThe Hero Splendor is a motorcycle manufactured in India by Hero. It has an electronic ignitionand a tubular double cradle type frame with a 97.2 cc engine. As of 2009, Splendor models wereselling at a rate of one million per year.3.3 USPIndia’s first transroad-On road, Off Road Bike3.4 Marketing StrategyHero MotoCorps key strategies are to build a robust product portfolio across categories,explore growth opportunities globally, continuously improve its operational efficiency,aggressively expand its reach to customers, continue to invest in brand building activitiesand ensure customer and shareholder delight
16The global market for motorcycles, including electrically-powered machines, is forecastto expand 7.2 percent annually to 134.5 million units in 2016, when industry revenueswill reach $90 billion. The Asia/Pacific region, which predominantly utilizes small andinexpensive motorcycles, will continue to dominate worldwide demand, representing 84percent of all units sold in 2016.World sales of motorcycles will be stimulated by rising standards of living in developingnations. China will remain by far the largest national market, with India and Indonesiaalso important based on large populations with the means to purchase inexpensivemotorcycles. There is a strong correlation between average income levels and motorcycledemand up to a certain point. In emerging economies strong growth in motorcycle salesis triggered once certain per capita income thresholds have been reached.Due to the superior fuel efficiency these machines provide compared to automobiles andother light vehicles, motorcycle demand gains will also be supported by higher petroleumcosts . Furthermore, a rebound from the 2007-2009 recessions in developed countries likethe US will lead to higher product sales, particularly of medium and heavy motorcycles,as economic conditions become more favorable and consumers begin to purchase theseexpensive recreational items again. As a result, medium and heavy internal combustionengine (ICE) motorcycles will account for nearly 20 percent of 2016 demand in dollarterms, even though they will make up less than two percent of global unit sales.Light motorcycles will remain the single largest ICE product segment in unitterms because they offer a mix of the best attributes of smaller (lower cost) and largerdisplacement models (more power). ICE scooters, mopeds, and motorbikes will compriseapproximately one-third of total product sales in 2016, supported by their low cost andeasy maneuverability in congested urban areas. Sales of electric bicycles (e-bikes) andelectric motorcycles (e-cycles) are expected to grow roughly in line with ICE motorcycledemand through 2016
19SegmentationCompany SegmentationHonda Ultra premium sports bikeBajaj Young boys looking for fast sporty bikes for IndianroadsHero Upper Middle-class people who want a bike that isstylish and gives a good mileageTargetingCompany TargetingHonda Upper middle and upper class menBajaj Young boys in the age 18-30 middle classHero Young and Adventurous Men from the age bracket of 25-35PositioningCompany PositiongHonda Powerful sports bikesBajaj The No.1 Sports bike in IndiaHero Positioned as Indias first on road and off road bike
211. Honda1.1 PriceProduct PriceTwister 55000-60000CBR 150000-180000Shine 60000-650001.2 UtilityTransportationOff road1.3 InterpretationTwister is satisfying their cost and customer satisfaction is also high. CBR is notsatisfying its cost but customer satisfaction is high.
222. Bajaj2.1 PriceProduct PricePulsar 62000-93000Platina 55000Discover 58000-650002.2 UtilityCopsOff road2.3 InterpretationThe products of Bajaj are justifying their cost and customer satisfaction is high.
233. Hero3.1 PriceProduct PriceKarizma ZMR 96000-110000Impulse 72000Splendor 55000-620003.2 UtilityTransportationCops3.3 InterpretationThe cost of Karizma ZMR and Impulse are satisfying their cost but customer satisfactionis low.satisfying its cost but it is satisfying their customer by its performance.
25SWOT Analysis1. HondaStrength Diversified operationLeading market position and brand strengthEngineering CapabilityStrong distribution networkWeakness Expenses related to post retirement benefits foremployeesEmployee ProductivityOpportunities Increasing demand for hybrid electric vehiclesOpportunities in Asian marketAviation businessThreats Economic slowdownCompetition in the Global Automative Market
262. BajajStrength Highly experienced management.Product design and development capabilities.Widespread distribution network.High performance products across all categories.High export to domestic sales ratio.Great financial support network (For financing theautomobile)High economies of scope.Weakness Hasnt employed the excess cash for long.Still has no established brand to match HeroHondas Splendor in commuter segment.Not a global player in spite of huge volumes.Not a globally recognizable brand (unlike the JVpartner Kawasaki)Opportunities Double-digit growth in two-wheeler market.Untapped market above 180 cc in motorcycles.More maturity and movement towards higher-endmotorcycles.Growing world demand for entry-level motorcyclesespecially in emerging markets.Threats The competition catches-up any new innovation inno time.Threat of cheap imported motorcycles from China.Margins getting squeezed from both the directions(Price as well as Cost)TATA Ace is a serious competition for the three-wheeler cargo segment
273. HeroStrength First brand from the stable of Hero MotoCorp afterthe splitGreat positioning combining the adventurous sideand executive classExcellent branding and advertisingGreat technical specifications and featuresWeakness Priced on a slightly higher side when compared toother in the segmentLimited target audience due to Off Road andadventurous positioningOpportunities Expansion in Tier 2 citiesMore variants of the bike e.g. high performanceversionsThreats New entrantsCompetitorsLow cost bikes
28RecommendationBajaj Pulsar and Discover should improve its mileage.Honda CBR should lower its price.Hero Karizma should improve its performance and its mileage.Hero Impulse should add new features and should advertise it.
29ConclusionHonda CBR price is high.Hero Karizma and Impulse performance and customer satisfaction is low.Bajaj Pulsar and Platina are high in performance.
30Bibliographywww.bajajauto.comwww.honda2wheelersindia.comwww.heromotocorp.comwww.mbaskool.comP.K.Ghosh (tenth edition)-Strategic Planning and Management