sachin kumar sharma-017-066.pdf

Chapter
Chapter
Chapter
Chapter-
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An Overview of Customer’s
Buying Behavior & Two
Buying Behavior & Two-
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wheelers Market
wheelers Market
wheelers Market
wheelers Market

Chapter-1
Introduction - An Overview of Customer’s Buying
Behaviour & Two - Wheelers Market
1.1 Buying Behaviour- Psychology Behind Buying Decisions
The psychology behind buying a product is both simple and complex. It’s
simple, because it is a science and having element of the psychology which made it
easy to understand. However, it is in real life and business can be fairly complex.
Customers make buying decisions based on a various factors, although it is
impossible to influence all customers. Successful marketers always try to make a
balance between appealing to the emotional and rational sides to our personality.
Each individual has a unique identity because of heredity, environment and
experience. Prediction of human behaviour is a difficult and complicated job, which
is filled with doubts, risks, and surprises. Correct predictions can yield vast fortunes
and incorrect predictions can result in the loss of money. In present scenario, around
the world business recognizes that the customer is the king. Marketers can only offer
quality and competitive products to the customer while they understand why people
consume the products; it may also helps to marketers to understand how they can
improve existing products. The age of liberalization, privatization and globalization
has brought changes in society and lifestyle of customer.
The existence of marketers can be only justified if they recognize customer’s
wants and able to satisfy them. The modern marketing notion for successful
management of a firm is to meet the customer needs with profitability. Sometime the
buyer is ready to buy the product because of evolving strategy of marketers but on
other occasion he might be refusing the product due to the bad experience or the
availability of other product with same or bright features in reasonable price. For
this cause, the buyer’s mind has been termed as a black box, which should be
opened and enlighten by the seller. It is a sign of successful marketer. The study of
customer’s buying behaviour also includes an analysis of factors that influence
buying decisions. Through understanding that how customers makes buying
decisions it may help to marketers in a number of ways. For example, if a manager

Introduction - An Overview of Customer's Buying Behaviour...... 2
knows through research that fuel mileage is the most important attribute for a certain
target market, the manufacturer can redesign the product to meet that criterion. If the
firm cannot change the design in the short run, it can use promotion in an effort to
change customer’s decision making criteria. For example, an automobile manufacturer
can advertise maintenance-free features while downplaying fuel mileage.
Buyer decision process is the decision making process of an individual
which is undertaken by customers regarding market transaction of their pre and post-
purchase experience with product and services. Generally, decision making is the
cognitive process of selecting a course of action from among multiple alternative
choices. Decision making is a psychological construct which means people can
never “see” a decision; it can be inferred only through observable behaviour of a
buyer. So it concludes that "decision making" is a called as psychological event.
Customers make decisions emotionally: Buying decisions can be based on
a feeling, need, or emotion; it is not a logical thought process. Therefore, tangible
and intangible benefits are keys to influence the customers.
Customers justify decisions with facts: The Customer’s buying decisions
can be based on justified facts, for example: a man sees an advertisement with a
photo of a sports bike and instantly falls in love. However, he can’t bring himself to
buy the bike based on a feeling, so customer reads the brochure or other information
for technical details of the two-wheeler like mileage, power of engine, safety, model,
and low maintenance etc. He wants the bike because it makes him feel good. But he
buys it only when he can justify the purchase rationally.
Customer’s ego must be satisfied: “Egocentric” means centred on the ego
or self. Every person has a different sight to see the world, accordingly he relates
himself personally. Therefore when a person comes across any product, he faces the
unspoken question, “What’s in it for him?” The question might be “How it is worth
buying for him? He wants to get personal worth.”
Customers look for value: Value can’t be determined in a fixed number.
Value is also relative to what seller is offering, what other competitors are charging,

how the offer is different from other competitors? A seller always demonstrates the
value of product or service that seems to be equivalent or greater than the offered
price. Customers are more likely ready to buy as the value of product is greater to
the offered price.
Customers think in terms of Customer: The human mind is not a
computer, calculator, or information processing unit. Its main function is interaction
with society. Marketers can’t force customers to do anything. When customers buy,
it’s not because marketers wield some magic over them. Sellers can urge and push.
They can attract. But ultimately, customers do what they wish to do. This means
seller’s job is only to show the customers that how offered product is meeting their
needs.
Customers are naturally doubtful: Mostly customers are skeptical of any
offer. They want to avoid risk. Seller can never guess the point of doubt of any
particular customer has, so it’s always best to support all claims with facts, survey
results, test results, authoritative endorsements, testimonials and scientific data.
Customers are always looking for something: Customers are naturally
dissatisfied and expend their lives searching for different things like love, glory,
wealth, comfort, safety. It is a matter of showing customers how a particular product
or service fulfils one or more of their needs.
Customers buy “direct” because of convenience: Customers easily find
the product offered at a nearby shop, so if they are not buying it directly, it is
because of absolute convenience. Therefore it’s wise to give emphasis to the
convenience of customer.
People like to see, hear, touch, taste or smell it before they purchase
product: Few customers never buy online because they want to examine the
merchandise directly. Some items, like books and CDs, are tangible and common
enough to sell online without difficulty because there is slight hesitation about the
physical quality of product while other items, such as food or clothing, may be a
harder sell.

Customers follow majority of the crowd: Most of the customers are
imitators. They look for guidance, especially when they are uncertain about things.
They usually ask, “What do others think and feel about this?” Then they act
accordingly. This is the reason that testimonials and case histories of the product are
so influential.1
1.1.1 Buying Process Of An Individual
Need Recognition
Need recognition is the first state of buying process—after recognizing a
problem or need, buyer makes a difference between the actual state and desired
state. The need can be triggered by inner stimuli or external stimuli. Inner stimuli
can be one of the person’s needs—hunger, thirst, sex. A person’s nee can also be
triggered by external stimuli. External stimuli works, when a person comes across
the different product or services.
Information Search
While the need is identified, customer starts searching more and more
information about the desired state. If the customer's desired state is strong and the
offered product or services satisfied to him, the customer is likely to buy it. If it
doesn’t satisfy to him the customer may store his need in memory. Viz. A customer
who wants to purchase a bike, he has different options of buying a two-wheeler. He
starts searching information and give heightened attention towards the bike. He
becomes more receptive to information about bikes, pay attention to bike ads, bikes
used by friends, and do conversations for about bikes or He goes into active
information search, includes reading material, internet phones, friends etc. The
customer obtains information several sources. It includes personal sources like
family, friends, neighbours, acquaintances and the commercial sources like
advertising, salespeople, dealers, packaging, displays, Web sites; Public sources also
includes like mass media, customer-rating organizations, and most preferred.
Experiential sources like handling, examining, using the product. The influence of
these information sources varies with different offered product to the buyer. Usually,
1
Scott Plous,(2003), “The Psychology of Judgment and Decision Making”(McGraw-Hill Series in
Social Psychology), New Delhi. pp115-120.

the customer receives the large amount information about a product from
commercial sources—those are controlled by the marketer. However commercial
sources in general only inform the buyer, but personal sources actually help him to
legitimize or evaluate the product.
In the stage of information search people frequently ask others—friends,
relatives, acquaintances, professionals and consider their recommendations for a
product or service. Therefore, companies have a strong concerned in building word-
of-mouth sources. These sources have two major advantages. First, they are very
convincing: Word of mouth is a method of promotion which is of customers, by
customers and for customers. Every business owner has dream to having a loyal,
satisfied customers which brings business for him. Second, the costs are very low.
Maintaining relationship with existing customers and turning customers into word-
of-mouth is very important. As more information is gathered by customer, his
awareness and knowledge about the brands and features increases.2
Evaluation of Alternatives
Evaluation of alternatives starts after the information search is completed by
customers. To finalize the set of brand choices, customer uses the gathered
information. How customer evaluates different brands? Unfortunately, customers
use different evaluation process in different buying situations. Therefore any
evaluation process may influence to customers3
.
The customer arrives at attitudes toward various brands through evaluation
procedure. Evaluation of purchase alternatives depend on an individual customer
and the specific situation of buying. In some cases, customers are very careful about
calculations and logical thinking. At other times, the same customer doesn’t evaluate
the same. Even they buy regularly because they rely on intuition. Sometimes
customers makes buying decision on their own; sometimes give weight age to the
advice of friends, family and work group, sometimes the product design itself may
2
Solomon, Michael R, (2010), “Customer Behaviour: Buying, Having, And Being”, Phi Learning.
New Delhi,pp211-217
3
Nair, Suja R., (2004) "Customer Behaviour in Indian Perspective", Himalaya Publishing House,
Bombai, pp25-26.

attract customers or salespersons advice for buying. Suppose customer has pointed
his choices to four different bikes. Also suppose that customer is primarily interested
in four attributes—engine power, ease of use, mileage, and price of the bike.
Customer has to form beliefs about how each two-wheeler has to rates on each
attribute. Clearly, if one brand rated best on all the attributes, customer buys the
same. However, the brands vary in appeal. So now customer might base his buying
decision on only one attribute, and the choice would be easy to predict. But if
someone wants mileage, they would prefer the two-wheeler that has the best
mileage. But mainly buyers consider several attributes, each with diverse
importance. If company identify the importance weights that a customer gives to
each of the four attributes, company could predict their two-wheeler choice more
reliably. Therefore Marketer study buying behaviour of buyers to find out how they
actually evaluate different brands and take steps to influence the buyer's decision.
Purchase Decision
In the evaluation phase, the customer gives ranking to the different brands
and forms their purchase intentions. Usually, the customer's buying decision will be
to buy the most preferred brand, but two factors may come between the buying
intention and the buying decision. The first factor is attitude of others which is
derived from surroundings. In case a father asks to son me to buy the lowest price
bike, then the chances of getting an expensive bike will be reduced.4
The second factor is unpredicted situational factors. The customer may form
a purchase intention based on external factors such as expected income, price, and
product benefits. However, unpredicted events may change the purchase intention.
Might be customer loses his job, some other buying may become more urgent, or a
friend may report him for being disappointed in preferred bike or a close competitor
may reduce the price. Thus, preferences and even buying intentions do not always
result in actual choice.5
4
Ramaswamy V.S, Mamakumari S,(2003) “Marketing Management Global Perspective Indian
Content”, 3rd Edition, Macmillan Business Books, New Delhi.pp86.
5
Roger D. Blackwell, James F. Engel, Paul W. Miniard, (2008), “Customer Behaviour”, South
Western Publication, New Delhi,pp65-67.

Customer behaviour is the study of How, what, when, and why people buy a
product. The fundamentals of customer behaviour are derived from sociology,
anthropology, psychology and economics. It helps to understand the buying
behaviour of individual as well as in groups. It is focused on the characteristics of
customers like psychographics, demographics and behavioural aspects. It describes
people wants. Customer behaviour also assesses influences on individual customer
from groups such as friends, family, working groups and society. 6
In 1980’s the detailed studies are done on deregulation policy which was
related to technology acquisition and its impact on competitors in the Indian auto
industry. In this study it is found that competitiveness is closely related to
technological advancement.7
Since 1970, customer satisfaction has been studied in various industries. It is
found that this build reliability which is different from related constructs like service
quality, performance of product and attitude of customer.8
1.1.2 Emerging Market And Indian Customers
The trends in Indian market are rapidly changing. Indian market is shifting
from mass marketing to direct marketing. Companies are focusing on relationship
marketing rather than transactions. In current scenario evolutionary changes are seen
in new trends.
In the late 1980’s and early 1990’s industry policies are opened and it has
pushed to Indian economy. It has brought changes in marketing strategies by
marketers especially those were dealing in customer as well as durable goods. The
Indian market has become a common place of unlimited opportunities in urban and
rural market for marketers. 9
6
Kotler Philip, (1997), “Marketing Management: Analysis, Planning, Implementation, and
Control”, Prentice Hall of India, New Delhi.pp87-90.
7
Narayanan, K. (1998),“Technology Acquisition, De-regulation and Competitiveness: A Study of
Indian Automobile Industry”, Research Policy, 27(2), pp. 215-228.
8
Westbrook, R, Oliver R (1981),“Developing better measures of customer satisfaction: some
preliminary results” in Monroe,K (Ed), Association of customer Research, Vol.44, pp 55-56.
9
Rao. B.N. (1990), Profile of Indian Market 1984-89. Operation Research Group, p10

The manufacturing companies are investing large amount in product
differentiation and advertising. India might not be at par with other Asian tigers like:
Singapore, South Korea, South Korea and Hong Kong but it is positively on the way
to be equivalent with other countries.
Indian economy has opened the doors for mass production and expansion in
investment in all industry. Therefore, for the consumption of consumable and
durable goods, the Indian economy was identified as one of the largest market in
Asia after China. The 200 million middle class income groups have sent a message
to the entire world that they have enormous appetite for the customer goods.10
The fast changes in customer spending because the purchasing power of
`customers is increased than earlier. It shows the perception of new generation is
changed towards the buying. Now the people don’t want to wait for festival or
occasion for buying. Therefore the numbers of multinational and domestic
companies are increased and they are looking forward beyond the expectation level
of customer. Marketers are creating need as well as satisfying to the customer.
The Indian market is multifaceted and it is vary vast. There are six lakhs
villages and more than five thousand towns in India. The high population of country
and with extreme diversities of religion, languages and customs provide the most
differentiated market into the world. This diversity made the different life style and
consumption habits which creates most challenging marketing environment in the
country.
In the Indian market, a buyer buys the product which suits with his socio and
economic environment. To understand the buying behaviour of an Indian, a marketer
has to cautious while he is applying the behavioural theories of customer behaviour.
To understand the buying pattern of an individual or group, it is required to
study his surroundings like culture, tradition, education, income status and his level
of sophistication or impact of external stimuli’s. People love to go for sightseeing,
10
Rajni Chada (1996), The Emerging Customer – A changing Profile of the Urban and Indian House
wife and its Implication, New Age International Publishers Ltd, New Delhi. pp182-204.

enjoys entertainment, and after the great events they express their happiness among
the family or society. Indians has these general characteristics which are alien with
life style but still Indians are not homogeneous in terms of common characteristics.
Liberalisation in India has change radical changes in buying behaviour of
middle class customers. Now Indian customers have become international customers.
Their aspirations are much higher than earlier, they have been sophisticated and
flexible in their lifestyles. Their attitude is more demanding in terms of buying a
product.
Dividing the Indian customers on the basis of caste, religion, language and
customs, it is more authentic to divide the Indian customers in different income
groups such as High income group, Middle income group and Lower middle income
class customer in India. The first group is rich but they are in minority and they
don’t create huge demand of products for any producing firm to concentrate upon
them. Today manufacturing companies are focusing on middle class group because
it constitutes the largest community who consumes the goods. Purchasing power of
third income group is very low.
Third income group belongs to those customers, who are availing the
benefits of several educational, social and economic programmes run by Indian
government for them. Over a period of time the upper strata of this income group
may merge into the middle income group.11
1.2 Introduction of Automobile Industry and Two-Wheeler Market
In India
Motorcycles are the most affordable and accepted forms of transportation. It
is common type of motor vehicle. The world’s first motorcycle was Daimler
Reitwagen. It was first petroleum fueled motorcycle. It was designed and built by
the German inventors Gottlieb Daimler and Wilhelm Maybach in Bad Cannstatt,
11
Raj Rani (1978), Customer Problems and customer protection for middle class home makers for
India ICSSR, New Delhi.

Germany in 1885. In 1894, Hildebrand & Wolfmüller became the first series
production motorcycle and the first to be called a motorcycle (German: Motorrad).
Until World War I, the largest motorcycle manufacturer in the world was
India, It was producing over 20,000 bikes per year.By 1920, this honour went to
Harley-Davidson with their motorcycles being sold by dealers in 67 countries. By
the late 1920s or early 1930s, DKW (Dampf-Kraft Wagen) took over as the largest
manufacturer.
After World War II, the BSA Group became the largest producer of
motorcycles in the world, producing up to 75,000 bikes per year in the 1950s.The
German company NSU (Neckar and Sulm) held the position of largest manufacturer
from 1955 until the 1970s.
In the 1950s, streamlining began to play an increasing part in the development
of racing motorcycles and the "dustbin fairing" held out the possibility of radical
changes to motorcycle design. NSU and Moto Guzzi were in the vanguard of this
development, both producing very radical designs well ahead of their time. NSU
produced the most advanced design, but after the deaths of four NSU riders in the
1954–1956 seasons, they abandoned further development and quit Grand Prix mo
Moto Guzzi produced competitive race machines, and by 1957 nearly all the Grand
Prix races were being won by streamlined machines. The following year, 1958, full
enclosure fairings were banned from racing by the FIM (Fédération Internationale
de Motocyclisme) in the light of the safety concerns. From the 1960s through the
1990s, small two-stroke motorcycles were popular worldwide, partly as a result of
East German Walter Kaaden's engine work in the 1950s.
In addition to the large capacity motorcycles, there is a large market in
smaller capacity (less than 300 cc) motorcycles, mostly concentrated in Asian and
African countries. An example is the 1958 Honda Super Cub, which went on to
become the biggest selling vehicle of all time, with its 60 millionth unit produced in
April 2008.Today, this area is dominated by mostly Indian companies with Hero
MotoCorp emerging as the world's largest manufacturer of two wheelers. Other

major producers are Bajaj and TVS Motors. For example, its Splendor model has
sold more than 8.5 million to date.
1.2.1 Evolution Of The Indian Two Wheeler Industry
The Automotive industry is one of the largest manufacturing industries in
India. It is also one of the largest industries in the world and the fastest field of
manufacturing globally. India producers are manufacturing over 18 million vehicles
(including 2 wheeled and 4 wheeled) and exporting more than 2.3 million every year.
India is world's second largest producer of two-wheeler motorcycles; there are eight
key players in the Indian markets that produced 13.8 million units in 2010-1112
. In
present market scenario the two-wheeler market is dominating in automobile industry
with a market share of over 75% and passenger cars has about 16%. Commercial and
three wheeler vehicles share is about 9% of the market among automobile vehicle
manufacturers. The industry has attained a turnover of more than USD 35 billion and
provides direct and indirect employment to over 13 million people.
The customer needs and preferences have changed. Due to the score higher
on technology, fuel economy and aesthetic appeal, motorcycles and gearless scooters
are liked. Iron or metal-bodied scooters and mopeds are unlike. Such changes in
customer preferences have made an major impact on the fortunes of the two-wheeler
players. The former leaders have either decomposed or have lost market share,
whereas new two-wheeler manufacturing leader have emerged.
With an expanding market and entry of new players over the last few years, the
two wheeler industry is now approaching a stage of maturity. Previously, there were
only a handful of two-wheeler models available in the country. Currently, India is the
second largest producer of two-wheelers in the world. It stands next only to China and
Japan in terms of the number of two wheelers produced and the sales of two-wheelers
respectively. There are many two-wheeler manufacturers in India. The major players in
the 2-wheeler industry are Hero motocorp, Bajaj Auto Ltd (Bajaj Auto), TVS Motor
Company 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
12
Annual Report,(2011), “Centre for monitoring Indian economy” (CMIE) Mumbai.

noteworthy that motorbikes segment’s share is just below 80% of the total two-wheeler
market in India which is dominated by Hero motocorp with a market share of 59%.
Scooter segment’s market share is about 18% which is led by Honda Motorcycle &
Scooter India, Private Limited (HMSI) with a market share of 43%.Threefourth of the
total exports in the two wheeler automobile industry are made in the motorcycle
segment. Exports are made mainly to South East Asian and SAARC nations.
The level of technology change in the Motor vehicle 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, further investment in new
technologies will help the players to be more competitive.
Customers are very important for the survival of the Motor Vehicle
manufacturing industry. In 2008-09, customer sentiment dropped, which burned on
the augmentation in demand of cars. The key to success in the industry is to improve
labour productivity, labour flexibility, and capital efficiency. Having quality
manpower, infrastructure improvements, and raw material availability also play a
major role. Access to latest and most efficient technology and techniques will bring
competitive advantage to the major players. Utilising manufacturing plants to
optimum level and understanding implications from the government policies are the
essentials in the Automotive Industry of India.
A picture of the evolution of the two wheeler industry in India before
Competition Act, 2002 is usefully split up into four ten year periods. This division
traces significant changes in economic policy making. The first time-period, 1960-
1969, was one during which the growth of the two-wheeler industry was fostered
through means like permitting foreign collaborations and phasing out of non-
manufacturing firms in the industry. The period 1970-1980 saw state controls,
through the use of the licensing system and certain regulatory acts over the
economy, at their peak. During 1981-1990 significant reforms were initiated in the
country. The final time-period covers the period 1991-1999 during which the reform
process was deepened. These reforms encompassed several areas like finance, trade,
tax, industrial policy etc. We now discuss in somewhat greater detail the principal
characteristics of each sub period.

1960 – 1969
During this period, collaborations with foreign firms were encouraged and
imports were restricted; only manufacturing firm were allowed.
1970 – 1980
In this period in 1974 two-wheeler motorcycles became popular because of
high fuel efficiency vehicle over others. On other hand the regulatory policy of
MRTP (Monopoly Restrictive Trade Practices) and FERA (Foreign Exchange
Regulation Act) resulted in On the other hand, the introduction of regulatory
policies such as MRTP and FERA resulted in a controlled industry. In the two-
wheeler motorcycle segment FERA caused technological stagnation, as a consequence
of which neither new products nor firms entered the market since this segment
depended almost entirely on foreign collaborations for technology. Indian motorcycles
in the 1970’s had two major drawbacks viz., low fuel-efficiency and high weight.
These drawbacks were overcome in the eighties when foreign collaborations were
once again allowed.
1981 – 1990
The technological backwardness of the Indian automobile industry, especially
in two-wheeler industry was one of the reasons for the initiation of reforms in 1981.
Foreign collaborations were allowed for all types of two wheelers up to an engine
capacity of 100 cc. This encouraged a space of new entries into the two-wheeler
industry the majority of which entered the motorcycle segment, bringing with them
new technology that resulted in more efficient production processes and products.
1991 – 1999
The reforms started in the late seventies have shown most significant change
in 1991 through the liberalization and globalization in Indian economy. Two-
wheeler industry has completely deregulated, exports of two-wheelers are increased.
In this time period number of brands is increased with different features of product
viz-a-viz the scooter segment has reversed the traditional trend of two-wheeler
industry. In the scooter segment, new models were introduced with new features like
self-starter facility, automatic transmission system, without gear riding etc. In the

motorcycle segment the 100cc models were found well against the existing heavier
models of 250cc and 350cc as these were fuel efficient and light weighted.
Developing regions of the world like South America, India, China and
Eastern Europe is showing continuous sales growth in an auto industry. From 2001
to 2006, the Indian auto industry has grown at an average rate of 18 percent in terms
of value output and the auto component sector has grown up about 26%. In the same
period 2001-2006, two-wheeler domestic sales have increased 13 %, three-wheelers
and commercial vehicles shown 15% and 25% annual growth respectively while
passengers’ vehicles recorded 17% annual growth.13
2000-2010
The Indian two wheeler industry has shown rapid rate of growth in last one
decade. Its share 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. 30096.82 crore in 2010 (Table 2). A snapshot of the two-wheeler manufacturers
operating in India across time 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 been several new entrants. This is also the period which
witnessed the end of Hero Honda’s 27 years old JV with Honda in 2010. Rising
income levels, reducing excise duties, higher loan tenure and loan-to-value offered 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 for
two-wheelers from households that can afford or actually 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 during last one decade especially in urban areas. However rural areas and
smaller towns still remains considerably under penetrated market.
In recent years, the Indian two-wheeler (two-wheeler) industry has shown a
strong volume growth over the last two-years, having grown by 25% in 2009-10 and
13
Badri Narayanan G, Pankaj Vashisht, (2008), “Determinants of Competitiveness of the Indian
Auto Industry”, Indian Council for Research on International Relations, pp 145- 151.

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 as this period of high
double-digit growth has showed up after a rather sedate previous two years, when
the two-wheeler industry volumes had shrunk by 5% in 2007-08 and had grown by a
mere 5% in 2008-09. In addition to the contribution of pent-up demand, the two-
wheeler industry growth over the last two years has been supported strongly by
various underlying factors including India’s rising per capita GDP, increasing rural
demand, growing urbanization, swelling replacement demand, increasing proportion
of cash sales and the less measurable metric of improved customer sentiment.
1.3 Two-Wheeler Scenario in India
The Indian automobile industry came into existence in1940s, as automobiles
vehicles were imported by Premier Auto Company and Hindustan Motors in India
from Ford and General Motors.14
Marketers are not only interested in quality
products but also they are much concerned about the customer’s behaviour because
it gives them the right path of new product development. Brand royalty and repeated
buying patterns reflects in customer satisfaction which leads to optimum
profitability. Therefore it is acknowledged as important as attributes of product. In
this view it has been mentioned, “Satisfaction derived from today’s product creates
favourable confidence in future product. This increases profitability in business15
.
In automobile industry the two-wheeler market has shown record change
after the liberalization policy is introduced in India by central government.
International automobile two-wheeler market is directly affected by globalization.
The reflection of globalization is seen in the buying behaviour of the two-wheeler
customers. Promotional strategies of two-wheeler manufacturers have accelerated
the growth of India and as well as international two-wheeler market. For the
expansion of business and recognition in two-wheeler market, the two-wheeler
manufacturers and two-wheeler distributor’s has formulated successful and different
competitive strategies. Two-wheeler industry has come up with several challenges.
14
Piplai, T. (2001): “Automobile Industry: Shifting Strategic Focus”, Economic and Political
Weekly, 36(30), pp. 2892-2897.
15
Parvatiyar Atul & Sheth N. Jagdish (2001): “Customer Relationship Management: Emerging
Practice, Process and Discipline”, Journal of Economic and Social Research, pp 1-34.

Before liberalization, there were only few two –wheeler manufacturers and limited
models were available in the two-wheeler market in India. Currently India has
second position in international market after china in production of various two-
wheeler models.
Due to the weak transportation mechanism, the trends in two-wheeler market
have grown up in the different states of India. Two-wheeler provides easy mobility
and comfort to the individual and his family. In 1948 Bajaj company started import
of Vespa scooters. In the beginning of 50’s production of scooters started by (API)
Automobile Products of India. Till 1958 Automobile products of India and Enfield
were only manufacturers of two-wheelers in India. In the age of 1960 Bajaj started
manufacturing of Bajaj scooters and made technical collaboration with Piaggio an
Italian company. In mid 80’s, two-wheeler producers was not in very good condition.
Enfield, Rajdoot and Escorts were only three major players in two-wheeler market
but In mid 80’s, when overseas production companies entered into India with new
technologies, the competition among two-wheeler manufacturers has started and
post-liberalization, the sales have improved multiple times.
Competitors always look for the gap among the available products in the
market. Kinetic, the manufacturer of two-wheelers found that there is a different
segment of customers those are not comfortable with geared scooter and
motorcycles. The Kinetic introduced a gearless scooter and collaborated for this
technology with Honda. It has got popularity among youngsters. The launching of
scooties also created different segment for women as well as teenagers those couldn’t
found comfortable while they drive either motorcycles or gearless scooters.TVS,
Hero and Kinetic started producing mopeds. Kawasaki, Honda and Yamaha,
collaborated with different two-wheeler companies in India. Yamaha, Escorts and
Rajdoot faced enormous competition with smaller 100 cc two-wheeler bikes those
were based on Japanese technology. These two-wheelers were produced by Hero
Honda (now Hero Moto Corp). Hero Honda was the only one company in India
which was manufacturing four-stroke motorcycles at that time and these
motorcycles gained immense popularity in 1990’s. The USP of Hero Honda was
affordable range, highly fuel efficient with lower maintenance motorcycles. The

Kyoto agreement and change in government’s policy affected two wheeler markets
when the pollution control norms were announced. It was a big hit for two stroke
technology because two stroke engines are less efficient than four stoke engines in
terms of pollution control. Currently there are around 10 major players are
manufacturing two-wheeler in India, they are Hero Honda, Bajaj, Honda, Hero,
Indus, Kinetic, Royal Enfield, Suzuki, TVS, and Yamaha.
The growing economy of India, continuous need of local transportation,
Economic growth, the need for better conveyance, progressive road infrastructure
with better financing and credit options, have encouraged the growth and development
in two-wheeler industry.16
Further, the improved features of two-wheelers, their trendy and stylish looks
are eye catching for the youth of India. Which influence and determine the customer
behaviour and it ensured that two-wheelers are remaining top position in automobile
industry in India.17
In every part of the India roads, one would not miss the presence of the Hero,
Bajaj, TVS, Yamaha and other two-wheelers variants. In the automobile industry
two-wheeler segment has played an ironically role in boosting the automobile
industry in India. The production of two-wheelers, sales and exports of the two-
wheeler vehicles is an indication of the growing economy and also represents the
growth of manufacturing economy.
The Motorcycles segment in two-wheeler industry exhibits the highest sales
volume; however, the scootersp segment has shown relatively faster growth since
2006 to 2011. Indian two-wheeler- industry has several attributes namely
demographic advantages of India, moderate two-wheeler penetration, and shrinking
in replacement cycle of two-wheeler. These factors have combined to push the
volume of two-wheeler industry from 4 million units in 2001 to 13 millions in 2011.
These drivers of the growth of the two-wheeler industry are remaining.
16
ACMA (2006): “Indian Automotive Component Industry: Engine of Growth Driving the Indian
Manufacturing Sector.
17
Humphrey, J. (1999): “Globalization and Supply Chain Networks: the Auto Industry in Brazil and
India”, Geneva, International Institute for Labour studies Geneva,p54.

1.3.1 Trend In Two-Wheeler Segment - Volume Mix For Domestic Products
Figure: 1.1
Source: Report (2011) FADA Federation of Automobile Dealers Association
The motorcycle segment has recorded growth over the years although it was
slide down 76.5 percent in the year of 2011. It was 83.5 percent in 2006-07. Although
motorcycle segment in two-wheeler industry grown up at 9.0% CAGR in the last
five years, scooters segment and the mopeds segment grown at a much faster CAGR
of 22.2% and 17.0%. It is contributing to reduction in the motor cycle segment.
1.3.2 Trend In Segment-Wise Sales Volume Growth Of Two-Wheeler
Figure: 1.2
83.50% 79.80% 78.70% 78.40% 76.50%
12.00%
14.50% 15.50% 15.60% 17.60%
4.50% 5.70% 5.80% 6.00% 5.90%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
2006-07 2007-08 2008-09 2009-10 2010-11
Mopeds
Scooters
Motorcycles

The motorcycle segment is targeted to the male population in urban as well
as in rural areas and this segmentation is divided in usage pattern like: individual
bike or family bike, profile of customer. The scooters (Hero Pleasure, TVS Scooty,
Activa etc.) are targeted to the female population and family. The motorcycles are
most popular in urban and rural areas. The faster growth is expected in scooter
segment because women are comfortable with gearless scooters, urbanization is
increasing and proportion of working women is increasing, expansion of product
lines in scooter segment, comparatively prices are low base. According to the report
of Indian credit rating agency the share of scooter segment is increased 19.1 percent
by 2011 and it is expected 27 percent in 2016.18
The sales volume of motorcycle segment shows that around 70% of the
motorcycles sold in 2011 were 90cc to 125cc (engine capacity).these motorcycles
were positioned to the mass population which needs fuel economy and low prices.
However the sales volume is gradually moving towards 125cc to 150cc. Domestic
sales shows that the sub segment of >125cc is increased by 17.4 percent by 2011
and the contribution of this >125cc segment to the total motorcycles segment is
raised from 26 percent in 2010 to 29 percent in 2011.19
1.3.3 Trend In Two-Wheeler Penetration In Indian Households
Figure: 1.3
18
Report (2011) FADA Federation of Automobile Dealers Association
19
Report (2011) SIAM -Society of Indian Automobile Manufacturers

The figure: 3 shows that two-wheeler penetration (number of households
having two-wheeler) is increased from 25 percent in 2001 to 35 percent in 2011 in
urban area and two-wheeler penetration is increased from 7 percent in 2001 to 14
percent in 2011 in rural area.
1.3.4 Trend In Two-Wheeler Population In India
Figure: 1.4
Source : Census 2001 & Annual Report SIAM 2011
The above figure shows that trend in two-wheeler population is raised. Two-
wheeler population in rural areas is increased from 9.3 million in 2001 to 24 million
in 2011. Indian population of two-wheeler in 2011 is increased from 13.3 million in
2001 to 27.8 million in 2011. Population of 51.8 million units is recorded for the
cumulative two-wheeler sales volume from 2007 to 2011.20
20
Census 2011, Annual Report (2011),SIAM-Society of Indian Auto Manufacturers.pp57-64.
9.3
24
13.3
27.8
0
5
10
15
20
25
30
2001 2011
Million
2W Population - Rural 2W Population - Urban
Population of
51.8 million units,
equivalent to
cumulative ZW
sales volumes from
2007 to 2011

1.3.5 Age Profile (Replacement Cycle) Of Two-Wheeler In India
Figure: 1.5
Source : Census 2011 & Annual Report (2011)
FADA- Federation of Automobile Dealers Association
The figure: 5 show that replacement cycle is reduced from 7 years (in 2001)
to around 5 years (2011). The reduction in two-wheeler replacement cycle implies
that average annual mileage covered per two-wheeler has been on the rise. As per
industry estimates around 50 percent of the total domestic sales of are now made to
first time buyers, 30 percent to customers looking to upgrade their existing two-
wheeler and 20 percent buyers seeking a second vehicle for the household. This
breakup suggests that around 50 percent of the sales in the domestic market are
made to replacement buyers. Thus the replacement cycle is shrinking.
1.3.6 Two-Wheeler Industry: Growth Drivers Intact-Domestic Two-Wheeler
Market
Entry segment of motorcycles shrinking in size as OEMs pursue profitable
growth through other two-wheeler segments. Motorcycle models which has a price
tag of up to Rs. 40000 constitute the entry segment two-wheeler. 100cc motorcycles
are largely consisted in this segment. It is the composition of the CD Dawn and CD
Deluxe models of Hero motocorp, Platina of Bajaj Automotive Ltd, Star Sport of
TVS, Crux and Alba of Yamaha Motors.
11%
40%
52%
35%
21%
17%
53%
39%
30%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Motorcycle Scooters Mopeds
0-5 years
6-10 years
>10 years

Figure: 1.6
Trend in Domestic Sale Volumes of Entry Segment Motorcycles
Source: Census 2011 Gov’t of India & Report 2011 FADA
The Entry segment is the most premium segment for manufactures. The
segments share is declined in 2007 to 2008, although the sales volume in this
segment has remained flat over 2009 to 2011. The segment share in two-wheeler
industry is declining. It is declined from 43 percent in 2006 to 16% in 2011. This
shows that gradually customer preference has shifted from entry segment to
executive segment in the Indian two-wheeler market.
The shrinking volume in entry segment leads to discontinuation of different
earlier brands. For instance, the production volume of Bajaj Auto's CT100 was 80-
85,000 units in 2006, but it was absolutely discontinued and replaced by Platina
whose current production volumes is around 30-35,000 per month. In the entry
segment margin is limited, two-wheeler manufacturers doesn’t have plans for new
model introductions in this segment. Nevertheless, these entry segment motorcycles
have a strong exports potential especially, to other developing markets. Even now,
majority of motorcycles export from India are in the category of entry segment. For
example, Bajaj Auto mainly sells its entry segment motorcycle Boxer in Africa, a
continent which accounts around 50% of the company's exports. Yamaha, too, is
exporting its mass market motorcycle Crux to Africa and South America. Indian credit
rating agency expects the entry segment volume will grow slowly than the overall
two-wheeler industry. And the volume growth will be driven mainly by exports.

1.3.7 Executive Segment Remains The Largest Volume Generator For The
Two-Wheeler Industry
Figure: 1.7
Trend in Domestic Sales Volumes of Executive Segment Motorcycles
Motorcycle models with a price tag of Rs. 40,000-50,000 comprise the
Executive segment, which is mainly concentrated around the 100cc -125 cc models
in two-wheeler industry. The segment's share in the domestic motorcycles segment
has risen from 48% in 2006 to 65% in 2011. Being the largest volume generator, the
companies have introduced largest number of new models. Although the executive
segment has high competition which intensify the presence of a large number of
brands, Hero Honda (now Hero motocorp) remains market leader on the strength of
its Splendor and Passion series of motorcycles that have maintained a dominant
position over the years. In fact, in 2008-09, Hero Honda's market share in this
segment had touched the highs of 80%, due to subdued competition in that period
following lowering of Bajaj Auto's focus on the 100cc segment and the absence of
contemporary products in TVS' portfolio. Since then, both Bajaj Auto and TVS have
introduced new products - Bajaj Auto launched the Discover 100 in July 2009; and
TVS launched the Jive (110cc bike) in December 2009. 'Bajaj Auto's Discover 100
has been a runaway success since its launch and has captured a market share of
around 22% in less than two years of its launch (currently clocking monthly volumes
of 1 lakh units), causing Hero Honda's market share in this segment to revert to

historical levels of around -65%. TVS Jive's monthly run-rate, on the other hand, has
remained low so far at - 4,000 units, even as it is uniquely positioned as the only
auto-clutch bike in the country. While there are brands from several other players
too that have a presence in this segment, none have been able to pose any serious
competition to Hero Honda so far. Yet, the strong growth opportunity provided by
this segment due to its large size has drawn regular new product introductions from
all players including Honda Motorcycles & Scooters (third largest player in the
Executive segment after Hero Honda and Bajaj Auto), Yamaha, Suzuki and
Mahindra, significantly expanding the segment's pie.
Going forward, ICRA expects competition in the Executive segment to
intensify further as Honda Motorcycles & Scooters and Suzuki have announced
plans to introduce new products in this segment. Concurrently, the refurbishment
rate of existing brands is also likely to gain further pace. However, considering the
healthy growth prospects of the segment, it is less likely for competition to be based
on price and below-the-line promotions. But the segment is expected to derive a
greater share of marketing spends as investment in building brands could have
positive long-term benefits for gaining/protecting market share in this large volume
segment.
1.3.8 Premium segment expected to continue being the fastest growing in the
motorcycles market
Motorcycle models with a price of over Rs. 50,000 comprise the Premium
segment, which consists largely of greater than 150 cc engine capacity bikes. This
category is the most segmented and includes:
• Performance bikes, ranging from 150cc to 220cc and consisting of Hero
Honda's Glamour, Achiever, CBZ Extreme, Hunk and Karizma; Bajaj Auto's
Pulsar family, Honda Motorcycles & Scooters' Unicorn Dazzler, and TVS'
Apache RTR, besides models from the stables of Suzuki and Yamaha;
• Cruiser bikes such as Royal Enfield's Bullet and Bajaj Auto's Avenger;
• Ultra hiking range consisting of Bajaj Auto's Kawasaki Ninja, Honda
Motorcycles & Scooters' CB 10000R, Suzuki's Hayabusa and Yamaha's
YZF-R1.

Figure: 1.8
Trend in Domestic Sales Volumes of Premium Segment of Motorcycles
The Premium segment has been the fastest growing one over the last five
years having recorded a volume CAGR of 27%, a period in which its segment share
increased to 17% in 2010-11 from 9% in 2005-06. Bajaj Auto's Pulsar family
comprising of 135cc, 150cc, 180cc and 220cc bikes occupy the frontal position in
this segment with a market share of -50% (monthly volumes of 70,000-75,000 units),
followed by Hero Honda with a market share of -20%. The balance 30% is almost
evenly distributed between Honda Motorcycles & Scooters, Suzuki and Yamaha.
Unlike Executive segment motorcycles, which are positioned as commuter
products and family bikes providing basic transportation, the positioning of the
Premium segment bikes is anchored on performance attributes. While Executive
segment bikes typify higher fuel economy and lower operating costs, the features of
Premium segment bikes are characterized by visual appeal, higher speeds, heady
acceleration and superior ride, handling and braking. At the edge, however, such
clear distinction in terms of target customers has now blurred. This is evident from
Bajaj Auto's introduction of the Pulsar 135cc, targeted at the conventional commuter
segment aspiring to experience sports hiking. Likewise, the Discover 150cc is
positioned as a family bike for the commuter segment wishing to ride a higher
displacement bike.

In ICRA's view, the market for this segment offers further scope for
segmentation in terms of price points and performance characteristics. Also, the
segment is expected to get crowded as new players like Harley Davidson, Ducati
and Hyosung gear up to expand their presence in the super-premium segment. At the
same time, Bajaj Auto, Suzuki, Honda Motorcycles & Scooters and Mahindra also
have multiple products in the pipeline slated for launch in the near term. Some of the
new products planned to be launched are either likely to be imported as completely
built units (CBUs) or would carry a high imported content resulting in higher prices
which could restrict volumes. Although these products are not meant for the mass
market, considering the increase in customer awareness levels, the OEMs cannot
afford to ignore the price-value equation. Overall, this segment is expected to remain
the fastest growing over the medium term, given the disproportionate growth in
purchasing power in the hands of middle-class urbanites, especially in the age group
of 20-30 years. This should also translate into superior profit margins for players
that are stronger in the Premium segment.21
1.3.9 Segment repositioning driving growth in the Scooters segment
As a product category, scooters have undergone an image makeover over the
last decade. From being a laggard in technology and characterised by two-stroke
engines, high emissions and old styling, scooters have metamorphosed into vehicles
with more refined engines and contemporary styling. Product positioning has also
undergone a change with all OEMs relinquishing geared scooter designs and
introducing gearless scooters with low kerb weight and self-start features that are
suited to women.
Revitalised by these changes, the Scooters segment has grown at a fairly
rapid pace over the last five years, albeit on a small base, having recorded a volume
CAGR of 18% to reach 2.1 million units in 2010-11. During this period, its share in
the total domestic two-wheeler market has also increased from 13% in 2005-06 to
18% in 2010-11. The Scooters segment has also experienced a trend in growing
segmentation with the category now having three differentiated sub-segments
consisting of sub-100cc models, 100cc models and 125cc models, each having its
21
Report 2011 ICRA- Indian Credit Rating Agency pp123-29

own value proposition and target segment. While the sub-10Occ segment scooters
are lightweight having fibre-bodies, the 125cc scooters are positioned as power
scooters with metal bodies. Amongst these three sub-segments, the 100cc scooters
sub-segment remains the largest, accounting for 67% of the total domestic scooters
market in 2010-11, and is currently dominated by Honda Motorcycles and Scooters.
Figure: 1.9
Trend in Domestic Sales Volumes of Scooters Segment
Source: Annual Report (2011) SIAM-Society of Indian Automobile Manufacturers
Figure: 1.10
Share of Scooters Segment in the Domestic Two-wheeler Industry
Source: Report (2011) SIAM

Figure: 1.11
Scooters: Sub-Segment Mix
Source: Annual Report (2011) SIAM
Overall, Honda Motorcycles & Scooters continues to maintain its leadership
position in the Scooters segment, through its flagship brand Activa (besides Aviator
and Dio) enjoying a market share of 43% in 2010-11, followed by TVS at 22%. In
the past, several players such as Scooters India, Kinetic Motor and LML exited from
the segment, unable to run the business profitably in an industry-wide declining
volume scenario. In May 2010, Bajaj Auto too completely exited the Scooters
segment where it once enjoyed a strong market position.
That said, the segment has seen several relatively new entrants in the form of
Hero Honda which launched the Pleasure in January 2006; Suzuki which launched
the Access 725 in September 2007; and Mahindra which has been the latest entrant
in the fast growing Scooters segment through its acquisition of the business assets of
Kinetic Motor in July 2008. Yamaha too recently announced its plans to introduce
an India-specific Scooter model in the domestic market.
ICRA expects the Scooters segment to maintain its growth momentum over
the medium term and gradually increase its share in the domestic two-wheeler
market from 18% in 2010-11 to 24% by 2014-15. With this, the Scooters market is
estimated to get double in size by 2014-15. Thus, even as a multitude of brands
28% 24% 21% 21%
15%
72%
73%
72%
65%
67%
2% 7%
14% 18%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006-07 2007-08 2008-09 2009-10 2010-11
125cc
100cc
Sub 100cc

already dot the segment's landscape and more are expected to follow, the likely
expansion in the pie should offer sufficient volumes for the industry to grow
profitably. For the new entrants, a steady gain in market share could hasten the
process of profitability improvement.22
1.4 Global Presence of Two-Wheeler Industry
Exports offer strong growth opportunity to Indian companies, given India's
low-cost manufacturing capabilities and reliable quality. Two-wheeler exports from
India reported a CAGR of 25% over the period 2005-06 to 2010-11 to reach 1.5
million units in 2010-11. BAL is the largest two-wheeler exporter from India,
followed by TVS, with both companies exporting to a large number of countries.
Together, BAL and TVS accounted for 79% of all two-wheeler exports from India
in 2010-11 and the managements of both companies consider exports a key
component of their overall growth plans.
Table 1.1: Trend In Two-Wheeler Export Volumes (From India)
Units (Nos.) 2006-07 2007-08 2008-09 2009-10 2010-11
Bajaj Auto 2,98,769 4,82,026 6,33,463 7,26,189 9,72,437
TVS 1,03,013 1,37,012 1,93,320 1,65,414 2,29,132
Hero Motocorp 97,645 90,571 81,193 97,699 1,33,063
Honda Motorcycles
& Scooters 24,065 35,442 53,807 79,504 1,04,237
Yamaha 61,395 61,352 38,537 65,123 95,529
Others 34,251 13,444 3,854 6,255 5,192
Total Two-wheeler 6,19,138 8,19,847 10,04,174 11,40,184 15,39,590
Source: Annual Report 2011 SIAM
However, export volumes of the largest two-wheeler manufacturer in the
world Hero Honda, have remained rather flat, being around 0.1 million units and
accounting for just 2% of its total two-wheeler sales volumes in 2010-11. Nevertheless,
following the cessation of its JV agreement with Honda Motor Company (Japan)
recently, Hero Honda is expected to get aggressive on the exports front, something it
22
Report 2011, ICRA- Indian Credit Rating Agency

could not do earlier due to the JV's constraints which restricted the markets to which
it could export. Currently, HHML's export markets are limited to Bangladesh, Sri
Lanka, Nepal and Columbia but the company is likely to expand its geographical
footprint over the medium term. Yamaha too has announced plans to intensify its
focus on exports and is even looking to set-up a third plant (in addition to the
Surajpur and Faridabad plants) where it would manufacture mass-market bikes (like
Crux and YBR) with Africa and South America as the key target markets.
Since the developed markets like the United States and Europe have altogether
different product and technology requirements as compared to emerging markets,
they get naturally excluded as target markets for the Indian players. Accordingly, a
large majority of two-wheeler exports from India are to developing markets like
South Asia, Africa and Latin America. While the developing markets are quite large
in terms of volume potential, their appeal from a profitability perspective is somewhat
mixed. Bajaj Auto's margins in certain markets like Africa are either similar or
lower than that in the domestic market; although in various other overseas markets,
it does earn 3-4% higher margins. At the same time, competition from global players
in other developing markets is also quite formidable. For instance:
• The African market is replete with Chinese bikes, which provide strong
price-based competition to other players;
• The South-East Asian market also has high competitive intensity where the
Japanese majors like Honda, Yamaha, Suzuki and Kawasaki command the
bulk of the volume share; and
• The Chinese market, the largest two-wheeler market, has its own set of
challenges including lack of respect for intellectual property and low price
points.
Over the years, Bajaj Auto and TVS have expanded their overseas presence
in a large number of countries and have even established assembly units in China
(Bajaj Auto) and Indonesia (Bajaj Auto and TVS) to have direct local presence.
However, for sustaining exports growth going forward, the domestic players will
need to continuously identify new potential markets, develop products suited to local

needs, invest in building brands for increasing market share and appropriately cope
up with the challenge of establishing a distribution network in the world.
1.5 Profile of Automobile (Two-Wheeler) Major Corporate Players
in India
1.5.1 Hero Motocorp Ltd. (Formerly Hero Honda Motors Ltd.)
Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.) is the world's
largest manufacturer of two – wheelers, in India. In 2001, the Company achieved the
coveted position of being the largest two-wheeler producing Company in India and
also, the ‘World No.1’ two-wheeler manufacturing Company in terms of unit
volume sales in a calendar year. HeroMotoCorp Ltd. remains this position till date.
Vision
Empowering India through mobility- powered by bikes. HeroMotoCorp Ltd.,
company’s new identity, reflects its commitment towards providing world class
mobility solutions with renewed focus on expanding company’s footprint globally.
Mission
A global enterprise fulfilling its customers’ needs and aspirations for
mobility and setting benchmarks in technology, styling and quality. Therefore it
converts its customers into its brand advocates. The Company will provide an
engaging environment for its people to perform to their true potential. It will
continue its focus on value creation and enduring relationships with its partners.
Strategy
Hero MotoCorp’s 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 activities and ensure customer and shareholder delight.
Manufacturing
Hero Honda bikes are manufactured across three globally benchmarked
manufacturing facilities. Two of these are based at Gurgaon and Dharuhera which

are located in the state of Haryana in northern India. The third and the latest
manufacturing plant is based at Haridwar, in the hill state of Uttarakhand.
Technology
In the 1980’s the Company pioneered the introduction of fuel efficient,
environment friendly four-stroke motorcycles in the country. It became the first
Company to launch the Fuel Injection (FI) technology in Indian motorcycles, with
the launch of the Glamour FI in June 2006. Its plants use world class equipment and
processes and have become a benchmark in leanness and productivity. Hero
MotoCorp, in its endeavor to remain technology pioneer, will continue to innovate
and develop cutting edge products and processes.
Products
Hero Honda's product range includes variety of motorcycles that have set the
industry standards across all the market segments and offers large no. of products
and caters to wide variety of requirements across all the segments.
Distribution
The Company’s growth in India is the result of an intrinsic ability to increase
reach in new geographies and growth markets. Hero MotoCorp’s extensive sales and
service network now spans over to 5000 customer touch points. These comprise a
mix of authorized dealerships, Service & Spare Parts outlets, and dealer-appointed
outlets across the country.
Brand
The new Hero is rising and is poised to shine on the global arena. Company’s
new identity “Hero MotoCorp Ltd.” is truly reflective of its vision to strengthen
focus on mobility and technology and creating global footprint. Building and
promoting new brand identity will be central to all its initiatives, utilizing every
opportunity and leveraging its strong presence across sports, entertainment and
ground- level activation.

Milestones Hero Motocorp Ltd. (Hero Honda)
1956 - Formation of Hero Cycles in Ludhiana(majestic auto limited)
1975 - Hero Cycles becomes largest bicycle manufacturer in India.
1983 - Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed
Shareholders Agreement signed
1984 - Hero Honda Motors Ltd. incorporated
1985 - Hero Honda motorcycle CD 100 launched.
1989 - Hero Honda motorcycle Sleek launched.
1991 - Hero Honda motorcycle CD 100 SS launched.
1994 - Hero Honda motorcycle Splendor launched.
1997 - Hero Honda motorcycle Street launched.
1999 - Hero Honda motorcycle CBZ launched.
2001 - Hero Honda motorcycle Passion and Hero Honda Joy launched.
2002 - Hero Honda motorcycle Dawn and Hero Honda motorcycle Ambition
launched.
2003 - Hero Honda motorcycle CD Dawn, Hero Honda motorcycle Splendor
plus, Hero Honda motorcycle Passion Plus and Hero Honda motorcycle
Karizma launched.
2004 - Hero Honda motorcycle Ambition 135 and Hero Honda motorcycle
CBZ* launched.
2005 - Hero Honda motorcycle Super Splendor, Hero Honda motorcycle CD
Deluxe, Hero Honda motorcycle Glamour, Hero Honda motorcycle
Achiever and Hero Honda Scooter Pleasure.
2007 - New Models of Hero Honda motorcycle Splendor NXG, New Models of
Hero Honda motorcycle CD Deluxe, New Models of Hero Honda
motorcycle Passion Plus and Hero Honda motorcycle Hunk launched.
2008 - New Models of Hero Honda motorcycles Pleasure, CBZ Xtreme, Glamour,
Glamour Fi and Hero Honda motorcycle Passion Pro launched.
2009 - New Models of Hero Honda motorcycle Karizma:Karizma - ZMR and
limited edition of Hero Honda motorcycle Hunk launched

2010 - New Models of Hero Honda motorcycle Splendor Pro and New Hero
Honda motorcycle Hunk and New Hero Honda Motorcycle Super
Splendor launched.
2011 - New Models of Hero Honda motorcycles Glamour, Glamour FI, CBZ
Xtreme, Karizma launched. New licensing arrangement signed between
Hero and Honda. In August Hero and Honda parted company, thus
forming Hero MotoCorp and Honda moving out of the Hero Honda joint
venture. In November, Hero launched its first ever Off Road Bike Named
Hero "Impulse".
2011 Performance
In 2011 total unit sales of 54,02,444 two-wheelers is recorded and it shows
growth of 17.44 per cent. Interim dividend of Rs. 70 per share is declared on face
value of each share of Rs. 2 each.
Supply Chain (Green vendor development Programme)
(Initiative of Hero MotoCorp for protecting and preservation of environment)
Rapid industrialization and advanced technological changes have put Indian
economy on fast growth. But such developments pose unprecedented challenges to
human society in term of climatic and environmental degradation. Therefore the
people and governments have come forward to dealt with environmental threats and
also to explore many opportunities so as to address the environmental issues and also
to create a sustainable environmental future for all. Hero MotoCorp are continuously
striving for synergy between technology, system and human resources, to provide
products and services, to meet the aspiration of valued customers that too,
demonstrating "WE CARE" philosophy. While doing so, maintaining the highest
standards of ethics and societal responsibility, constantly innovate the products and
process and work in partnership with supply vendors to take the organization to new
excellences. Company believes that vendors and dealers are key stakeholders and
partners to work towards the goal of sustainable development.
Green Vendor Development Programme refers to the way in which
organizational innovations in industrial supply chain management may be considered
in the context of the environment. Organizations which act proactively not only to

identified but also to implement actions in process / operation so as to address
environmental issues.
Green Vendor Development Programme (GVDP) encourages a collaborative
effort between Hero MotoCorp and its suppliers to achieve Hero MotoCorp's overall
corporate environmental goal. GVDP calls for partner companies to demonstrate
their commitment towards improved environmental performance and striving for
continual improvement.
Six pillars have been assigned to GVDP model which are Energy management,
Water management, Waste minimization, Prevention of Pollution, Substitution of
hazardous chemical and Environmental compliance management. Partner vendors
are given specific training on all six pillars of GVDP and mapping of processes/
equipments is carried out based on logical analysis so as to identify the gaps or
significant environmental aspect and accordingly improvements projects are
undertaken for implementation.
HMCL also endeavors to provide a platform on which the vendors can share
their environment achievements and problems encountered during implementation
of the green vendor program. The objective of this meet is to share success stories
on environmental improvements that can be replicated at other vendor facilities.
This platform lays the foundation for a mutually beneficial eco-future. HMCL
understand that environmental protection is responsibility towards future generations
and thus while providing customers with supreme quality of products and services it
is important for HMCL to ensure that environmental considerations are given utmost
importance. HMCLis continuously taking initiatives towards environmental protection
and base all business decisions on environmental considerations.
Green It (A mission to maintain high ecological standards)
Target Key Areas for Maximum Impact - Though according to some estimates
today IT contributes to around 4-5% of Global Carbon Emissions and it is very
essential to control that, IT has the potential and power to impact the remaining 95%
as well. The critical element in this entire journey is the Green IT intervention strategy
where the decision makers agree on areas where IT could influence the environment.

Actions Speak Louder Than Plans
Here are some Green IT Initiatives that we have taken or are underway at
Hero MotoCorp:
• Green IT as a focus area in the IT Policy
• New, energy efficient data center with power management features
• Virtualization and server consolidation
• Use of TFTs in place of CRTs for displays
• Reduction of printers
• Video conferencing / Collaboration tools - to reduce travel
• Buying of energy certified equipment - replacing old inefficient equipment
• Creating Awareness in organization
• Usage of e-learning to reduce trainee or trainer travel
• New IT initiatives to cut paper consumption such as;
o converting our paper based customer loyalty program to an online
card based program
o cutting down on printing of cheques in a big way and going for
electronic fund transfer
o digitization of workflows needing approvals, e-fax to get fax on
email and many others.
Cleaner processes
Every raw material and chemical is thoroughly evaluated for its environmental
impact before it is introduced into production process. Over the last few years, Hero
MotoCorp has proactively eliminated the use of harmful substance like
• Asbestos
• Hexavalent Chromium
• Phenolic Substances
Green Supply chain
The process of sustainable development is incomplete without involving the
company's supply chain. Hence Hero MotoCorp has therefore put together a "Green
Dealer Development Program" for the front end and a "Green Vendor Development
Program" for the backend of the supply chain.

In each of these programs, the partners' are made aware of the importance of
caring for the environment and are encouraged to manage their material resources,
industrial wastes, energy resource, pollution and other effluents based on a number
of pre-determined parameters.
Hero MotoCorp supports all its partners in the Green Supply Chain venture by:
Developing required competencies
• Sharing knowledge
• Providing technical support
Through this program Hero MotoCorp aims to generate sufficient momentum
within the industry, and looks forward to the day when the entire automotive
industry is made up on a seamless green chain.23
1.5.2 Bajaj Auto Ltd
The Bajaj Group is amongst the top 10 business houses in India. Its footprint
stretches over a wide range of industries, spanning automobiles (two-wheelers and
three-wheelers), home appliances, lighting, iron and steel, insurance, travel and
finance. The group's flagship company, Bajaj Auto, is ranked as the world's fourth
largest two- and three- wheeler manufacturer and the Bajaj brand is well-known
across several countries in Latin America, Africa, Middle East, South and South
East Asia. Founded in 1926, at the height of India's movement for independence
from the British, the group has an illustrious history. The integrity, dedication,
resourcefulness and determination to succeed which are characteristic of the group
today, are often traced back to its birth during those days of relentless devotion to a
common cause. Jamnalal Bajaj, founder of the group, was a close confidant and
disciple of Mahatma Gandhi. In fact, Gandhiji had adopted him as his son. This close
relationship and his deep involvement in the independence movement did not leave
Jamnalal Bajaj with much time to spend on his newly launched business venture.
His son, Kamalnayan Bajaj, then 27, took over the reins of business in 1942.
He too was close to Gandhiji and it was only after Independence in 1947, that he
was able to give his full attention to the business. Kamalnayan Bajaj not only
23
Annual Report (2011), Hero Motocorp Ltd.

consolidated the group, but also diversified into various manufacturing activities.
The present Chairman of the group, Rahul Bajaj, took charge of the business in
1965. Under his leadership, the turnover of the Bajaj Auto the flagship company has
gone up from INR.72 million to INR. 120 billion, its product portfolio has expanded
and the brand has found a global market. He is one of India’s most distinguished
business leaders and internationally respected for his business acumen and
entrepreneurial spirit.
Group of companies
Bajaj Auto is the flagship of the Bajaj group of companies. The group
comprises of 34 companies and was founded in the year 1926. The companies in the
group are:
• Bajaj Auto Ltd.
• Bajaj Holdings & Investment Ltd.
• Bajaj Finserv Ltd.
• Bajaj Allianz General Insurance Company Ltd.
• Bajaj Allianz Life Insurance Co. Ltd
• Bajaj Financial Solutions Ltd.
• Bajaj Auto Finance Ltd.
• Bajaj Allianz Financial Distributors Ltd.
• Bajaj Auto Holdings Ltd.
• P T Bajaj Auto Indonesia (PTBAI)
• Bajaj Auto International Holdings BV
• Bajaj Electricals Ltd.
• Hind Lamps Ltd.
• Bajaj Ventures Ltd.
• Mukand Ltd.
• Mukand Engineers Ltd.
• Mukand International Ltd.
• Bajaj Sevashram Pvt. Ltd.
• Jamnalal Sons Pvt. Ltd.
• Rahul Securities Pvt Ltd

• Shekhar Holdings Pvt Ltd
• Madhur Securities Pvt Ltd
• Niraj Holdings Pvt Ltd
• Shishir Holdings Pvt Ltd
• Kamalnayan Investments & Trading Pvt Ltd
• Sanraj Nayan Investments Pvt. Ltd.
• Hercules Hoists Ltd.
• Hind Musafir Agency Pvt. Ltd.
• Bajaj International Pvt. Ltd.
• Bachhraj Factories Pvt. Ltd.
• Baroda Industries Pvt. Ltd.
• Jeevan Ltd.
• Bachhraj & Co Pvt Ltd
• The Hindustan Housing Co. Ltd.
• Hospet Steels Ltd
Management Team
• Rahul Bajaj Chairman
• Madhur Bajaj Vice Chairman
• Rajiv Bajaj Managing Director
• Pradeep Shrivastava Chief Operating Officer
• Abraham Joseph Chief Technology Officer
• K Srinivas President (Motorcycle Business)
• R C Maheshwari President (Commercial Vehicle Business)
• Rakesh Sharma President (International Business)
• Eric Vas President (Retail Finance)
• Kevin P D'sa President (Finance)
• S Ravikumar Senior Vice President (Business Development & Assurance)
• Amrut Rath Vice President (Human Resources)
• N H Hingorani Vice President (Commercial)
• C P Tripathi Vice President (Corporate Social Responsibility)

Company Secretary
• J. Sridhar
• Board of Directors
• Rahul Bajaj Chairman
• Madhur Bajaj Vice Chairman
• Rajiv Bajaj Managing Director
• Sanjiv Bajaj Director
• D.S. Mehta Director
• Kanti kumar R Poddar Director
• Shekhar Bajaj Director
• D J Balaji Rao Director
• J.N. Godrej Director
• S.H. Khan Director
• Mrs. Suman Kirloskar Director
• Naresh Chandra Director
• Nanoo Pamnani Director
• Manish Kejriwal Director
• P Murari Director
• Niraj Bajaj Director
Registered Office
Akurdi, Pune-411035.
ChakanIndustrialArea,Chakan,Pune-411501
BajajNagar,WalujAurangabad-431136
Plot No. 2, Sector 10, Pant Nagar, Rudrapur
Mile Stones of Bajaj Auto Ltd.
• 1945-November 29, Bajaj Auto came into existence as M/s Bachraj Trading
Corporation Private Limited.
• 1948 -Sales in India commence by importing two- and three-wheeler
• 1959-Bajaj Auto obtains licence from the Government of India to manufacture
two- and three-wheelers.
• 1960-Bajaj Auto became a limited company. Bhoomi Poojan of Akrudi Plant

• 1970 -Bajaj Auto rolls out its 100,000th vehicle.
• 1971 -The three-wheeler goods carrier is introduced.
• 1972 -The Bajaj Chetak is introduced.
• 1975 -BAL & Maharashtra Scooters Ltd. joint venture.
• 1976 -The Bajaj Super is introduced.
• 1977-The Rear Engine Auto rickshaw is introduced. Bajaj Auto achieves
production and sales of 100,000 vehicles in a single financial year.
• 1981 -The Bajaj M-50 is introduced.
• 1984 -Foundation stone laid for the new plant at Waluj, Aurangabad
• 1985-TheWaluj plant inaugurated by the erstwhile President of India, Shri
Giani Zail Singh. Production commenced at Waluj, Aurangabad in a record
time of 16 months.
• 1986 - The Bajaj M-80 and the Kawasaki Bajaj KB100 motorcycles are
introduced.500,000 vehicles produced and sold in a single financial year.
• 1990 -The Bajaj Sunny is introduced.
• 1991 -The Kawasaki Bajaj 4S Champion is introduced.
• 1994 -The Bajaj Classic is introduced.
• 1995 -November 29 Bajaj Auto is 50. Agreements signed with Kubota of
Japan for the development of diesel engines for three-wheelers and with
Tokyo R&D for ungeared Scooter and moped development. The Bajaj Super
Excel is introduced while Bajaj celebrates its ten millionth vehicle. One
million vehicles were produced and sold in this financial year.1997 -The
Kawasaki Bajaj Boxer and the RE diesel Auto rickshaw are introduced.1998
-Production commences at Chakan plant. June Kawasaki Bajaj Caliber rolls
out of Waluj. July Legend, India's first four-stroke scooter rolls out of Akurdi.
• October Spirit launched.
• 1999 - Caliber motorcycle notches up 100,000 sales in record time of 12
months.
• 2000 -The Bajaj Saffire is introduced.
• 2001 -November Bajaj Auto launches its latest offering in the premium bike
segment 'Pulsar'. January The Eliminator is launched.

• 2003 -October Bajaj Pulsar DTS-i is launched. October 107,115 Motorcycles
sold in a month. July Bajaj Wind 125,The World Bike, is launched in India.
February Bajaj Auto launched its Caliber115 "Hoodibabaa!" in the executive
motorcycle segment.
• 2004 - Bajaj Discover DTS-i launched New Bajaj Chetak 4 stroke with
Wonder Gear launched
• Bajaj CT100 Launched
• Bajaj unveils new brand identity, done new symbol, logo, brandline.
• 2005 -December Bajaj Discover launched
• June -Bajaj Avenger DTS-i launched
• February- Bajaj Wave DTS-i launched
• 2006 April – Bajaj Platina Launched
• 2007 December RE GDi auto rickshaw launched
• September Bajaj XCD 125 DTS-Si launched
• August DTS-Si engine launched
• July Revamping of Organizational structure
• June Bajaj Pulsar 220 DTS-Fi launched April
• New Bajaj Auto Plant at Pantnagar, Uttarakhand
• February 200cc Pulsar DTS-i launched January Bajaj Kristal DTS-i launched
• 2008 - September Bajaj Platina 125 DTS-Si launched
• August Bajaj XCD 125 DTS-Si is largest selling 125cc motorcycle
• July Bajaj Discover 135 DTS-i Upgrade Launched.
• June Bajaj Pulsar 220 bags IMOTY award
• 2009 April Bajaj Pulsar 150 & 180 upgrade launched
• January Bajaj XCD 135 DTS-Si launched
• 2010 - Bajaj Discover 150
• 2011 - Bajaj Discover 125
Plants
Bajaj Auto's has in all three plants, two at Waluj and Chakan in Maharashtra
and one plant at Pant Nagar in Uttranchal, western India.

Plant Location
Bajaj Nagar, Waluj, Aurangabad 431136
MIDC, Plot No A1, Mahalunge Village, Chakan 410 501 Dist. Pune.
Plot No. 2, Sector 10 Phase -II - E, Pant Nagar, Sidcul, Rudrapur Dist. Uttranchal
Most Selling Brand – Pulsar
Western influences and changes in Indian values inculcate a new sight to the
youngsters; this young Indian was cool, masculine, and stylish and deserved to be
different. But all they got were 100cc commuter bikes. In 2001that changed, forever.
The first generation Pulsar was a runaway success. It not only introduced a new
category in motorcycling, but created a new dimension - performance. When
families were discussing mileage, Pulsar riders were already talking torque, pick-up
and power-to-weight ratios. With Pulsar, bikes were no longer just a mode of
transport; instead a relationship between man and machine was beginning to get
forged. The Pulsar was launched in two variants; 150 cc and 180 cc and was
"Definitely Male" Power of 15 and 12 PS for the 180 and 150 respectively 240mm
ventilated.
Since the time of its launch Pulsar has ruled the hearts of this nation, and by
the time of its first upgrade, was already ruling the roads. Outselling competition
sports bikes by more than three times, Pulsar was fast becoming the bad boy on the
block. The revolutionary DTS-i technology was introduced here which gave the
Pulsar a distinct competitive advantage over competition bikes that it still holds. The
DTS-i advertising campaign that accompanied the launch of this generation Pulsar
also redefined motorcycle advertising in India - this was the first time a bike ad
showed the bike with one wheel off the ground - yes the irreverent imagery of the
Pulsar was born.
Increased Power to 16 and 13 PS for the 180 and 150 respectively Each
Pulsar upgrade has had 2 aspects to it - styling and technology. The changes under
both have been significant, each time redefining the segment. Competition was
constantly kept on its toes trying to stay at least just behind Pulsar thus keeping
Pulsar and the Pulsar maniacs ahead of the curve. UG2 had many technological

upgrades that are till date a part of the Pulsars, and a standard for the industry - 17'
alloy wheels that allow for greater suspension travel, nitrox suspension and the
legendary ExhausTEC were all introduced in this period. In terms of styling there
was the broader rear tyre, tyre huggers and "All black styling" on the Pulsar 180.
Increased Power to 16.5 and 13.5 PS for the 180 and 150 respectively.
In 2006 Pulsar crossed the 1 million mark with that many Pulsar maniacs on
the road. Pulsar was no longer just a bike, it was a youth brand and was by far the
market leader in the sports segment with a 50% share, that is maintained till date.
This leadership position had come about after hard work and toil by teams at Bajaj
Auto - UG3 had the highest number of total upgrades and ushered in the digital era.
This was the first time that the digital speedometer, back-lit switches, self cancelling
indicators, LED tail lamps etc. were introduced. Multiple sensors and the digital
console gave the rider a lot of information about the overall performance of the bike,
and with it a confidence to push forward with additional power that the Pulsar now
dished out.
Increased Power to 14 PS for the 150 In 2006 Pulsar crossed the 1 million
mark with that many Pulsar maniacs on the road. Pulsar was no longer just a bike, it
was a youth brand and was by far the market leader in the sports segment with a
50% share, that is maintained till date. This leadership position had come about after
hard work and toil by teams at Bajaj Auto - UG3 had the highest number of total
upgrades and ushered in the digital era. This was the first time that the digital
speedometer, back-lit switches, self cancelling indicators, LED tail lamps etc. were
introduced. Multiple sensors and the digital console gave the rider a lot of
information about the overall performance of the bike, and with it a confidence to
push forward with additional power that the Pulsar now dished out. Increased Power
to 14 PS for the150.
The first Indian bike to break the 200 cc barrier had hit the road - The Pulsar
200 and 220. Biking in India was set to change and Pulsar was again leading this
revolution. While the 200cc sported a carburetor, the 220cc was fuel injected! These

babies could dish out undulating power of 18 and 20 Ps respectively and also
boasted of an oil cooler. The 220 also had both front and rear disc brakes.
Within 3 years another 2 million Pulsars were added, taking the total to over
3 million Pulsars on Indian roads. By this time the sports segment had also expanded
to over 15 brands from all major manufacturers like Honda, Yamaha, Hero-Honda,
TVS. The segment accounted for about 17% of the total motorcycles sales and
Pulsar contributed half of that with its 50% market share that it still maintains.
The 150 got clip-on handle bar and 15Ps power in Feb 2010. The looks of
the legendary 200 were firmly entrenched in the minds of the customers and on
popular demand the Pulsar 220 was also launched in a Street Fighter avatar. With a
50% market share of the fastest growing segment in the motorcycle industry, over 4
million Pulsars were sold. Exported to over 30 countries the Pulsar is by far the
biggest brand in Indian motorcycling and eyes world dominance soon.24
AWARDS
2009 - 2010
• Pulsar 135 LS - Viewer's Choice Bike of the Year - UTV Bloomberg -
AutoCar
• Pulsar 135 LS - Bike of the Year - UTV Bloomberg - AutoCar
• Pulsar 135 LS - Technology of the Year - 4Valve - ET NOW - Zigwheels
2007 - 2008
• Pulsar 220 DTS-Fi IMOTY Award - Indian Motorcycle of the Year 2008 -
All Auto Mags - Overdrive, AutoCar, BS, Bike, Top Gear
• Pulsar 220 DTS-Fi - Bike of the Year 2008 - NDTV Profit Car India and
Bike India Awards
• Pulsar 220 DTS-Fi - Bike of the Year 2008 - Overdrive
• Pulsar - Ranked First in ' TOP 30 AUTOMOBILE BRANDS OF INDIA '
2008 - 4Ps Power Brand Awards
24
Annual Report (2011) Bajaj Auto Ltd pp10-25.

2006 - 2007
• Pulsar DTS-Fi - Bike of the Year 2007 - CNBC - TV 18 AutoCar Auto
Awards
2004 - 2005
• Bajaj Pulsar DTS-I - TNS Automotive Total Customer Satisfaction in
Premium Segment - NFO Automotive
2003 - 2004
• DTS-i Technology - Auto Tech of the year - ICICI Bank OVERDRIVE
Awards 2004
2002 - 2003
• Bajaj Pulsar 180 DTS-I - BBC World Wheels Viewers Choice Two
Wheeler of the
• Bajaj Pulsar 180 DTS-I BBC World Wheels Award for Best Two Wheeler
between Rs. 55,000 to Rs. 70,000 - IBBC World Wheels
• Bajaj Pulsar-Motorcycle Total Customer Satisfaction Study 2003 - NFO
Automotive
• Bajaj Pulsar-Bike of the Year 2003 - ICICI Bank OVERDRIVE Awards
2003
• Bajaj Pulsar - Bike of the Year 2002 - Business Standard Motoring
• Bajaj Pulsar - Most Exciting Bike of the Year 2003 - By OVERDRIVE
1.5.3 TVS Motor Company Ltd
TVS Motor Company is the third largest two-wheeler manufacturer in India
and one among the top ten in the world, with annual turnover of more than USD 1
billion., and is the flagship company of the USD 4 billion TVS Group.
TVS Motor Company Ltd. was established in 1911 by T. V. Sundaram
Iyengar in India. The TVS group of companies is mainly situated in Padi, Tamil
Nadu, in the outskirts of Chennai (formerly Madras). TVS Motor Company Limited
is the flagship company of TVS Group, the USD 2.2 billion group. The Group is the

third largest two-wheeler manufacturer in India and globally among the top ten, with
an annual turnover of over USD 650 million. TVS manufactures a wide range of
two-wheelers including motorcycles, scooters, and mopeds. The company also
manufactures three-wheelers, TVS King, in two variants, two-stroke petrol and two-
stroke liquid petroleum gas (LPG). It also offers automobile spares and accessories.
The company operates in India, Singapore, Indonesia and the Netherlands. It is
headquartered in Chennai. Currently the group has more than 30 companies and
employees over 40,000 people worldwide. TVS Motor Company, India employs
about 4,285 people. With steady growth, expansion and diversification, it commands
a strong presence in the manufacturing of two-wheelers, auto components and
computer peripherals. They also have vibrant businesses in the distribution of heavy
commercial vehicles (HCV) passenger cars, finance and insurance.
1980 was the red letter year for TVS when India's first two-seater moped
rolled out that redefined the realm of personal transportation. In 1982, the company
entered into a technical collaboration with Suzuki Motor Corporation of Japan
which helped the fledgling joint venture gain from the expertise of a global two-
wheeler giant like Suzuki. In 2000, the TVS group and Suzuki Motor Corporation
parted ways from their joint venture with the former buying out the 25.97 per cent
stake of the Japanese company for Rs 9 crore.
Globally, TVS Motor Company is the first two-wheeler manufacturer to be
honoured with the hallmark of Japanese Quality - The Deming Prize for Total
Quality Management. It is the only automotive manufacturer in India to get the
prestigious Deming Prize. One of its subsidiaries Sundaram Clayton was the first
company in India to receive the Deming followed by Sundaram Brake Linings also
getting the Deming Prize. This prize is "given to organizations or divisions of
organizations that have achieved distinctive performance improvement through the
application of TQM in a designated year."Sundaram Clayton went on to be awarded
the Japan Quality Medal.

Mission
TVS is committed to being a highly profitable, socially responsible, and
leading manufacturer of high value for money, environmentally friendly, lifetime
personal transportation products under the TVS brand, for customers predominantly
in Asian markets and to provide fulfilment and prosperity for employees, dealers
and suppliers.
Vision
"TVS Motor - Driven by the customer."
The philosophy of TVS Motor is that they are responsive to customer
requirements consonant with its core competence and profitability. TVS Motor
provides total customer satisfaction by giving the customer the right product, at the
right price, at the right time.
Tour of history of TVS from past to present
The company was incorporated as Indian Motorcycles Pvt. Ltd. on July
1982. In the same year it entered in agreement with Suzuki motors Japan to provide
technical knowhow. According to the agreement Suzuki motors provided all
assistance in technology, production, trade secrets and other. In 1986 a new
company Laxmi was opened to manufacture engine and critical parts. The company
in the following year acquired the assets of Sundaram Clayton Ltd. In the later part
of the year the company changed the name to TVS MOTORS Ltd. The company
continued to progress under the assistance of Suzuki. In 1991 the agreement with
Suzuki expired, then with the consent of Govt. of India the agreement was renewed
for three more years. The company continued to introduce new products in the
market which include Samurai, then Shogun then Scooty. Finally in 1997 TVS-
Suzuki became the first company to launch a 100 cc motorbike in Indian Market.
Then TVS made entry in Scooter segment by launching TVS Spectra. However after
initial interest the scooter did not took off as thought by TVS Suzuki, and then its
variants were introduced. The joint venture continued to bring new products in
market with TVS Victor as one of their new brand in 2001. Then later in that year
both the companies parted ways and the 15 year long joint venture ended with TVS

buying the 25% shareholding of Suzuki for 9 crores. Then TVS competed in the
Indian Market all alone. Although TVS has captured a part of the market of leader
Hero Honda (Now Hero Motocorp Ltd) but it could not capitalise on it. During the
following years TVS came with different products in the motorcycle category in
100, 125, 150 cc category. It tried to provide with the best of product quality in each
segment. On 1 June 2012, TVS Motors reported a dip of 5% in its total sales for May
2012.25
In July 2012, TVS Motors and BMW Motorrad were reported to be in talks
for technology sharing.26
Currently it is 3rd in the market leadership and need to be
proactive if it wants to move higher in the market capitalisation war.
Group companies
With steady growth; expansion and diversification, today TVS commands a
strong presence in various fields - two wheelers, automotive components, automotive
spares, computer peripherals and finance. The following is the list of different
companies under the group:
TVS Motors Company Ltd.
• Lakshmi Auto Component Ltd.
• Lucas Indian Service Ltd.
• Axles India Ltd.
• Brakes India Ltd.
• Harita Grammer Ltd.
• India Motor Parts and Accessories Ltd.
• Indian Nippon Electricals Ltd.
• Lucas TVS Ltd.
• Madras Auto Service
• Southern Roadways Ltd.
• Sundaram Brake Linings Ltd.
• Sundaram Fastners Ltd.
• Sundaram Finance Ltd.27
25
The Hindu Business line,(1 June 2012) "TVS Motor sales dip 5%".
26
The Hindu Business Line, (10 July 2012),"Eyeing TVS for supply, Production of components :
BMW Motorrad".
27
Annual Report, (2011) TVS Motor Company.pp22-40.

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