INTRODUCTION

It deals with exploring of strategy adopted by two automobile giant, to grab existing
market. A proper definition of research problem will enable researcher to be on the track.
The defining the research problem properly is a prerequisite for study and is a step of
the highest importance. In fact formulation of problem is more important than its
solution. Comparative analysis of Bajaj with respect to hero enable marketer to have
comprehensive emphasis on the adoption new marketing strategy and help them in
knowing their competitors well and accordingly plan for the future .It helps them in
forecasting designs to grab the market in their way to maximize the profit efficiently.
Proper research is the useful for analyzing existing market as well as paves the way for
the future utilization resources.

The Indian industrial sector has undergone profound regulatory changes in recent times
as a consequence of the economic reforms program put together in between 1988 and
1991. Consequent to these reforms some of the industries that have been influenced the
most have been the consumer durables industry (such as two-wheelers, washing
machines, televisions etc.), the automobile industry and certain financial services. In an
evolving industry especially in emerging economies like India, it is extremely important
to formulate optimal policies on competition in order to promote both competition as well
as growth. India is the second largest manufacturer of two-wheelers in the world. It
stands next only to Japan and China in terms of the number of two-wheelers produced
and sold respectively.

The Indian two-wheelers industry can be broadly classified into three major segments --
scooters, motorcycles and mopeds. The domestic two wheeler sales of 3.778mn in
FY2015 constitute scooter sales of 33.4% (39% in FY03), motorcycles 47.7% (41% in
FY03) and mopeds 17.6% (20% in FY03). The motorcycle segment has gradually
increased its presence from 27% in FY92 to 47.7% in FY2015 mainly at the expense of
the scooter and, to some extent, the moped segment.
1
The demand for scooters is on the wane and witnessed a 10%yoy fall in FY2000. With the
gradual shift in demand, sales in the scooter segment is expected to fall further, while on
the other side motorcycle and scooter segments will record continued growth in the future.
This will translate into a demand fall of around 20% in scooters while sales of scooters
will rise by around 30% in FY04. With the ongoing expansion from Bajaj Auto Ltd, LML
and TVS Suzuki, the capacity in the sector will increase form 2mn in FY2000 to 4.15mn
by FY05, leading to a surplus situation.

We expect the motorcycle segment to continue to grow at an average of 20% in FY05.

This will increase demand for motorcycles from 1.796mn in FY2000 to 4.15mn in FY05.
The supply of motorcycles as per the present trend will increase from 2.08mn in FY2000
to 4.38mn in FY05. The segment will be witnessing several new entrants in FY05,
mainly in the four-stroke sub-segment. This will lead to an over supply situation and
increase the competition in the Japanese segment.

We expect the demand for mopeds to grow at a modest rate of 5% in FY05. The demand
for mopeds will increase from 0.726mn in FY2015 to 0.762mn in FY05. The moped
production capacity is expected to increase from 1.17mn in FY2015 to 1.2mn in
FY05.The Automobile Industry performance in the year 2015-05 showed encouraging
results for all segments of the automobile industry. The industry registered a growth of
around 16% in numbers over the year 2003-04.

Two Wheeler segment as a whole during the year 2015-05 grew by15%. Backed by
Government initiative on rural roads and better connectivity with major towns and cities,
improved agricultural performance, upward trend of purchasing power in the hands of
rural people.

2
 SIGNIFICANCE OF PROBLEM

How to define a research problem is undoubtedly a herculean task. However, it

is the task that must be tackled intelligently to avoid the perplexity encountered in
research problem. The usual approach is that the researcher should himself pose a
question and set up techniques and procedures for throwing light on the question
concerned for formulating or defining the research problem .The step in understanding
the problem is to understand its origin and nature clearly .The best way of understanding
is to discuss it with those who raised the question in order to find out how the problem
originally came about and with what objectives in view . Discussing concerning
problem often produces useful information. Various new ideas can be developed through
an exercise. Hence a researcher must discuss his problem with his colleagues and others
who have enough experience in the same area or working on similar problems. This
quite often known as an experience survey. People with rich experience are in position to
enlighten the researcher on different aspects of his proposed study and their advice and
comments are usually invaluable to the researcher. They help him to sharpen his focus of
attention on specific aspect of the field .Discussions with such persons should not only
be confined to the specific problem at hand , but should also concerned with the general
approach to the given problem, techniques that might be used possible solution.

How the automobiles company makes the marketing strategy for the product
promotion? Hero moto corp and Bajaj both are the largest two wheeler company in
India, how they different in the sales distribution system. Making a comparative
analysis of the above 2 companies.

3
 REVIEW OF LITERATURE

All available literature concerning the problem at hand must necessarily be surveyed and
examined before a definition of the research problem is given. This means that the
researcher must be well conversant with the theories in the field, reports and records as
also all other relevant literature .He must devote sufficient time in reviewing of research
already undertaken on related problems .This is done to find out what data and other ,
materials, if any are available for operational purposes .Knowing what data are available
often serves to narrow the problem itself as well as the technique that might be used .
This would also help a researcher to know if there are certain gaps in the theories ,or
whether the existing theory is applicable to the problem under study are inconsistent
with each other ,or whether the findings of the different studies do not follow a pattern
consistent with each other, or whether the findings of the different studies do not follow
a pattern consistent with the theoretical expectation and so on. All this will enable a
researcher to take new strides in the field for furtherance of knowledge i.e. he can move
up starting from the existing premise.

4
Now a days the number of sectors are going to the way of success and automobile sector also one
of them .Area of the business also become in broad manner. In automobile sector number of
companies are there, due to that competition is become tough each company using new sales
strategy, designing new offers, different marketing strategies for product promotion and to
capture all segments of consumer either it is related to working man or woman, college going
boys or girls, so I will take two top company of the automobile sector one is HERO which is
make the record of highest seller in the world and second one bajaj ,which has come the fastest
growing company in automobile sector in last five year ,main objective of this study to know
how these company makes a perfect strategy to capture the market and there sales and
distribution system of vehicles.

 To know about the marketing strategy of both companies and how they different to
each other.

 To know about the system of sales and distribution system of both companies.

The research methodology of my project is descriptive research. The research design is

characterized by flexibility in order to be sensitive to the unexpected and to discover insights not
previously recognized.
Data collected through secondary sources i.e. from books, journals different magazines,
newspapers, net, etc.

5
 OBJECTIVES

 To know about the marketing strategy of BAJAJ AUTO LTD and HERO MOTO
CORP.
 How they different to each other.
 To know about the system of sales and distribution system of both company.
 To know the perception of the customer for both the company.

6
 COMPANY PROFILE

BAJAJ AUTO LTD.

Executive Summary

Bajaj Auto Ltd (BAL), the largest two and three wheeler manufacturer in the country, has a
dominating 60% market share in scooters, 27% in motor cycles, 7% in mopeds and a leading
86% market share in three-wheelers. While it still remains a leader in the scooter segment, it is
well behind HERO in the motorcycle segment. In mopeds/scooterettes, it is the number two
player after TVS Suzuki. The company has a wide array of models both in the two-stroke and
four-stroke configurations. However, with the implementation of the latest emission norms, it is
slowly moving away from two-stroke vehicles and converting them to four-stroke ones. With
customer preference having shifted away from scooters towards motorcycles, BAL has had not
the best of times in the past year or so.

Industry basics

The Indian two wheeler sector is the largest in terms of volumes among all the segments in the
automobile industry. The segment can be further categorized into three main sub-segments –
scooters, motorcycles and mopeds. Lately, however, some products like scooterettes and step-
thru's have been introduced in the market, which have features of more than one segment. Five
players mainly dominate the two-wheeler segment. All these companies have foreign
collaborations mainly with well-known Japanese firms. These ventures, set up in the mid 80s,
suffered heavily due to a sharp depreciation in rupee till the early 90s. All these players are now

7
well established with about 95% indigenization. Bajaj Auto, the local player with low cost
advantage, dominates the sector. All the existing players have been expanding capacities and
widening their product base to include 4-stroke vehicles, which conform to Euro environmental
norms. Recently, Honda Corporation of Japan announced its intentions to set up a 100%
subsidiary to manufacture scooters and motorcycles. India is one of the lowest cost production
bases for two-wheelers.

In the last four to five years, the two-wheeler market has witnessed a shift towards motorcycles
at the expense of scooters. With urban consumers aspiring to possess the latest in terms of looks
and technology, energy efficient and sleeker looking models have replaced the staid ones in the
market. In the rural areas, consumers have come to prefer sturdies bikes to withstand the bad
road conditions. Motorcycles sales now contribute 47.6% of all two-wheeler sales, up from 41%
in FY99.

BAL commenced operations as importing agents for Vespa scooters of Piaggio in 1948. BAL
entered into a technical collaboration agreement with Piaggio in 1961 to manufacture scooters
and three wheelers. The agreement, which expired in 1971, was not renewed. BAL has 2 plants
and a third being set up, all located in Maharashtra. BAL scooters incorporate Piaggio
technology as upgraded by BAL’s in-house R&D from time to time. It also developed a fully
indigenous model of motor cycles in 1981. Subsequent to the opening up of the sector for foreign
technology and equity participation in the mid 80’s, BAL entered into a technical collaboration
agreement with Kawasaki Japan. It started production of Kawasaki 100cc motor cycles in 1986.
BAL has entered into technical collaboration with M/s Kabota of Japan for manufacture of diesel
engines for its three wheelers. Besides strengthening its in-house R&D, the Company has also
entered into technical collaborations with Kawasaki, Kubota, Tokyo R&D of Japan, and Cagiva
of Italy. BAL has also promoted Maharashtra Scooters Ltd. (MSL) with state government bodies.
MSL assembles Bajaj scooters at its Satara plant.

8
Group/ Management

Mr. Jamanalal Bajaj founded the Bajaj Group in the 30s. The group now has 24 companies,
including 6 listed companies. Besides BAL, the major companies in the group are as follows:

 Mukand Ltd.: Alloy/ Special Steel, term key projects

 Bajaj Electricals Ltd.: Electrical equipments, fans, appliances
 Bajaj Hindustan Ltd.: Sugar, industrial alcohol

Subsidiary/affiliate companies

Bajaj Auto Holdings Ltd. (BAHL) is a wholly owned subsidiary of BAL engaged in the business
of investment in shares, debentures and other securities.

Bajaj Auto Finance Ltd. (BAFL) - has ceased to be a subsidiary after its IPO of 4.175mn shares
of Rs10 each at a premium of Rs80 in May 1994. BAL, along with the subsidiary BAHL holds
about 45% equity of BAFL. BAFL engages in financial services and investment activities.

Maharashtra Scooters Ltd (MSL) was promoted by BAL and Western Maharashtra Development
Corporation (WMDC), in 1975, with a plant at Satara. MSL assembles scooters for BAL.

Plant locations

BAL has two plants located at Akurdi near Pune and Waluj near Aurangabad. Akurdi was set up
in 1961 and Waluj in the mid-80s. Super and Chetak scooters are manufactured in both the
plants. Besides, Akurdi plant manufactures front engine three-wheelers and M-80, Indian
motorcycle. Waluj plant manufactures rear engine three-wheeler, Sunny mopeds and Kawasaki
motorcycles. A third plant with a manufacturing capacity of 1m vehicles is being set up at
Chakan near Pune

9
Business

BAL is the market leader in two and three wheeler industry with a presence in all the product
groups. In FY2000, scooter sales constituted 51.8% of total volumes and contributed to 37.3% of
total turnover. Motorcycle sales constituted 30.9% of total volumes and contributed to 30.9% of
total turnover. Moped sales constituted 5% of total volumes and contributed to 3.4% of total
turnover. Three-wheelers constituted 12.3% of total volumes and contributed to 23.2% of total
turnover. The rest of the turnover is contributed by sales of spare parts.

Scooters

BAL has a host of models in the geared and un-geared category of scooters. Its 'Chetak', 'Classic'
and 'Super' models still rule the roost in large parts of the country. Among its recent ones are the
'Legend', 'Bravo' and 'Saffire'. ‘Legend’ – a 4 stroke geared scooter with a 9HP engine is the most
powerful in the market. ‘Bravo’ is a two-stroke 150cc scooter with a catalytic converter in line
with year 2000 emission norms. Recently, it launched the two-stroke 'Saffire' in Pune city.

BAL dominates the scooter segment with 57.7% market share. BAL’s scooters were traditionally
positioned as rugged family vehicles and good value for money. BAL scooters are also perceived
to require low maintenance cost and fetch higher resale value. However, during the last three
years, scooter segment has recorded sluggish sales growth, with a shift in demand towards
motorcycles. This has led to a gradual market share loss to the likes of Kinetic Motor and TVS
Suzuki. To counter this, BAL's strategy would be to position itself in the fuel-economy segment
at a competitive price point. Secondly, Bajaj will try to capture market share by introducing top-
of-the-line scooters, which match its competitors in terms of style and technology. Towards this,
Bajaj will be introducing the four-stroke 'Chetak' in November 2000 giving 65 kms/liter fuel
economy and the 'Fusion' and 'BravoHP' in October 2000 to give LML something to think about.

10
Motorcycles

BAL has two basic motorcycle products - M80, a 75cc indigenously developed low cost vehicle
in the step-thru segment and Japanese motorcycles. Among the Japanese ones, BAL has within
its fold, the 100cc ‘4S-Champion’, 125cc ‘KB 125’, 111cc ‘Caliber’ and 100cc ‘Boxer’. BAL’s
motorcycles are positioned as a four-stroke fuel efficient vehicles. Kawasaki Caliber, a 111cc 4-
stroke motorcycle was launched in June 1998 and is "focused at those who are young at heart".
Last year, it introduced the ‘Boxer’ model in two versions at very competitive prices.

BAL has traditionally been weak in the southern and western regions of the country. Henceforth,
it will focus on establishing a greater presence in these areas. As part of the strategy, BAL has
also decided to launch new models in sub-segments in which it does not have a presence at
present. Among them will be the 175cc 'Eliminator'. Trial productions of this model will
commence from next month onwards in Waluj. It is expected to come out in the market by
October 2000. Next in line is the 150cc-200cc 'Pulsar', which will be introduced in November
2000. Both the models will be in the four-stroke category. Another model in the development
stage is code named 288C. This model is being jointly developed by Kawasaki and will be four-
stroke model. It is designed to attack HERO' s 'Splendor', which is also the largest selling model
of motorcycle in the country. Trial production of the 288C will begin in July 2000 and the model
will be priced competitively at Rs4,000-5,000 less than the Splendor.

Mopeds/Scooters

BAL has a small market share of 9.5% in FY2015 in this segment. Among its models are the
‘Sunny Zip’, ‘Rave’ and the ‘Spirit’. Last year, it launched ‘Bajaj Sunny’, a 50cc upgraded
scooterette model that has been extremely successful. Rave, BAL’s 74cc scooterette was

11
relaunched in FY98. BAL had launched Spirit a 60cc, 2-stroke scooterette complete with an
electric start in November 1998, to compete with leader TVS Suzuki’s ‘Scooty’.

Although the southern region is the major market for mopeds, BAL's mopeds and scooterette's
have a larger presence in the western part of the country. In FY01, BAL is hoping to cash on the
recent success of ‘Spirit’. During the year, the company is also planning to distribute its newly
launched 'Sunny Spice' model to other parts of the country. The model has just made its debut by
selling around 850 units in Punjab. Also on the assembly line is the long awaited 'Saffire', which
is presently being sold in Pune. The company hopes to sell around 12,000 units per month of the
three models in FY04.

Exports

Bajaj Auto continued to be India’s largest exporter of two and three wheelers. During 2015-05, it
exported 196,710 two and three-wheelers—which represented a growth of 26 per cent over
2003-04. Exports now constitute 11 per cent in volume terms and 12 per cent of its value of net
sales.Table 3 summarizes the product-wise exports

Bajaj Auto is the market leader in Sri Lanka and Bangladesh in two-wheelers; and in Colombia
and Guatemala, Bajaj motorcycles are one of the leading brands. In addition to an office in Dubai
that was set up in 2003 for exploring African markets, during 2015-05 a representative office was
opened in Indonesia. Plans are on the anvil to set up a joint venture in Indonesia with a local
partner for foraying into the three-wheeler market of that country. Over time, exports will have to
be a focus area for the company. The reasoning is clear. Two-wheelers with engine capacity of
250 cc or less constitute over 90 per cent of the global market. This happens to be Bajaj Auto’s
area of core competency: the company has proven product development skills, design
capabilities, production techniques and processes, cost competitiveness and an understanding of
different consumer psyches in the Pulsar, Discover and Wave. In 2015-05, Bajaj Auto’s R&D
efforts in product development were recognized by Overdrive magazine, which awarded

12
Discover DTSi the distinction of “Bike of the Year, 2005” and the “Best Indigenous Design of
the Year 2005”.

Product-wise exports of Bajaj Auto (in numbers)

Product 2013-14 2014-15 Growth

Motorcycles 123,946 82,314 51%

Total two-wheelers 130,945 130,945 45%

Three-wheelers 65,765 65,797 —

Total vehicles 196,710 156,007 26%

Outlook

BAL, despite losing market share to its competitors during the last two-three years, continues to
dominate the two-wheeler segment. Besides a strong distribution/service network and powerful
brand equity, BAL has the advantage of low cost production due to scale economies and high
level of indigenization. Its competitors on the other hand, have access to better global technology
and have also reduced their vulnerability to a rupee depreciation with their products being
indigenized to a large extent. In order to arrest its declining market share, BAL has launched
several new models during the past fiscal and more are in the offing in each segment of the two-
wheeler market. Although BAL will be able to maintain its dominance in the near future,

13
competition will be far more intense as the competitors are now on a stronger wicket and have
become more aggressive.

Moreover, the management has recognized the need to utilize its surplus reserves for
strengthening its presence in the market by way of launching new models, expanding capacity
and penetrating new markets.

HERO

14
 Executive Summary

Hero is one of the leading companies in the two-wheeler industry. At present, it is the leading
player in the motorcycle segment with around 42% of the market share in FY2015. During the
year, the company posted a 51.5%yoy rise in turnover, which was driven by a 43.6%yoy rise in
sales volumes. Even last year in the face of overall sluggishness in the automotive sector, the
company managed to post a 24% volume growth in motorcycles. The company has invested in
capex to bring in new models and meet the increased market demand. All this has been without
resorting to debt and entirely from internal accruals.

Industry basics

The Indian two wheeler sector is the largest in terms of volumes among all the segments in the
automobile industry. The segment can be further categorized into three main sub-segments –
scooters, motorcycles and mopeds. Lately, however, some products like scooterettes and step-
thru's have been introduced in the market, which have features of more than one segment. Five
players mainly dominate the two-wheeler segment. All these companies have foreign
collaborations mainly with well-known Japanese firms. These ventures, set up in the mid 80s,
suffered heavily due to a sharp depreciation in rupee till the early 90s. All these players are now
well established with about 95% indigenization. Bajaj Auto, the local player with low cost
advantage, dominates the sector. All the existing players have been expanding capacities and
widening their product base to include 4-stroke vehicles, which conform to Euro environmental
norms. Recently, Honda Corporation of Japan announced its intentions to set up a 100%
subsidiary to manufacture scooters and motorcycles. India is one of the lowest cost production
bases for two-wheelers.

In the last four to five years, the two-wheeler market has witnessed a shift towards motorcycles
at the expense of scooters. With urban consumers aspiring to possess the latest in terms of looks
and technology, energy efficient and sleeker looking models have replaced the staid ones in the

15
market. In the rural areas, consumers have come to prefer sturdier bikes to withstand the bad
road conditions. Motorcycles sales now contribute 47.6% of all two-wheeler sales, up from 41%
in FY99.

hero, a part of the Hero group, is a reputed name in the two-wheeler sector and the management
has a rich experience in the business. Corporation and over the years has been the most
successful Indo-Japanese venture in two-wheelers. The management has always laid special
emphasis on development of a strong network of ancillaries, the most critical aspect of the
business. While earlier it did not pay adequate attention towards investing in capex, it has
redeemed itself by increasing capacities in the past three years to cater to the increasing demand.
This it has done by largely relying on its internal accruals. The management remains a focused
player in the segment with no plans to diversify into anything else.

Business

HERO manufactures motorcycles. is the market leader in the 100cc segment. Motorcycles
contributed to 92.3% of the total turnover in FY05 with the rest coming in from sale of spare
parts and accessories.

Motorcycles

HERO MOTO CORP was the first player to introduce 4-stroke motorcycles in India. Its
positioning, and also performance as the most fuel-efficient motorcycle, has made it the market
leader in the segment. Its models include a basic model, a modified version for the rural market
with a dust guard and two stylish up market models. Its basic models include the 'CD-100' and
the largest selling 'Splendor'. Both these are in the 100cc configuration. 'Street', a 100cc bike
launched in Feb 1997 is an adaptation of one of Hondas most popular models Honda Cub.
Recently it launched an upgraded version of this model - called 'Street Smart' at the same price
level. Another model known as 'Sleek' is mainly targeted at the export market. In FY99, the

16
company launched a powerful 156cc bike named 'CBZ'. It has a strong 12.8 BHP, five-geared
engine. It is the only bike available with a disc brake option. With CBZ, HERO has filled a gap
left due to the absence of a power bike in its product range. The model with its stylish looks
seems to be a success story especially among the urban segment. The company's collaborator
Honda of Japan has agreed to provide design and technology for new models to be manufactured
in the plant. All of Hero models are 4-stroke and comply with current Euro emission norms.

HERO sold 1892540 motorcycles in FY2005 as compared to 2155479 units in FY04, recording a
volume growth of 43.6%yoy as compared to industry growth of 24%yoy. It's all India market
share increased from 37.5% in FY04 to 42.4% in FY2005. If we see region wise share of the
market, Hero has a strong presence in almost all regions of the country. It has a dominating 48%
market share in the southern region. HERO has also strengthened its hold over the eastern region
where market share has increased from 22% in 1996 to the current level of around 35%.

Ancillaries

Hero has a strong network of ancillaries comprising inter alia, a number of Munjal group
companies such as Munjal Castings, Sunbeam Castings and Munjal Showa. Over the years, the
company has indigenised more than 95% of its components. In line with the Honda philosophy,
Hero sources most of its component requirement from third party vendors. This allows greater
flexibility in production planning. Materials cost is relatively high and overheads are lower.

Expansion plans

Earlier, Hero Motocorp had faced capacity constraints and lost significant market share to
competitors during FY95 and FY96. With demand for motorcycles showing an upward trend, the
company did well by commissioning a new plant at Gurgaon, with a capacity of 150,000 vehicles
per annum in FY97. Capacity at its Dharuhera plant in Haryana has also been expanded from
300,000 vehicles to 350,000 vehicles during FY98. In FY99, production capacity had reached

17
650,000 units with a capacity utilization of over 90%. In the future too, the company has
indicated that it will not hesitate to invest in new capacities and models in accordance with
changing market needs.

18
Outlook

With strong brand equity of its fuel-efficient vehicles, a wide range of motorcycles, and the
backing of the global leader Honda, Hero is well placed in the sector. With the consumer shift
towards motorcycles not likely to abate in the foreseeable future, growth in the motorcycle
segment seems set to continue in FY06. However, competition is slated to rise in the segment
what with players like Kinetic Motors and LML planning to make a foray in the segment. Bajaj
Auto, too, has line up a few models with which to challenge the ruling player. On the other hand,
customers have become more discerning and weigh all options (price, durability, aesthetics etc)
before choosing a bike. However, with adequate manufacturing capacities, high productivity
levels, wide product portfolio and a leading world player as its partner, HERO is well placed to
reach its set target of 1mn units. But all said and done, a likely imponderable in the long term
will be the intended entry of Honda in the two-wheeler market two years from now.

Earnings sensitivity factors

 Demand growth in 100cc motor cycles, historically, has been linked to sector growth,
which in turn is dependent on the economic conditions.
 Success in new product launches and widening of product range to meet competition.
 Raw material prices of steel, aluminum, tyres etc.

Background

The Hero group of the Munjals entered into a technical collaboration agreement with the world’s
largest two-wheeler manufacturer Honda Motors of Japan to set up HHML. HHML is the only
Honda venture outside Japan to produce Im vehicles in less than a decade. That too, has been
achieved with just one model. Munjals also have another company Majestic Auto Ltd. (MAL)

19
which manufactures indigenous mopeds. MAL has entered into a technical agreement with
BMW German for heavy-duty motorcycles. HHML has renewed the agreement with Honda in
early 1995 for 10 years. The renewed agreement provides for a number of new contemporary
Honda models to be manufactured at the new plant at Gurgaon, set up in FY97.

Group

HERO belongs to the Munjal group. The group has been founded by Brijmohanlal Munjal and
his three brothers in 1951. It began operations with a manufacturing unit for bicycle components.
Over the years, the group has become the largest manufacturer of bicycles in the world. Besides
Hero, there are 4 other major companies in the group, namely the following:

 Hero Cycles (1951), which is India’s leading bicycle manufacturer and exporter.
 Gujarat Cycles (1989).
 Majestic Auto (1978), which is one of the leading manufacturer and exporter of mopeds.
It has collaboration with Steyr Daimler Puch of Austria. It has also entered into a
technical collaboration agreement with BMW Germany to manufacture heavy duty 650cc
motor cycles.
 Munjal-Showa (1985), which is one of the leading manufacturers of shock absorbers, and
other automotive components.

Plant locations

Hero, plant is located at Dharuhera, Haryana near Delhi. Its rated capacity is being increased to
0.375mn nos pa. Hero has set up a new plant at Gurgaon, 30 kms away from the existing plant.
The new plant has a capacity of 0.15mn nos pa.

20
 MARKETING STRATEGIES

HERO

PRICE

Hero adopt a highly systematized and efficient penetration strategy. Accordingly, products can,
in keeping with the demands of the marketing climate at large that it operates in, be brought
down to low prices. But as the present state of its brand as well as its consistently healthy
performance shows the company has not been compelled to adopt this strategy with a view to
securing the largest market share. This strategy holds importance only when the product can be
put under the fabric ‘price-sensitive’, there appears to be considerable scope for strong
competition, and the company’s unit manufacturing costs go down within the company’s scale of
production and accumulated manufacturing experience.

The prices of Hero are quite high in comparison to the prices of products of other companies, i.e.
CBZ and Passion, its products 62,000 and 45,000 respectively. It is because of the high quality
of its products that the company has not only maintained but enhanced its sale in spite of high
prices of its products.

Now the brand name of Hero is well established in the market, and this adds another dimension
to the booming success of its products.

21
PLACE

Hero stands out as one of the most reputed names in the two-wheeler industry. With its newly
launched brands such as CBZ and passion, as well as its ever soaring sale, the company has
earned an enormously vast niche for itself in the Indian market.

The basic strategy of this company rests on its skilled, all-pervasive distribution network spread
out in every corner of the country. It has short rooms in almost all the big and small cities over
the landscape of India.

Like Bajaj Auto, its products have got a considerable grasp over the grassroots. However, in spite
of the fact that it is a comparatively new players in the booming oligopolistic two-wheeler
market, the range of its popularity and accessibility to the masses has been enormous. This has
been largely possible due to the efficient corporation and assistance, it has been able to drive
from its distribution.

PROMOTION

As one of the two-wheeler giants of India, the company is poised to take new strides in order to
promote its products like CBZ and Passion.

The essential objective of its promotion strategies is to bring to products to host of consumers
with ease, perfection and at comparatively low and affordable costs. Distinguished in its fuel
efficiency attributes, the company is willing to target those consumers particularly who are likely
to be swept off their fact by price factors and more appearance.

22
Promotion Strategies

i) The basic characteristics of promotion strategies adopted by Hero can be had in its
emphasis on advertisements through various channels. These channels which have a
comparatively more effective base of viewership are targeted in the first place.
ii) Hero has roped in film actor Hrithik Roshan, Cricketers like Sourav Ganguly,
Mohammad Kaif, Harbhajan Singh, Zaheer Khan, Yuvraj Singh and Virender Sehwag as
its brand ambassadors.
They will endorse the company products, attend corporate and brand events and help
promote its "We Care" campaign comprising safety riding, environment and friendliness.

The Company has lift now stone unturned to get Zonal and regional offices, show rooms and
outlets set up at every place with a potential consumer base.

23
PRODUCT

The Hero models are being increasingly used by youngsters / bachelors in urban areas and by
rural folk as a study means of personal transportation. It’s models attracts youngsters and higher
income group.

24
 CBZ CD-DAWN

PASSION PRO SPLENDOR+

KARIZMA
HUNK
25
Strategic Innovations

The strategies of Hero Motocorp involve:

 Process control quality

 Self-inspection
 Defect prevention through
 Not to receive defective parts
 Not to produce defective parts
 Repenting the human potential though
 Quality circles
 Suggestion Schemes

26
27
 BAJAJ AUTO

PRICE

Bajaj Auto adopted a rapid penetration strategy. This strategy consists of launching the product
at a low price and promises to bring about the fastest market penetration and the largest market
share. This strategy makes sense when the product is price-sensitive, there is strong potential
competition, and the company’s unit manufacturing costs fall within the company’s scale of
production and accumulated manufacturing experience.

The prices of Bajaj Auto products like Chetek and Caliber are quite low in comparison to the
prices of other market players of the products of cost. So, Bajaj Chetek and Caliber Rs. 23,930
and Rs. 44,000 respectively but the market is not picking up as expected even when the prices of
Bajaj products are less than those of HERO, its biggest competitors.

Bajaj Auto with its lower price wanted to capture the market by making its product available at
maximum number of outlets at possible.

As the brand name of Bajaj Auto is well established in the market, the launch of two-wheelers by
the name of Bajaj Chetak and Bajaj Calibre as well as keeping the prices low, it was aimed to
target to the maximum level of people, especially the people who are very much price sensitive.

Bajaj Auto follows differentiation pricing route. Differentiated pricing is one in which
companies charge different prices for the same product in different zones/areas of the market.
Sometimes the differentiation in pricing is made on the basis of customer class rather than
market territory differentiation.

28
PLACE

Bajaj Auto has been in two-wheeler business for last many decades, but it has introduced its
Calibre brand just recently to match with the Competitors product.

Caliber is a very well established brand in India today. What it was introduced in India by its
present name it was quite easy to market it in difficult places.

The Company is strategy is to cover as many outlets as possible, so that their product is easily
available to the consumer.

The management has spared to effort in spreading its distribution from the rural grassroots to the
urban lads including teen-agars, College – going students (both girls and boys) as also officials
and professional working in different corners of towns, suburbs, as well as the vast spread of
metropolitan and megapolitan cities.

The company has got different distributors for different brands and products. The company
follows area wise distribution system i.e. for different areas there are different distributors.

29
PROMOTION

Bajaj Auto is one of the largest manufacturers of two-wheeler in India. To get a greater market
share it has introduced its calibre brand. They use extensive promotional techniques like
Broadcast Media, Sales Promotion, Demonstrations, Point of Purchase (POP) display.

In all this, the company has successfully shown that it believes in delivering the best products to
the consumer.

Today the company has emerged as the market leader in the two-wheeler industry.

The company believes in pull strategy. The pull strategy involves those marketing activities
which are designed at end users. The purpose is to induce the intermediaries to order the product
from the manufacturer.

Promotional Strategies

 Hoardings: This is one of main promotional tools of Bajaj Auto. They have installed their
hoardings on highways, electric poles etc.
 Advertising: The Company has, over the last few years, spent a lot on advertising in
leading newspapers and media channels including the electronic media channels.
 The Company is giving more emphasis on opening new outlets at various places by
keeping the tastes and preferences of the customers in mind. They are also trying to give
more emphasis on the customer service at their outlets.
 Bajaj Auto is introducing new outlets these days, keeping in mind that its different
products including Calibre are demonstrated by colorful lights or other attractive
hoarding to make the place attractive.

30
PRODUCT

The company is launching new products to keep face with the competitive market. Being the
market leader in the scooter industry the company wants to establish the same position in the
motorcycle market. The company attracts its models to lower income group by its technical
specifications.

SCOOTER

WAVE Bajaj Chetak 150

BIKE

BAJAJ-CT100 BAJAJ PULSAR 150

31
KAWASAKI WIND 125 BAJAJ CALIBER

BAJAJ PULSAR 180 BAJAJ ELIMINATOR

32
DISTRIBUTION NETWORK

33
 INNOVATIVE STRATEGIES

BAJAJ Auto is to unveil its first business-to-consumer portal, Kawasakieliminator.Com, in

January this year.

Motorcycle enthusiasts would be able to place orders for the bike with the manufacturer who will
then involve the local dealer to complete the sale.
This B2C site is part of BAL’s much bigger B2C initiative, Riderszone.Com, expected
to be a one-stop online site for everything on two-wheelers, including the sale of new
and second-hand vehicles and spares.

The most ambitious feature of the tentatively named Riders zone is that it will be a neutral site.
That is, all manufacturers are expected to participate.
Being developed by a team under Sanjeev Bajaj, general manager, corporate finance,
BAL, it has been under testing for the past several months. Kawasakieliminator.Com
would be launched to coincide with the launch of the bike, the country’s first cruiser
bike.

Effectively, the Eliminator portal will act as a forerunner to the bigger and more ambitious portal
Riders zone, said RL Ravichandran, vice-president, business and product
development, BAL.

BAL has registered five names and different logos for the full-fledged B2C portal though Riders
zone appears to be a front runner.

Ravichandran said the Eliminator site will allow motorcycle enthusiasts to order the bikes after
they have had a three-dimensional view of the bike, along with their colour
specifications (the bike comes in three colors).

34
Since this is the first time an Indian maker is going for a cruiser bike, there is considerable
interest in the high-end, premium, bike segment. The site will provide information
about the bike and allow the enthusiast to get the full feel of the product.

While the fully fleshed Riders zone is expected to have more features like second-hand sales, the
current site will be specifically for the Eliminator. Later, when Riders zone develops,
this will become a part of it.

"For now, it is an additional marketing tool and is not expected to generate revenues. We see this
as more of an information centre," Ravichandran said, “The site has been designed to
capture the enthusiasm of the high-end bike lover. It will detail the pedigree of
Kawasaki, explain the process of manufacturing, its pricing...all of it to help people
understand the uniqueness of the product”.

The motorcycle will be launched in urban centers with a high internet usage pattern besides a
history of buying lifestyle products. The initial launch is in Pune, followed by
Mumbai, Delhi, the Punjab and Bangalore, in a high priced, niche segment.

The site is expected to add features like hire purchase and much later, second-hand vehicles. For
its financing needs, Bajaj Auto Finance has already been tied in. BAFL is also
expected to roll out to more cities from the next financial.

Ravichandran was categorical that this was not a revenue-generating activity. "It is the first
initiative of its kind, addressing customers on the net. We are not looking at revenue
generation from this; this is more for consumer information," he said.

35
 PENETRATION IN RURAL INDIA

The two- and three-wheeler major Bajaj Auto to step on the gas in rural Bharat.

And why not. With vehicle - two- and four-wheeler - penetration at 40-45% of households in
most metros, mini metros, and emerging metros, the next wave of growth has to come from rural
India, where it is currently as low as 7%.

“A rural customer has no choice. He buys whatever is available to him in the first place. So
whoever reaches him first will have a natural monopoly. Our aim is to reach each village with a
population of over 5, 000,” says S. Sridhar, Bajaj’s vice president, marketing & sales (two-
wheelers). As a strategy, the company is segregating rural market from urban. In the first phase,
it will be setting up 20 outlets in affluent, but severely underpenetrated, rural districts, by March,
2007. Special schemes and financial products suited for the rural market will be launched.
Bajaj’s non-banking financial arm, Bajaj Auto Financial Ltd (BAFL), is expected to play a key
role here.

The strategy of having exclusive rural dealers has met with reasonable of success. In Nasik, for
example, the company earlier had two outlets, both in the city, and barely a kilometers away
from each other. It closed down one, and opened another one 35 km away from the city. Result:
Both outlets are catering to exclusive catchments area and are closer to their customers. A rural
customer no longer needs to travel to the city to buy or service his two-wheeler.

And Bajaj is taking the classical marketing route to enter the rural mind space. “We will train the
sons and daughter of village VIPs, who are also the opinion makers and thought leaders of their
respective villages, to do this” Sridhar says. The company expects its rural outlets to achieve a
breakeven at 175-200 vehicles a month. It estimates the cost of setting up rural outlets at Rs 40
lakh, with working capital requirements of Rs 2 crore. Catering to a large number of
‘unbankable’ customers in rural India is a challenge.

36
And particularly for a product like two-wheeler, which is increasingly bought on finance. Sridhar
is keeping his ‘chequeless transaction’ ace up close to his chest. All he is willing is disclose is
that Bajaj Auto Finance will be playing a significant role, and will try to involve the rural self-
help groups. “How do you expect a man, who has no bank account, to provide 12 post-dated
cheques? The problem with agencies providing micro finance to self-help groups is that there is
no control on the end-use of the money. We, along with BAFL, are working on having control on
the end use,” says Sridhar. This way, the company hopes that the customer would buy a two-
wheeler with a two-wheeler loan, and not, say, use it on his daughter’s marriage. But that doesn’t
mean that the company is abandoning its urban focus. It is setting up 10 high-end motorbike
showrooms - Probiking Centers - over the next 6-8 months. “A dealer is not willing to invest so
much, up to Rs 4 crore, on a Probiking Centre. In the first phase, all the 10 such centers will be
company owned. The next 40 could have dealer participation,” Sridhar says.

Currently only two models, the Pulsar and the Avenger, and their variants are sold from
Probiking Centres. But the company is expected to announce the launch of at least one premium
(150 cc plus) motorcycle during the 2006 Auto Expo in January in New Delhi. Also on the anvil
are some ungeared scooter models, which is the only growing segment in the scooter market.

37
 HYPOTHESIS

Hypothesis is considered the principal instrument .Its main function is to suggest new
experiments and observations. In fact, many experiments are carried out with the deliberate
object of testing hypothesis. Decision makers often face situations wherein they are interested in
testing hypothesis on the basis of available information and then take decisions on the basis of
such testing. Thus hypothesis testing enables us to make probability statements about population
parameters. The hypothesis may not be proved absolutely, but in practice it is accepted if it has
withstood a critical testing.

38
 SAMPLING TECHNIQUES

A sample design is a definite plan for obtaining a sample from a given. It refers to the technique
or the procedure the researches would adopt in selecting items for the sample .Sample design
may as well lay down the number of items to be included in the sample i.e ,the size of the sample
. Sample design is determined before data are collected. There are many sample designs from
which researcher can choose . Some designs are relatively more precise and easier to apply than
others .One has to adopt appropriate design for research to be done. while developing a
sampling design, the researcher must pay attention to the following points;
Type of universe
sampling unit
Source list

Size of sample

Parameters of interest

Budgetary constraint

Sampling procedure

Probability sampling under restricted sampling techniques, as stated above, may result in
complex random sampling designs. Such designs may as well be called mixed sampling designs
for many of such designs may represent a combination of probability sampling procedures in
selecting a sample .Some of the popular complex designs are as follows :

39
SYSTEMATIC SAMPLING: Systematic sampling has certain plus points. It can be taken as an
improvement over a simple random sample in as much as the systematic is spread more evenly
over the entire population.
STRATIFIED SAMPLING: If a population from which a sample is to be drawn does not
constitute a homogeneous group, stratified sampling techniques is generally applied in order to
obtain a representative sample.
CLUSTER SAMPLING: In cluster sampling the total population is divided into a number of
relatively small subdivisions which are them selves clusters of still smaller units and then some
of these clusters are randomly selected for inclusion in the overall sample.
AREA SAMPLING: If cluster happen to be some geographic subdivision, in that case cluster
sampling is better known as area sampling. In other words, cluster designs, where the primary
sampling unit represents a cluster of units based on geographic area, are distinguished as area
sampling.
MULTI-STAGE SAMPLING: Multi stage sampling is a further development of the principle of
cluster sampling. Suppose we want to instigate working efficiency of companies in India and we
want to take a sample of few companies for the purpose.
SAMPLING WITH PROBABILITY PROPORTIONAL TO SIZE: In case the cluster sampling
units do not have the same number or approximately the same number of elements, it is
considered appropriate to use a random selection process where the probability of each cluster
being included in the sample is proportional to the size of the cluster.

SEQUENTIAL SAMPLING: This sampling design is some what complex sample design. The
ultimate size of the sample under this technique is not fixed in advance, but is determined
according to mathematical decision rules on the basis of information yielded as the survey
progresses .This is usually adopted in case of acceptance sampling plan in context of statistical
quality control.

40
 DATA COLLECTION METHODS

The primary data are those which are collected afresh and for the first time ,and thus happen to
be original inn character. The secondary data on the other hand , are those which have already
been collected by someone else and which have already been passed through the statistical
process . The researcher would have to decide which sort of data he would be using for his
study and accordingly have to select one or the other method of data collection .The methods of
collecting primary and secondary differ since primary data are to be originally collected , while
case of secondary data the nature of data collection work is merely that of compilation.
Researcher must be very careful in using secondary data. One must make a minute scrutiny
because it is just possible that the secondary data may be inadequate or unsuitable in context of
the problem which the researcher wants to study . One must be cautious that they posses
following characteristics:

1) Reliability of data

2) Suitability of data

3) Adequacy of data

DATA COLLECTION

The study of report is based on descriptive research. The major purpose of descriptive research is to give
description of the state of affairs as it’s exists at present. The main characteristic of this method is that
the research has no control over variables; this can only report what has happened or what is
happening.

41
The Information regarding the organization’s marketing strategies has been obtained through-

Secondary Sources

 Internet
 Reports of CII
 Articles from – Business Today, Business India, A & M’s. Business worlds.
 Newspaper Articles from – Indian observes, Brand Equity, Economic Times.

Based on the information obtained from the above sources concepts were developed on which
analysis was made.

There are many scope of this study in the automobile sector. Today, Indian
economy is growing very fast so demand of the automobile two wheeler vehicles is also going on
high. Customer service should be the be-all and end-all of sector.

DESCRIPTIVE RESEARCH

42
It may be either simple or complex. It determines who,what,when,where and how of the topic .It
is concerned with describing the characteristics estimating the proportion of the people in a
specified population who hold certain views or attitudes predicting specifically and discovering
or testing whether certain variables are associated. Descriptive study may employ any of or all
the methods of data collection such as interview, questionnaire, observation, tests and cumulative
record cards. In the descriptive study the researcher must be careful to make a note of the
bias and extravagance that may creep in at every stage of the study formulating the objectives of
the study; designing the methods of data
collection; selecting the sample; collecting, processing and analyzing the data and report the
findings.

RESEARCH DESIGN

43
Descriptive research studies are those which are concerned with describing the characteristics of
a particular individual, or of a group whereas diagnostic research studies determine the frequency
with which something occurs or its association with some thing else. The studies concerning
whether certain variables are associated are examples of diagnostic research studies. Most of the
social research comes this category. From the point of view of the research design ,the
descriptive as well as diagnostic studies share common requirement and as such we ma group
together these two type of research studies. In descriptive as well as in diagnostic studies, the
researcher must be able to define clearly ,what he wants to measure and must find adequate
methods for measuring it along with a clear cut definition of population he wants to study. It is
the first step to specify the objectives with sufficient precision. The design which gives smallest
experimental error is supposed to be the best design in many investigations. Similarly, a design
which yields maximal information and provides an opportunity for considering many different
aspects of a problem is considered most appropriate and efficient design in respect of many
research problems. Thus, the question of good design is related to the purpose or objective of the
research problem and also with the nature of the problem to be studied. A design may be quite
suitable in one case, but may be found wanting in one respect or the other in the context of some
other research problem. In a descriptive study the first step is to specify the objectives with
sufficient precision to ensure that the data collected are relevant. If this is not done carefully, the
study may not provide the desired information. Then comes the question of selecting the
methods by which the data are to be obtained.

ANALYSIS PATTERN

44
After data collection, it has to be processed and analyzed in accordance with the outline laid
down for the purpose at the time of developing the research plan. This is essential for a scientific
study and for ensuring that we have all relevant data for making contemplated comparisons and
analysis. Technically speaking , processing implies editing, coding, classification and tabulation
of collected data so that they are amenable to analysis .The term analysis refers to the
computation of certain measures along with searching for patterns of relationship that exit
among data group .Thus , “in the process of analysis ,relationships or difference supporting or
conflicting with original or new hypothesis should be subjected to statistical tests of significance
to determine with what validity data can be said to indicate any conclusions. Analysis may,
therefore , categorized as descriptive analysis and inferential analysis is largely the study of
distributions of one variable .This study provides us with profiles of companies, work groups,
persons and other subjects on any of a multiple of characteristics such as size composition
,efficiency,preferences,etc.We may as well talk of correlation analysis and causal analysis
correlation analysis studies the joint variation of two or more variables for determining the
amount of correlation between two or more variables . causal analysis is concerned with the
study of how one or more variables affect changes in other variable. Causal analysis is
considered relatively more important in experimental researches , where as in most social and
business researches our interest lies in understanding and controlling relationship between
variables.

ANALYSIS PATTERN

45
 The Indian two-wheeler industry made a small beginning in the early 50s when Automobile
Products of India (API) started manufacturing scooters in the country. Until 1958, API and
Enfield were the sole producers. In 1970 – 1980

This was a period during which the overall growth rate of the two-wheeler industry was high
(around 15% per annum). Furthermore, the levels of restriction and control over the industry
were also high. The former was the result of the steep oil price hikes in 1974 following which
two-wheelers became popular modes of personal transport because they offered higher fuel-
efficiency over cars/jeeps. On the other hand, the introduction of regulatory polices such as
MRTP and FERA resulted in a controlled industry. The impact of MRTP was limited as it
affected only large firms like Bajaj Auto Ltd. whose growth rates were curbed as they came
under the purview of this Act. However, FERA had a more far-reaching effect as it caused
foreign investment in India to be restricted. In the motorcycle segment FERA did not cause
technological stagnation, Indian motorcycles in the seventies had two major drawbacks viz., low
fuel-efficiency and high weight. Worldwide however, there was a trend towards using high-
strength, low-weight materials for various components which resulted in vehicles that were
compact and had lower weight. Since fuel-consumption of a two-wheeler depended on its
weight, lighter vehicles meant greater mileage. These drawbacks were overcome in the eighties
when foreign collaborations were not once again allowed, as a consequence of which, new
products nor firms entered the market since this segment depended almost entirely on foreign
collaborations for technology. The scooter and moped segments on the other hand were
technologically more self-sufficient and thus there were two new entrants in the scooter segment
and three in the moped segment. In 1981 – 1990 the technological backwardness of the Indian
two-wheeler industry was one of the reasons for the initiation of reforms in 1981. Foreign
collaborations were allowed for all two-wheelers up to an engine capacity of 100 cc. This
prompted a spate of new entries into the industry (Table 1) the majority of which entered the
motorcycle segment, bringing with them new technology that resulted in more efficient
production processes and products, Fuel-efficiency improved by (60-100)% in the new vehicles.
In the seventies, motorcycle mileage was on an average between 25 to 50 kmpl (kilometer per
46
liter), which had now improved to 50 to 80 kmpl. For mopeds it improved from 50 kmpl to 80
kmpl. Output of the engines also increased from 3-4 HP to 10 HP per 100 cc.. The variety in
products available also improved after ‘broad banding’ was allowed in the industry in 1985.

In 1948, Bajaj Auto began trading in imported Vespa scooters and three-wheelers. Finally, in
1960, it set up a shop to manufacture them in technical collaboration with Piaggio of Italy. The
agreement expired in 1971.

In the initial stages, the scooter segment was dominated by API, it was later overtaken by Bajaj
Auto. Although various government and private enterprises entered the fray for scooters, the only
new player that has lasted till today is LML.

Under the regulated regime, foreign companies were not allowed to operate in India. It was a
complete seller market with the waiting period for getting a scooter from Bajaj Auto being as
high as 12 years.

The motorcycles segment was no different, with only three manufacturers viz Enfield, Ideal Jawa
and Escorts. While Enfield bullet was a four-stroke bike, Jawa and the Rajdoot were two-stroke
bikes. The motorcycle segment was initially dominated by Enfield 350cc bikes and Escorts
175cc bike.

The two-wheeler market was opened to foreign competition in the mid-80s. And the then market
leaders - Escorts and Enfield - were caught unaware by the onslaught of the 100cc bikes of the
four Indo-Japanese joint ventures. With the availability of fuel efficient low power bikes, demand
swelled, resulting in HERO - then the only producer of four stroke bikes (100cc category),
gaining a top slot.

The first Japanese motorcycles were introduced in the early eighties. TVS Suzuki and HERO
brought in the first two-stroke and four-stroke engine motorcycles respectively. These two
players initially started with assembly of CKD kits, and later on progressed to indigenous

47
manufacturing. In the 90s the major growth for motorcycle segment was brought in by Japanese
motorcycles, which grew at a rate of nearly 25% CAGR in the last five years.

The industry had a smooth ride in the 50s, 60s and 70s when the Government prohibited new
entries and strictly controlled capacity expansion. The industry saw a sudden growth in the 80s.
The industry witnessed a steady growth of 14% leading to a peak volume of 1.9mn vehicles in
1990.

The entry of Kinetic Honda in mid-eighties with a variometric scooter helped in providing ease
of use to the scooter owners. This helped in inducing youngsters and working women, towards
buying scooters, who were earlier inclined towards moped purchases. In the 90s, this trend was
reversed with the introduction of scooterettes. In line with this, the scooter segment has
consistently lost its part of the market share in the two-wheeler market.

In 1990, the entire automobile industry saw a drastic fall in demand. This resulted in a decline of
15% in 1991 and 8% in 1992, resulting in a production loss of 0.4mn vehicles. Barring HERO,
all the major producers suffered from recession in FY93 and FY94. HERO showed a marginal
decline in 1992. The reasons for recession in the sector were the incessant rise in fuel prices, high
input costs and reduced purchasing power due to significant rise in general price level and credit
crunch in consumer financing. A factor like increased production in 1992, due to new entrants
coupled with the recession in the industry resulted in companies either reporting losses or a fall
in profits.

India is one of the very few countries manufacturing three-wheelers in the world. It is the world's
largest manufacturer and seller of three-wheelers. Bajaj Auto commands a monopoly in the
domestic market with a market share of above 80%, the rest is shared by Bajaj Tempo, Greaves
Ltd and Scooters India.

48
The total number of registered two-wheelers and three-wheelers on road in India, as on March
31, 1998 was 27.9mn and 1.7mn respectively. The two wheeler population has almost doubled in
1996 from a base of 12.6mn in 1990.

Details of firms within the two-wheeler industry

Name of
Period Brand
Name of the foreign
of Segment name of
Indian firm collaborator, if
entry product
any
Royal
1955 - Enfield India Enfield Ltd.,
motorcycle Enfield
1969 Ltd. (EIL)* U.K.
350 cc
Automobile
Innocenti Ltd.,
Products of scooter Lambretta
Italy
India (API)*
Bajaj Auto Piaggio Ltd.,
scooter Vespa
Ltd. (BAL) Italy
Ideal Jawa
Jawa Ltd., Yezdi, 250
Pvt. Ltd. motorcycle
Czechoslovakia cc
(IJPL)*
Escorts Ltd. CEKOP, Rajdoot,
motorcycle
(EL)* Poland 175cc

49
 Kinetic
1970 -
Engineering - moped Luna
1980
Ltd. (KEL)
Scooters
India Ltd. - scooter Vijai
(SIL)*
Maharashtra
Scoters Ltd. - scooter Priya
(MSL)
Majestic
Hero
Auto Ltd. - moped
Majestic
(MAL)
Sundaram
Clayton Ltd. - moped TVS 50 cc
(SCL)
Ind-
1981 -
TVS Suzuki, Japan motorcycle Suzuki
1990
100 cc
Kawasaki
Bajaj Auto Kawasaki,
motorcycle Bajaj 100
Ltd. Japan
cc
Yamaha, Yamaha
Escorts Ltd. motorcycle
Japan RX 100 cc

50
 Hero
HERO
Majestic Honda, Japan motorcycle
100 cc
Ltd.
Kinetic
Engineering Honda, Japan scooter NH 100 cc
Ltd.
Lohia
Machinery Piaggio, Italy scooter Vespa XE
Ltd.
moped
Zundapp- motorcycle 50cc 50cc
Enfield India
Werke GmBH motorcycle 80cc 100cc
motorcycle
moped
1991- Bajaj Auto
- -scooterett Sunny
1999 Ltd.
e
scooter –
TVS - Scooty
scooterette
scooter -
Kinetic Honda Marvel
scooterette
TVS - scooter Spectra
Kinetic
- scooterette Style
Motors**

51
* indicates firms/brands whose sales declined in the eighties **
In 1998, the joint venture between the Firodias Group of India
(Kinetic) and Honda of Japan came to an end when the former
bought out Honda’s stake of 51%. However in return for
royalty and technical fees, Honda continued to supply technical
know-how to the new Kinetic Motors Company Ltd. (KMCL).

INDUSTRY STRUCTURE

The Indian two-wheelers Industry can be broadly classified as scooters, motorcycles and
mopeds. The domestic two wheeler sales of 6.2mn in FY05 is constituted by these segments as
shown below.

Automobile Domestic Sales Trends (In Nos)

Category Scooters Motorcycles Mopeds Two

52
 Wheelers
2014-15 876,224 2,114,693 643,461 3,634,378

2013-14 908,268 2,887,194 408,263 4,203,725

2012-13 825,648 3,647,493 338,985 4,812,126

2011-12 886,295 4,170,445 307,509 5,364,249

2010-11 923,566 4,964,442 320,852 6,208,860

Source : SIAM

In the last five years, the domestic two-wheeler industry has seen structural changes. This can be
seen from the change in composition of two-wheeler sales, where the motorcycles have
consistently gained market share from the scooter and moped segments to corner a share of 41%
of total two-wheeler sales. This trend is expected to continue in the next two years till the four-
stroke scooters make their presence felt in the segment. The table below gives an idea about the
strides made by the motorcycle segment in the last six years.

Year Scooter Motorcycle Moped

FY08 47.2 25.2 27.6
FY09 47.5 26.7 25.8
FY10 46.8 29.5 23.7
FY11 46.0 30.4 23.6
FY12 43.9 33.0 23.1
FY13 41.5 37.2 21.3
FY14 39.0 41.0 20.0

53
 FY2015 33.2 47.6 19.2
Source : SIAM

The scooter market is dominated by 150cc vehicles from Bajaj Auto and LML, with the rest
being served by 100cc variometric scooters from Kinetic Honda.

For scooters, northern India is the major market contributing nearly 46% of the total scooter
sales. Western and southern India take up second and third position with 27.5% and 15.7%
respectively.

For our calculations we consider TVS Scooty sales as part of scooter sales as given by Society of
Indian Automobile Manufacturers (SIAM).

The Indian motorcycle industry can be broadly categorized in to Indian motorcycles and Indo-
Japanese motorcycles. The Indo-Japanese motorcycle segment is dominated by Hero group,
Bajaj and Escorts in collaboration with Japanese vehicle manufacturers Honda, Kawasaki and
Yamaha respectively. The Indian motorcycles segment is dominated by Bajaj (M80), Escorts and
Royal Enfield.

In motorcycles sales, western region leads with a market share of 40% of the total motorcycle
sales. South and north regions come second and third with a market share of 27.5% and 17.4% of
total motorcycle sales respectively. For mopeds southern and western regions of India are the
major contributors with nearly 52% and 28% of the over all moped sales. Looking at the
population of moped sales in south it appears that the sale of mopeds has reached stagnation.
Western and southern region lead in three-wheeler sales with a contribution of 42% and 35.8% of
total three-wheeler sales respectively. In terms of two-wheeler vehicle population, Maharashtra
stands first with a population of 2.96mn vehicles and Gujarat stands second with 2.64mn
vehicles as on March 31st 1997. Tamil Nadu is the third largest state with 2.45mn two-wheeler

54
population. In terms of three-wheeler vehicle population Maharashtra stands first with a
population of 0.39mn and Gujarat in the second place with 0.22mn as on March 31st 1997.

Penetration of Two-Wheelers

On a base of around 28mn vehicles on Indian roads and around 175mn households, there were
only 160 motorized two-wheelers per thousand households in FY03. This compares poorly with
countries like Thailand where it is around 600 per thousand households. Also with a household
size of 5.5 persons and more than one wage earner in about 60% of the households, the potential
for a second vehicle demand is also good.

The NCAER in its latest report on market demographics has clearly indicated that post-
liberalization (ie FY92 to FY96) Indian households have graduated to higher income groups as
can be seen in the table below.

55
 Distribution Of Households In %age

Annual Income
FY96 FY00
income group
(Rs at
FY00 Urban Rural Total Urban Rural Total
prices)
<=25,000 Low 42.1 73.6 65.2 27.9 57.2 48.9
25,001 -Low
35.8 21.4 25.2 34.9 29.0 30.7
50,000 Middle
50,001 -
Middle 15.2 4.0 6.9 20.3 8.6 11.9
77,000
77,001 -Upper
3.9 0.7 1.5 9.6 3.1 5.0
106,000 Middle
> 106,000 High 3.1 0.3 1.1 7.3 2.0 3.5

Growth In Income Groups (%) In Pre And Post Reform Period

Income
FY86 to FY89 FY93 to FY96
group
UrbanRural Total Urban Rural Total
Low 0.93 -0.20 -0.01 -7.03 -3.03 -3.72
Low Middle 3.34 4.91 4.33 5.46 10.20 8.59
Middle 8.53 17.82 12.72 11.96 3.11 7.01
Upper 18.52 16.39 17.83 11.90 12.25 12.06

56
 Middle
High 9.57 13.90 10.65 18.22 15.68 17.14
Total 4.14 2.04 2.61 3.50 1.44 2.01
Source: NCAER

As seen from the above tables, the number of households in the low income group has fallen
since FY86 and has been more pronounced in the post-reform period. On the other hand, the
number of households in the middle, upper middle and high income groups, which form the
consumer base for two wheelers, have increased. Their share of the total number of households
has increased from 10.6% in FY88 to 20.5% in FY96. The rising income profile has, however,
been more pronounced in the urban areas as average annual growth in India.

Technology and usage of vehicles:-

Two-wheeler is one of the rare industries, which is capital as well as labor intensive. The setting
up of a green field venture and ancillary network require enormous capital investment. The
assembly operation is highly labor intensive.

The capital requirement for a venture varies from segment to segment and based on amount of
outsourcing. For eg setting up of 0.1mn capacity plant for manufacturing scooter requires
approximately Rs1bn and motorcycles Rs1.7bn.

Two-wheeler production entails an assembly of over 700 components, including those sourced
from vendors / independent manufacturers(about 60-70%). In the press shop, sheet metal
components like body frame, fuel tank, front fender and rear fender, muffler etc are pressed,
welded, painted / plated in respective shops. In the engine plant, engine components (cast/ forged
parts) are machined and assembled along-with other components. The engine is then transferred
to the main plant and assembled with the body and bought out components.

57
Due to the peculiar characteristic of high ancillarisation, balance sheet does not reveal the
complete picture. The material cost which is understood as fully variable, has in-built overheads
of ancillaries. Typically, when volumes are expanding, raw material cost escalations are not
passed on, as ancillaries are able to spread their overheads over larger volumes. Ancillaries add
as much as 50-300% value on the basic raw material. While steel and aluminum account for 5%
each, of the material cost, 60-70% of the cost is incurred on components sourced from outside.

Engine is the heart of an automobile. The function of an automobile engine is to convert

chemical energy of the fuel into mechanical energy, to power the vehicle. In the engine, petrol
and air mixture is burnt from the spark ignited by a spark plug in a cylinder. The combustion
builds up pressure, which pushes the piston. The reciprocal movement of the piston (riveted to a
crankshaft) is converted in rotating motion. The power is transmitted from the crankshaft to the
wheels by a mechanism of gears.

The engines can be broadly classified as two and four stroke engines based on number of strokes
used to produce a single power stoke. In a four-stroke engine - suction, compression, power and
exhaust operations are carried out by four different strokes of the piston. Therefore four-stroke
engine produces one power stoke out of every four strokes of the piston. In a two-stroke engine
one power stroke is produced out of every two strokes of the piston.

In a 2-stroke engine, during the emission of the exhaust gases, fresh fuel/air mixture comes from
transfer port to the main cylinder. This leads to emission of some unburnt gasses along with
exhaust gases leading to drop in fuel efficiency and increase in pollution through emission.
However, a two-stroke engine generates twice as much power as four stroke, engine size and
speed being the same. A four-stroke engine is heavier, complex in design and expensive.

Gears determine the ratio between engine speed and wheel speed, using a mechanism of gear
wheels of different diameters. In a geared drive, the driver manually shifts the gears to change
the torque supplied to the wheels. Whereas in a variometric drive, the torque is transmitted by a
belt running between variable diameter pulleys, providing infinite number of gear ratios.
58
Scooters originated in Italy and were designed for ladies, particularly nuns. It has no bar in the
front and the engine and wheels are covered for the convenience of women riders. The scooter
engine is shaft driven.

In India, scooter manufacturing was started in 1972 by Bajaj Auto in collaboration with Piaggio,
Italy. With the passage of time, scooters have taken considerable position in domestic transport
as they are considered as rugged yet safe family vehicle. This perception was due to a larger
board area, which can be used to carry groceries and a better carrying capacity, which helps in
driving three adults on the vehicle. But the scooters suffered from poor aesthetics, low fuel
efficiency and difficulty in driving.

The introduction of ABS body along with variometric transmission by Kinetic Honda changed
the perception leading to a shift in demand from moped users like youngsters and working
women.

Motorcycle - the name is evolved from motorised cycle. A motorcycle has an engine, wheels and
chain exposed. Moreover, it is chain driven. Two-stroke motorcycles are positioned as power
bikes by making use of their high power delivery to cater the young generation. Four-stroke
motorcycle is positioned as fuel-efficient and environment friendly vehicle.

The Indo-Japanese motorcycles have advantage of better fuel efficiency, more power, better road
grip, low emissions and lightweight compared to scooters. Usually, motorcycles are the costliest
among two-wheelers.

Mopeds - the motorcycle with pedals is the entry level two-wheeler. Mopeds are the cheapest
category of two wheelers, having low power compared to scooters and motorcycles. Mopeds are
most popular amongst college students, ladies and low income house holds. These vehicles cost
in the range of Rs12,000 and onwards. Mopeds are predominantly used for small distance
transportation. Mopeds are also used as the second vehicle in the family along with car or
scooter/motorcycle.

59
All the two-wheeler manufacturers are regulated by emission levels, noise levels, color, shape
etc, which vary from country to country. Imports of vehicles therefore have to pass through
homologation (approval process) of a sample vehicle.

Emission norms

Two-wheelers emit harmful pollutants such as carbon monoxide and hydrocarbons. The emission
norms are becoming stringent the world over. In India, the norms are being implemented in two
phases. While the first phase Euro 1 norms have become applicable since April 1996, even more
stringent norms Euro 2 will come into effect from April 1, 2000. The details about emission
norms is as given in Annexure 1.

For the two-wheelers new emission norm for year 2000 will be an acid test as none of the present
models except four stroke vehicles confirm to the norms. To full-fill emission norms the
manufacturers have three options: to switch to four-stroke engines, to fit catalytic converters for
the existing models, to improve upon the existing two-stroke engine.

The temporary option for overcoming emission norms is to fit the catalytic converters, this will
increase the cost of vehicles. But as a long-run solution scooter manufacturers have to opt for
four-stroke engines or improvement in two stroke engines.

The catalytic converters cost in the range of Rs1,500 - 2,500, but have a limited life of 10,000
km of vehicle running. Therefore catalytic converter requires regular maintenance on behalf of
the user. Also catalytic converter will be effective only for unleaded petrol usage, which is not
widely available in the country.

60
Scooter manufacturers have started responding to the Y2K norms by introducing four-stroke
vehicles in H2 FY98. They plan to fit catalytic converters to two-stroke scooters to overcome
emission norms.

The Japanese motorcycle segment will be able to overcome emission norms with the technology
help of respective Japanese collaborator. The Indian motorcycles have to either shift to four-
stroke technology or make use of catalytic converter. But this will reduce the price difference
between Indian and Indo-Japanese motorcycles, reducing the price advantage of Indian
motorcycles.

The mopeds segment will be badly affected due to Y2K emission norms, as none of the existing
moped models confirm to the specifications. With the deadline nearing, the moped manufacturers
have to tighten the belt to meet the norms.

To over come this problem the industry leader Bajaj Auto has introduced four-stroke versions in
the FY2000.

Demand

The Indian two-wheeler industry has witnessed deep cyclical trends. A robust growth witnessed
up to 1989, was followed by a severe recession upto FY93 and a strong recovery between 1993-
2012. The industry then witnessed a slowdown since the second half of FY13 which continued
upto FY14. Prospects in FY2015 have turned for the better once again with an overall revival in
demand. The trend in two-wheeler sales since the past decade is as given below.

Year FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Sales 1.61 1.50 1.76 2.21 2.66 2.97 3.04 3.4 3.78

61
volume (in
mn)
Yoy growth(11.2) (6.7) 17.5 25.2 20.4 11.8 2.4 11.8 11.0
(%)
Source : SIAM

Two-wheeler sales have increased from 0.37mn in FY80 to 1.85mn in FY90 at a CAGR of
17.4%. There after the industry suffered from drop in demand in 1991, 1999 and 2015.

In the 90's, the two-wheeler industry has performed extremely well especially after the
automobile recession in 1992-93. In the period FY07-FY15 the two-wheeler industry has grown
at a CAGR of 14.6%. This splendid growth was possible due to the above average performance
of the motorcycle segment, which has grown at a CAGR of 24.3% compared to 11% for scooters
and 8.6% for mopeds.

After lying low for two years, sales of two-wheelers bounced back to witness growth in FY99. In
the period 01 the sales of two-wheelers has increased by 11.85% yoy to 3.4mn. The trend has
continued in FY2014 with the sector sales growing by 11% to 3.78mn vehicles. In the 2014-15
sale of two wheeler in percentage of share is 78.63.

The demand for two-wheelers in India is dependent upon factors like availability of finance,
increase in income levels, and restricted growth in public transportation and movement in petrol
prices. Except petrol prices, all other factors have positive correlation with the demand for two-
wheelers. The increase in petrol prices on the contrary, adversely affects the demand for two-

wheelers, due to increase in the running cost of a vehicle.

Two-wheelers are distinguished on different factors for different consumer segments. For e.g.,
high powered two-wheelers have a niche market as racing/sporting vehicles and have a special

62
appeal to youngsters. Easy maneuverability/handling ease is preferred by teenagers and women.
Urbanites are lured by fuel efficiency and low maintenance. The lower end of the market looks
for durability, value for money and higher resale value.

Scooters

The scooter segment can be further classified into the geared and the ungeared scooter segment.
Geared scooters are generally metal bodied while the ungeared ones come in plastic bodies. The
demand for geared scooters is primarily from the middle aged groups who have a family to look
after. They would look out for the utility value of the vehicle. The demand for geared scooters is
price sensitive compared to motorcycles. The demand for gearless scooters (or scooterettes) is
mainly from women, teenagers and the student community. They are basically easy to handle and
ride. Demand in this segment is also price sensitive. The scooterettes were first introduced by
BAL (Sunny) followed by TVS Suzuki (Scooty). In FY99, LML entered the segment with a
scooterette in 60cc and 75cc engine capacity.

Until 1990, the two-wheeler market was dominated by the geared scooter with their sales
equaling the combined sales of motorcycles and mopeds. However, things have changed in the
90s with customer preference shifting from geared scooters to motorcycles and also to an extent
to the premium end scooters and scooterettes. This is mainly because of better fuel-efficiency
and ruggedness of motorcycles and better maneuverability and aesthetic appeal of scooterettes.

Scooter sales have increased from 0.91mn in FY06 to 2.25mn in FY20115 at a CAGR of 3.6%.
But sales growth has dropped from a high of 24%yoy in FY06 to 7.1%yoy in FY12. FY4 saw

better times with sales growth rising to 5.5%yoy. In FY2015, scooter sales fell by 5.4%yoy to
1,253,969 units over last yea

63
Trend In Scooter Sales

FY1 FY1 FY1

Year FY06 FY07 FY08 FY09 FY11 FY14 FY15
0 2 3
Sales
volume 0.91 0.77 0.71 0.83 1.03 1.22 1.31 1.26 1.33 2.25
(in mn)
Yoy
growth 3.8 (15.6) (8.1) 17.8 24.1 18.4 7.1 (3.6) 5.5 (5.4)
(%)
Source : SIAM

In terms of market share in the two-wheeler market, the share of geared scooters fell from 46.2%
in FY91 to 25.8% in FY2000 while that of scooterettes increased modestly from 4.3% to 7.2% in
the same period. In terms of absolute numbers, sales of geared scooters have risen from 0.835mn
in FY91 to 0.973mn in FY2000 while that of scooterettes increased from around 77,000 to
0.28mn in the same period.

The future growth in the scooter segment will be more from the scooterettes or gearless scooters
segment, as compared to basic models. The four-stroke models of geared scooters, which were
expected to create some demand have not yet been able to do so. This may be due to the their
associated drawbacks like increased risk of skidding, vibration problems and restricted efficiency
gains. Also higher maintenance costs due to the large number of moving parts add up to the
disadvantages of buying a four stroke scooter. Given the latest emission norms, scooters, if not
four-stroke, will have to be fitted with a catalytic converter. This would bring down the price
differential between a scooter and motorcycle and result in further switching of demand from the
scooter segment. The four-stroke scooter model launched by Bajaj Auto also has been unable to

64
live up to the expectations. Nothing much is expected from it in the future either. Thus the
demand for geared scooters is expected to fall in the future.

Companies like Bajaj Auto, which have a major presence in the geared scooter segment are
trying to milk what remains of a shrinking market. Their strategy will be include starting hire-
purchase schemes in areas with a population of above 100,000 in the traditional scooter market
of the north. Secondly, Bajaj will also plan product specific strategies. The aim would be to
excite the buyer by giving him something new in terms of features, technology, specifications
and aesthetics. One such effort in this direction will be the 4-stroke 'Chetak' scooter with higher
fuel efficiency (70 km/ltr) than a traditional 2-stroke one. Another model to be introduced later
will be called 'Fusion' with a metallic finish and good power. The company seems confident that
the traditional markets for scooters like Punjab, Delhi etc will for the foreseeable future stick to
geared scooters as the product come to signify a certain value proposition which will be difficult
to beat by other kinds of two-wheelers.

Taking into account the various factors, we expect sales in the geared scooter segment to fall by
around 20%yoy in FY01 while that of the scooterette segment to grow by around 30%yoy.

Motorcycles

The motorcycle is being increasingly used by youngsters/bachelors in urban areas and by rural
folk as a sturdy means of personal transportation. Bigger wheels, better road grip, higher ground
clearance, power, fuel efficiency, low maintenance cost are the major attraction of this segment.
The motorcycle segment, too, can be further classified into the Japanese and the Indian
motorcycle segments. The former consist of models manufactured out of Japanese technology
while the latter category consist of the high-powered bikes of the 'Rajdoot' and 'Bullet' range and
also the step-thru's which fall somewhere between a scooter and a motorcycle.

65
The sales of motorcycle has increased from 0.1mn in FY80 to 0.38mn in FY93 at a CAGR of
11.6%. The segment picked up momentum in the 90's to grow at a CAGR of 15.7% to 1.796mn
vehicles in FY2015. Motorcycle sales achieved a major milestone of crossing the scooter sales in
the month of November 1998. This trend has further continued for the next couple of years
causing a jump in sales of 28.7%yoy to 1,796,734 units in FY2015.

Trend In Motorcycle Sales

Year FY0 FY0 FY08 FY0 FY1 FY11 FY1 FY1 FY1 FY1
6 7 9 0 2 3 4 5
Sales 0.47 0.43 0.38 0.47 0.65 0.81 0.98 1.13 1.40 1.80
volume
(in mn)
Yoy 13.8 (8.9) (11.6) 23.2 39.0 24.2 20.9 15.7 23.5 28.7
growth
(%)
Source : SIAM

In the last two years, the motorcycle segment has witnessed the launch of several new models
from existing players. Majority of these have been in the four-stroke engine category for which
the technology has come from Japanese parents. Increasing product differentiation and

66
competition has resulted in new sub-segments emerging. The efficiency segment is currently the
fastest growing and constitutes four-stroke motorcycles. This has caused a dent in the demand for
two-stroke motorcycles which is expected to further drop in the future. Taking in to consideration
the limited availability of mass transportation in rural and semi-urban areas and suitability of
motorcycles to these conditions, we expect the segment to continue to grow at 20%yoy growth in
FY14. This will increase demand for motorcycles from 1.80mn in FY2015 to 2.5mn in FY16.

The major growth in motorcycle segment will be coming from Japanese segment and in
particular four-stroke motorcycles, leading to marginalization of Indian motorcycles. The
Japanese motorcycles will continue to improve penetration in the rural areas by providing
additional features like luggage carrying provision etc. On the other hand, sales of step-thru's
will most probably stagnate.

The rush of new models in the small car market combined with up gradation of small car users to
new mid-size cars has lead to sharp drop in prices of second hand cars. In some cases the price of
a second hand car is just twice the price of a brand new motorcycle. This will accelerate shift of
two-wheeler users to cars and hence affect the demand for high end motorcycles. Therefore, in
the coming years the high end motorcycle manufacturers will have to take into consideration
prices of second hand cars, while positioning the vehicle.

INTERNATIONAL SCENARIO

A two-wheeler is used as a personal/family vehicle or a goods carrier in the developing countries,

whereas it is confined to sports/racing (heavy motorcycles) or short distance shopping (mopeds)
in developed countries.

67
The world two-wheeler market is dominated by Japan. Japanese manufacturers account for
around 65% of the total two-wheeler production in the world. However, production within Japan
has been declining due to lower domestic demand and shift in manufacturing base outside the
country. Japan is also the world's largest exporter of two-wheelers in the world controlling
around 75% of the world trade. Its major markets are China, USA and Europe. In terms of player
positions, Honda Motors Corporation, Yamaha Motors and Suzuki Motors corporation share the
top three slots in the world two-wheeler market. The table below shows the production and sales
figures of motorcycles and scooters in Japan during the past decade.

68
Production Of Two-wheelers By Capacity (nos)

51- 126-
Year 0-50 cc 125cc 250cc >250cc Total
2008 1,408,136 585,974 310,054 490,206 2,794,364
2009 1,408,137 585,975 310,055 490,207 2,794,365
2010 1,408,138 585,976 310,056 490,208 2,794,366
2011 1,408,139 585,977 310,057 490,209 2,794,367
2012 1,408,140 585,978 310,058 490,210 2,794,368
2013 1,408,141 585,979 310,059 490,211 2,794,369
2014 1,408,142 585,980 310,060 490,212 2,794,370
2015 1,408,143 585,981 310,061 490,213 2,794,371

Sales of two-wheelers by capacity (nos)

Year 0-50 cc 51- 126- >250cc Total

69
 125cc 250cc
2008 1,248,978 157,387 175,837 76,619 1,658,815
2009 1,248,979 157,388 175,838 76,620 1,658,816
2010 1,248,980 157,389 175,839 76,621 1,658,817
2011 1,248,981 157,390 175,840 76,622 1,658,818
2012 1,248,982 157,391 175,841 76,623 1,658,819
2013 1,248,983 157,392 175,842 76,624 1,658,820
2014 1,248,984 157,393 175,843 76,625 1,658,821
2015 1,248,985 157,394 175,844 76,626 1,658,822

The above tables indicate a falling trend in production and sales in Japan. While sales in the less
than 50cc and 126-250cc vehicles have fallen by a sharp 40.4% and 62.7%, that of 51-125cc
have risen by 12.5% in the 1989-1998 period. Sales in the above 250cc segment have more or
less remained stagnant. However, production of in the 250cc+ segment has gone up by 51.4% in

the same period.

Current Scenario

Production In January To June 2005

Company Up to > 50cc Total Total

50cc (Jan-Jun

70
 2015)

Honda 189,131 251,903 441,034 411,655

%yoy -1.6 14.8 7.1 -22.8
Kawasaki 123,442 0 123,442 116,913
%yoy 6.7 0 5.6 3.8
Suzuki 45,796 176,092 222,698 225,366
%yoy -14.4 2.9 -1.2 -18.7
Yamaha 113,957 299,314 413,271 379,636
%yoy -22.5 28.7 8.9 -9
Others 217 0 217 1,242
%yoy -82.5 0 -82.5 -
Total 349,101 851,561 1,200,662 1,134,812
%yoy -11.6 15.1 5.8 -15.3

The downward trend in production witnessed in the first six months of 2015 has reversed. The
rise has been entirely driven by higher production of 50cc plus two-wheelers, completely
reversing the trend witnessed in the same period in 2015 when production fell by 15.5%yoy. This
perhaps is a sign of the rising fortunes of the Japanese economy. Except Suzuki, all the major
manufacturers have posted higher production figures. In terms of share in production, Honda
leads with 36.7% followed by Yamaha with 34.4%.

Exports In January To June 2005

Company Up to 50cc > 50cc Total Total (Jan-

Jun 2015)
71
Honda 12,003 199,392 211,395 198,869
%yoy -34.8 10.5 6.3 -21.4
Kawasaki - 116,305 116,305 104,708
%yoy - 11.1 11.1 -1.7
Suzuki 2,608 186,663 189,271 187,180
%yoy -60.7 3.4 1.1 -6.1
Yamaha 20,988 280,376 301,364 234,016
%yoy 12.3 30.2 28.8 -7.4
Total 35,599 782,736 818,335 724,773
%yoy -18.6 14.9 12.9 -10.7
68% of the production in Japan has been exported out of the country in the first six months of
2015 as compared to 64% last year. This scenario contrasts directly with the Indian scenario. In
India, only about 2-3% of the production in FY2015 were exported.

The Asian continent is the largest user of two-wheelers in the world. This is due to poor road
infrastructure and low per capita income, restrictive policy on car industry. The technology for
two-wheelers is not as well developed as for car industry. This is due to oligopoly between top
five players in the segment, compared to thirty manufacturers in the car industry.

72
 ANALYSIS

The manufacturers of two-wheelers distinguish their products based on power, fuel efficiency,
maintenance requirement, ease in handling, style, looks and ergonomics, price etc. The two-
wheeler industry is controlled by eight major players viz Bajaj Auto Ltd (BAL), Maharashtra
Scooters Ltd (MSL), LML, Kinetic Motors Ltd, Hero MOTO CORP, Escorts Yamaha Motors Ltd
(EYML), TVS Suzuki Ltd (TSL) and Kinetic Engineering Ltd (KEL). Among these only Bajaj
Auto and TVS Suzuki are having presence in all the three segments of two-wheelers, with the
rest catering to one or two segments of the two-wheeler market.

Market Share in the Scooter Segment

Company FY2015 FY14 FY13

Bajaj Auto 46.0 48.6 49.9
Kinetic Motors 9.6 7.4 9.0
LML 22.6 24.8 24.4
Maharashtra
11.7 11.5 11.0
Scooters
TVS Suzuki 10.2 7.6 5.7
Source: SIAM

73
The market share of the leading players in the scooter segment is as given above. BAL is the
leader with a 57.7% market share in FY2015 (along with MSL). LML has also suffered with its
market share dropping from 25.2% in FY98 to 22.6% in FY2015. The biggest gainer has been
TVS Suzuki which has raised its share from 7.1% in FY98 to 10.2% last fiscal. The other player
Kinetic Motor Company has also done well by improving its share from 7.2% to 9.6% in the
same period.

In H2 FY10, four-stroke scooters were introduced from BAL (Legend) and TVS Suzuki
(Spectra). These four-stroke models are priced at a premium to conventional two-stroke scooters
and the initial response for them hasn't been encouraging. The four-stroke scooters are the result
of continuous R&D effort by Indian manufacturers to develop vehicles confirming to Y2K
emission norms.

74
The capacity of scooters has increased from 1.38mn in FY14 to 2mn in FY2015. The increase in
capacity was brought about by expansion projects of LML and Bajaj. With the entry of TVS
Suzuki with 0.15mn capacity along with the new plant of Bajaj, scooter industry capacity will
increase from 1.83mn in FY11 to 2.15mn by FY15.

Capacity for Scooters (mn nos)

Manufacturer FY2011 FY12 FY13 FY14 FY15(P)

BAL 1.02 1.02 1.05 1.10 1.15
Kinetic Motors 0.18 0.18 0.18 0.22 0.25
LML 0.3 0.4 0.4 0.45 0.50
TVS Suzuki 0.04 0.075 0.175 0.20 0.22
Others 0.02 0.03 0.03 0.03 0.03
TOTAL 1.55 1.7 1.83 2.00 2.15
Growth % - 9.3 7.7 9.3 7.5
Source: SIAM & Indiainfoline research

The scooter segment will witness a stream of new models from existing players in the next few
months or so. Some of the launches expected are: four-stroke scooters from LML, four-stroke
scooters in the engine capacity of 75 to 150cc range from Bajaj developed in technical
collaboration with Tokyo R&D, Japan and a variometric four-stroke scooter from TVS.

75
Motorcycles

The motorcycle segment is dominated by four players viz Hero, TVS Suzuki, BAL and Escorts
Yamaha. The market share of each of the players is as given below. Nearly 80% of the
motorcycle sales is of Japanese motorcycles with the rest coming from Indian motor cycles and
step-thru's. The Indo-Japanese segment is catered by three to five models from each of the
players viz BAL, TVS, Hero moto corp, Honda and Yamaha. But majority of the sales is of
100cc-125cc vehicles. The Japanese range of motorcycles are costlier due to import content and
royalty payments to their Japanese collaborators.

Market Share in the Motorcycle Segment

Company FY2015 FY13 FY14

Bajaj Auto 24.0 7.0% 27.8
Yamaha Motors 14.0 1.5% 15.9
Hero Moto corp. 42.4 23.8% 36.0
Royal Enfield 1.4 18.7% 1.6
TVS Suzuki 18.2 49.0% 18.7
Source : SIAM

The motorcycle segment will be broadened on the high price front by introducing high powered
bikes priced above Rs55,000. These bikes have been targeted at college going students who have
a flavor for high powered rides. To cater to this segment, Hero launched CBZ, a 156cc four-
stroke motorcycle, in March 1999. It is priced around Rs60-65,000. 'Fiero' from TVS Suzuki has

76
been the latest addition in this list. Bajaj Auto is also getting ready with its 175cc 'Eliminator'. In
the near future, competition will hot up in the Japanese motorcycle segment with players like
LML and Kinetic Motors standing ready with their offerings.

Motorcycles will be the least affected segment from Y2K emission norms, as Japanese four-
stroke motorcycles confirm to the norms, except some models of TVS Suzuki and Escorts
Yamaha. The two-stroke Indo-Japanese motorcycles will be making use of catalytic converter so
as to confirm the emission norms. The only threat will be for Indian motorcycles, which also

have a two-stroke engine. The major player in the Indian motorcycles segment Bajaj Auto, with
its M-80 model, plans to overcome the emission problem by introducing a four-stroke version

The supply of motorcycles will be increasing from 2.08mn in FY2014

to 2.38mn in FY2015.

Motorcycle Capacity (mn) Source: SIAM & Indianfoline research

Manufacturer FY2011 FY12 FY13 FY14 FY15(P)

BAL 0.47 0.53 0.58 0.63 0.7

77
Escorts 0.3 0.3 0.3 0.3 0.35
Hero moto 0.4 0.48 0.53 0.68 0.75
TVS Suzuki 0.25 0.3 0.35 0.4 0.45
LML 0 0 0 0.05 0.08
Others 0.03 0.03 0.03 0.03 0.05
TOTAL 1.45 1.63 1.78 2.08 2.38
Growth % - 12.8 9.2 16.9 13.3

78
Exports

The exports of two-wheelers from India are insignificant in comparison to domestic sales. The
exports started looking up in FY09 and FY10 when they registered a growth of above 50% to
reach a figure of 0.116mn vehicles. In FY11, the exports remained stagnant but continued its
upward journey at a growth of 9.43% to reach 0.125mn vehicles in FY12. In FY13, the exports
remained stagnant due to slump in Asian demand. The sluggish trend continued during FY14 and
FY2015. Shares of both scooters and mopeds in the export market fell while that of motorcycles
remained stagnant. The major portion of exports is contributed by motorcycles which form about
42.4% of total two-wheeler exports. The composition of exports by different sectors is as given
in the table below.

Automobile Exports Trends (nos)

Two
Category Scooters Motorcycles Mopeds Wheelers

2010-11 25,625 41,339 44,174 111,138

2011-12 28,332 56,880 18,971 104,183

2012-13 32,566 123,725 23,391 179,682

2013-14 53,687 187,287 24,078 265,052

2014-15 60,766 277,100 28,858 366,724

Source: SIAM

79
The major exporters from the country are Majestic Auto, BAL, Escorts Yamaha and HERO
constituting 66% of the total two-wheeler exports from the country in 2015. Majestic Auto
exports its 'Hero Puch' mopeds, which contribute nearly 16% of the total exports from the
country. Major export destinations, in terms of value, include Egypt, Sri Lanka and Argentina for
scooters, Nepal, Sri Lanka, Argentina and Uruguay for motorcycles and UK, Argentina and
Uruguay for mopeds.

Bajaj Auto is the major exporter of three wheelers. It exported almost 17,693 vehicles compared
to a total three wheeler exports of 18,388 vehicles from India in FY2015. The other exporters
being Scooters India and Mahindra & Mahindra. M & M managed to export 32 units of its
'Bijlee' during the year. The exports are mainly to African and South East Asian countries. The
exports of three-wheelers have remained more or less stagnant since FY12. While exports
increased from 68,144 units in 2013-14 to 66,801 units in 2014-15, the momentum was lost in
FY2015. The setting up of Piaggio Greaves joint venture with the intention of making India as a
base for three-wheelers for the whole of Asia will give a boost to exports.

80
MARKET SHARE OF AUTOMOBILE INDUSTRY IN (2015-05)

Market Share ( 2014-15 )

Passenger Vehicles 13.44
Commercial Vehicles 4.03
Three Wheelers 3.90
Two Wheelers 78.63

81
PEST ANALYSIS OF THE TWO WHEELER INDUSTRY

Many macro environmental factors are country specific and a PEST analysis will need to be
performed for all countries of interests.

PEST analysis is very important that an organization considers its environment before beginning
the marketing process. In fact, environmental analysis should be continuous and feed all aspects
of planning. The organization's marketing environment is made up from:

1. The internal environment e.g. staff (or internal customers), office technology, wages and
finance, etc.

2. The micro-environment e.g. our external customers, agents and distributors, suppliers, our
competitors, etc.

3. The macro-environment e.g. Political (and legal) forces, Economic forces, Socio-cultural
forces, and Technological forces. These are known as PEST factors.

POLITICAL/LEGAL FACTORS

82
The excise duty on two-wheelers, which previously ranged between 10% to 30%, according to
the engine capacity was rationalized in 1991-92 budgets to only two-category viz. 15% up to
75cc and 25% above 75cc. This mainly affected manufacturers of 100cc category in the early
nineties. Since then the excise duty structure for two-wheelers has been left unchanged till 1999.
In the 1999-2000 budgets, due to rationalization of duty structure the excise duty up to 75cc
vehicles was increased to 16% while for those above 75cc decreased to 24%. As a result, scooter

prices were reduced by Rs 200-400 per vehicle.

The components used for manufacturing two-wheelers are charged an excise duty of 15%. The
industry has been asking GOI to reduce this excise duty to 10%.

The price of the two-wheelers varies across the country due to variation in registration charges,
state taxes and octroi levied by the states.

The Government of India (GOI) wants the automobile industry to achieve a major improvement
in emission levels in two steps. The first milestone was achieved by applying stringent norms
applicable from April 1, 1996. This confirms to Euro I standards. The second hurdle has been set
with a dead line of April 1, 2000, which confirm to Euro II norms.

The GOI controls availability and price of petrol, the fuel for two-wheelers. But with the
dismantling of Administered Price Mechanism (APM), the cross subsidy provided by high petrol
prices is expected to come down leading to reduction in petrol prices in the country. This will
reduce the running cost per km for two-wheelers and have positive impact on demand.

The availability of unleaded petrol across the country will be a crucial factor, as catalytic
converters (used to confirm Y2K norms) work satisfactorily only under unleaded petrol.
Therefore GOI, which controls distribution of petroleum products in the country, has to take
speedy measure, so as to enhance the availability of unleaded petrol across the country by April
2000.

83
Government policy impact on petrol prices: Petrol prices determine the running cost of two/three
wheelers expressed in Rupees per kilometer. Petrol prices are the highest in India as GOI
subsidizes kerosene and diesel. But with the recent change in GOI policy to reduce the subsidy,
the prices of petrol will remain constant at the current prices. This will have a positive effect on
purchases on two/three wheelers.

Opening up of the Indian two-wheeler industry to international players –Honda, Suzuki and
Yamaha of Japan and Piaggio of Italy. Foreign equity collaboration was allowed.

Reduction in custom tariffs on imported components as well as excise concessions to fuel-

efficient vehicles up to 100cc.

ECONOMIC FACTORS

84
The improvement in Asian market is expected to improve the two-wheelers exports in the year
2006 and grow by 8% till end of 2006. This will lead to exports of 0.1million two-wheelers in
2005 to 0.11million in 2006.

Improvement in disposable income: With the increase in salary levels, due to entry of
multinationals following liberalization process and fifth pay commission, the disposable income
has improved exponentially over the years. This will have a multiplier effect on demand for
consumer durables including two-wheelers. This is already witnessed in improved demand for 2-
wheelers in 2005 compared to a meager growth in 2003.

Changes in prices of second hand cars: The second hand car prices of small cars have come
down sharply in the recent past. This will shift the demand from higher end two-wheelers to cars
and affect the demand for two-wheelers negatively. A further drop in second hand car prices will
lead to pressure on the two-wheeler majors who plan to release higher end scooters and
motorcycles.

Availability of credit for vehicle purchase: The availability and cost of finance affects the
demand for two and three-wheelers as the trend for increased credit purchases for consumer
durable has increased over the years. Therefore any change with respect to any of these two
parameters as a result of change in RBI policy has to be closely watched to assess the demand for
two and three wheelers.

SOCIO-CULTURAL FACTORS

85
A deteriorating public transport system.

A growing middle class and increasing demand for two wheelers in small towns and rural areas.

Teenagers and women prefer easy maneuverability/handling ease.

Urbanites are lured by fuel efficiency and low maintenance.

The lower end of the market looks for durability, value for money and higher resale value. The
demand for scooters is price sensitive compared to motorcycles.

Customer preference towards fuel-efficient and aesthetics has increased, leading to higher
growth in sales of premium end scooters. This has induced the companies to bring in new models
in this segment, to help in obtaining better realization. The major beneficiary from this trend had
been LML, which has a dominant position in premium scooters segment.

Implementation of mass transport system: Many states have planned to implement mass transport
systems in state capitals in the future. This will have negative impact on demand for two-
wheelers in the long run. But taking into account the delays involved in implementation of such
large infrastructure projects; we expect the demand to be affected only five to seven years down
the line.

86
TECHNOLOGICAL FACTORS

For the two-wheelers new emission norm for year 2005 will be an acid test as none of the
present models except four stroke vehicles confirm to the norms. To full-fill emission norms the
manufacturers have three options: to switch to four-stroke engines, to fit catalytic converters for
the existing models, to improve upon the existing two-stroke engine. The temporary option for
overcoming emission norms is to fit the catalytic converters; this will increase the cost of
vehicles. But as a long-run solution scooter manufacturers have to opt for four-stroke engines or
improvement in two stroke engines. The Indo-Japanese motorcycle segment will be able to
overcome emission norms with the technology help of respective Japanese collaborator. The
Indian motorcycles have to either shift to four-stroke technology or make use of catalytic
converter. But this will reduce the price difference between Indian and Indo-Japanese
motorcycles, reducing the price advantage of Indian motorcycles.

The mopeds segment will be badly affected due to Y2K emission norms, as none of the existing
moped models confirm to the specifications. With the deadline nearing, the moped manufacturers
have to tighten the belt to meet the norms.

87
SWOT ANALYSIS OF INDIAN EXPORTS

Strengths

 Cost Competitiveness in terms of Labor and Raw Material

 Established Manufacturing Base.
 Economies of Scale due to Domestic Market
 Potential to harness Global Brand Image of the Parent Company.
 Global Hub Policy for two wheelers.

Weaknesses

 Infrastructure Bottlenecks
 Perception about Quality

Opportunities

 Huge Export Markets (Europe ,America ,Africa etc) for Indian two wheelers

Threats

 China, Malaysia, Thailand etc.

 Other countries also have strategies for Export Promotion
 Growing of four wheeler segment is also a big threat to the two wheeler segment.

INTERPRETATION
Bajaj Auto
88
Companies like Bajaj Auto, which have a major presence in the geared scooter segment, are
trying to milk what remains of a shrinking market. Their strategy will be including starting hire-
purchase schemes in areas with a population of above 100,000 in the traditional scooter market
of the north. Secondly, Bajaj will also plan product specific strategies. The aim would be to
excite the buyer by giving him something new in terms of features, technology, specifications
and aesthetics. One such effort in this direction will be the 4-stroke 'Chetak' scooter with higher
fuel efficiency (70 km/ltr) than a traditional 2-stroke one. Another model to be introduced later
will be called 'Fusion' with a metallic finish and good power. The company seems confident that
the traditional markets for scooters like Punjab, Delhi etc will for the foreseeable future stick to
geared scooters as the product has come to signify a certain value proposition which will be
difficult to beat by other kinds of two-wheelers.

Taking into account the various factors, we expect sales in the geared scooter segment to fall by
around 20%yoy in FY04 while that of the scooterette segment to grow by around 30%yoy.

With a four – stroke 111.6 cc engine and Maximum Net Power of 7.7 HP, and a keep weight of
101 kg, Bajaj Calibre is capable of proving a tough competitor to HERO ‘Passion’. There was
the time when Hero moto corp .Baja started this year with Hero having taken precious chunks
out of its share of the scooter market with the Eterno, Activa and the Dio eclipsing Bajaj’s old
warhorses. To make things worse Bajaj’s premium cruiser the Eliminator failed to elicit any kind
of response form the public clearly confused over its positioning. With nothing going their way,
and HERO continuing their reign over the motorcycle market, Bajaj went right ahead and
launches its successor its power packed Avenger. Bajaj and HERO both share emotional
advertising. Bajaj responds with a powerful, classy and sophisticated ad campaign of its own.
Positioning itself as a maverick motor bike, with a free will of its own, the Avenger has captured
everyone’s imagination with its tagline ‘feel like God’. If it is successful, Bajaj may soon be
feeling just like that.

89
HERO Motocorp

HERO Motocorp has launched a new 100cc motorcycle named `Passion'. The company has said
that the new two-wheeler will incorporate enhanced functionality along with Hero Motocorp
combined strengths of riding comfort and fuel efficiency.

90
This bike has been specially designed, keeping in mind contemporary styling, functionality and
safety. With a four-stroke 100cc engine, power of 7.5 PS at 8,000 rpm, and a kerb weight of 116
kg, Passion is a combination of style and fuel efficiency.

The most striking feature of this brand lies in its being endowed with a wide range of attractive,
catchy choices for its buyers. To put it straight, it will be available in six colors and would give
60 to 65 km per liter under city riding conditions. has also said that the new bike meets not just
the current emission norms, but also has a specially-designed silencer to meet the expected noise
norms. The vehicle was launched recently in a dealer conference in Agra, late last week. The
company is targeting sales of the new bike from the younger generation.

The product offerings from HERO include the CD 100, CD 100SS, the Splendor and CBZ, in
addition to the new bike.

Hero moto corp has a market share of 47 per cent in motorcycles. There are over four million
Hero motorcycles on the road currently

DATA ANALYSIS

Sample unit : - Ghaziabad

91
Sample size : - 136
Sample technique: - Random Sampling
Data collection : - Primary Data and Secondary Data

QUES: - DO YOU USE MOTORCYCLE?

YES – 97
NO -- 39

92
QUES: - IN HOW MUCH CC YOU USE BIKE ?
100CC - 82 125CC - 26
150CC - 12 150 + CC -6

QUES:-WHAT IS THE RANGE OF YOUR MOTORCYCLE?

RS.50, 000 - 82 RS.60, 000 -26
RS.90, 000 - 12 RS.100, 000 ABOVE - 6
93
QUES:- WHICH COMPANY’S MOTORCYCLE HAVE?
HERO- 58 BAJAJ- 51
TVS - 10 OTHER COMPANY- 17

QUES;- WHICH FEATURE YOU LIKE ABOUT THE MOTORCYCLE?

MILEAGE - 85 QUALITY- 37
LOOK - 7 OTHER- 7
94
QUES:- WOULD YOU LIKE TO HAVE SAME MOTORCYCLE NEAR FUTURE?
YES - 81 NO-35
CAN’T SAY- 20

QUES:- ON WHAT PARAMETRES YOU LOOK YOUR MOTORCYCLE?

PERFORMANCE- 68 MAINTANCE- 43
LOOK- 19 PRICE- 6
95
QUES:- ACCAORDING TO YOU WHAT ARE THE FACTORS TO BE CONSIDER BEFORE
BUYING MOTORCYCLE?
LOCATION- 12 PURPOSE- 88
TYPE OF USE - 26 OTHER- 10

QUES: - HOW DO YOU COMPARE YOUR MOTOCYCLE WITH THE COMPETOR?

COST - 36 PERFORMANCE – 81
SERVICE - 11 OTHER – 8

96
QUES:-DO YOU FEEL THAT YOUR MOTORCYCLE IS VALUE FOR MONEY?
YES – 118 NO – 18

QUES:- WHAT DO YOU FEEL ABOUT THE COMPANY BRAND ?

VERY GOOD - 79 GOOD – 36
AVERAGE - 15 BAD- 6

97
FINDINGS

98
During the project I meet various people & trying to find their perception regarding BAJAJ
AUTO LTD. AND HERO MOTO CORP. in the Ghaziabad. While studying I find that the main
customer or the users of motorcycle are those people who are doing job & other major users are
the college going students.
HERO is the leading motorcycle seller in the Ghaziabad region & it is far ahead from their
competitors in terms of customers. Which have come just now in the city have capture a good
market. HERO is capturing a lot of market because of its good quality motorcycle. In starting it
is well accepted by the people for its low price. HERO management is not able to make their
services available to the general customer because of shortage and black marketing from some
service Centre.
But the BAJAJ is also creating an image on the high-class customers by its new models and good
quality of bikes. The BAJAJ is the choice of the high class and the people who worked in the
higher position.

CONCLUSION

99
The two-wheelers market has had a perceptible shift from a buyers market to a sellers market
with a variety of choices. Players will have to compete on various fronts viz pricing, technology,
product design, productivity, after sale service, marketing and distribution. In the short term,
market shares of individual manufacturers are going to be sensitive to capacity, product
acceptance, pricing and competitive pressures from other manufacturers.

All the three segments, motorcycles, scooters and mopeds have witnessed capacity additions in
the last one year and it will continue in the upcoming period. Over this period, only the
motorcycle segment is expected witness higher demand vis-à-vis supply, while the scooters
supply will outstrip demand.

As incomes grow and people feel the need to own a private means of transport, sales of two-
wheelers will rise. Penetration is expected to increase to approximately to more than 25% by
2005.

The motorcycle segment will continue to lead the demand for two-wheelers in the coming years.
Motorcycle sales are expected to increase by 20% as compared to 1% growth in the scooter
market and 3% by moped sales respectively for the next two-years.

The four-stroke scooters will add new dimension to the two-wheeler segment in the coming
future. Perhaps, the moped segment will be the worst affected due to Y2K emission norms
applicable from April 2000 as not many of the present models confirm to be there.

Bajaj Auto Motorcycle Sales Rise By 118%yoy

100
Bajaj Auto has posted a rise of 118%yoy in sales of Japanese motorcycles Motorcycle unit sales
have overtaken sales of scooters, the company's main product, which remained depressed since
the sales The company said it recorded a 10%yoy growth in scooterettes with total sales of Bajaj
Spirit and Sunny Zip rising. "Overall Bajaj Auto has recorded about 3%yoy growth in two and
three wheeler sales. The company sold 156,007 units against sales of 196,710 units in 2015-05,
having the growth of 26% the company said in a statement.

Hero Moto corp Sales Up By 28%

Motorcycle major Hero has posted a rise of 27.8%yoy rise in volume sales to 73,806 units as
compared to 57,768 units in the corresponding period a year ago. For the four-month period of
April-July 2000, the company has done better by posting sales of 313,348 units as against
219,234 units, a rise of 43%yoy.

101
 RECOMMENDATIONS

BAJAJ

 Broader production base: The Company should be poised to drop its costs and
increase its competitive strength in the market place so that it may be able to broader
its production bases.
 Low per capita use: The per capita consumption Bajaj auto products in general and
Bajaj Caliber in particulars in India is not so high as in China and Japan. This
notwithstanding the fat that the Company has been able to achieve a mixed bag of
success and failures recently. The fact remains that this disparity is expected over the
coming years especially with prices expected to drop in the coming year.
 It should increase its number of authorized dealers and service centre’s in India.
 Global thrust: It can thrust to emerge as a global player of respect for which it is
necessary to export in bigger quantities than it has done in the past. This will require
big capacities.
 The media Revolution, Exposure to foreign brands and raising incomes will promote
greater consumer awareness. The market for consumer goods will continue to grow
and rural demand is expected to be particularly strong as a result of several years of
comparative agricultural prosperity. Therefore the company should increase its
production capacity and capitalize on its resource-mobilizing capabilities to this end
only.

102
HERO Moto Corp

 The company should supply products of highest quality at restorable prices for
customer’s satisfaction and for the benefit of the society in general.
 The company should ensure timely supply.

 The company should have a better work culture among all employees and it should
generate and sustain the concretion among all employees and it should generate and
sustain the concretion among all employees through systems education and training.
 The company has to increase its capacity. This shall cater to the demand for the
future. The company shall be spending Rs.100 Cr this year towards this end. For
expansion a feasibility study should be conducted on the setting up of a new plant.
 They should also think on entering into other segment of two wheeler such as the

scooter.

103
 QUESTIONNAIRE
NAME: - PHONE NO. :-
PLACE:-

Ques no.1:- Do you use motorcycle?

1 .Yes. ___ 2. No. _____

Ques no.2:- In how much cc you use motorcycle?

1. 100 cc ____ 3. 150 cc _____
2. 125 cc ____ 4. More _____

Ques no. 3:- what is the range of your motorcycle?

1. Rs.50000 ____ 3. Rs.90000 _____
2. Rs.60000 ____ 4. Rs. 100 000 above _____

Ques no. 4:- which company’s motorcycle you have?

1. HERO Motocorp ____ 3. TVS ____
2. BAJAJ AUTOMOBILES ____ 4. OTHER ____

Ques no. 5:- which feature you like about the motorcycle?
1. Mileage ___ 3. Quality _____
2. Look ___ 4. Other _____

Ques no.6 Would you like to have same motorcycle in near future?
1. YES ____
2. NO. ____

Ques no. 7 would you like to give suggestion to the company for the motorcycle?
1. Yes ________________________________________
2. No ____

Ques no.8 On what parameters you look your motorcycle?

104
 1. Performance _____ 3. Maintenance _____
2. Look____ 4. Price _____

Ques no.9 According to you what are the factors to be consider before buying motorcycle?
1. Location _____ 3. Purpose _____
2. Type of use_____ 4. Other ______
Ques no.10 How do you compare with the competitor?
1. Cost ___ 3. Performance _____
2. Service___ 4. Other _____
Ques no 11 Do you feel your motorcycle is value for money?
1. Yes ____
2. No ____
Ques no.12 How do you feel about the brand of the company?
1. V. good ____ 3. Average _____
2. Good _____ 4. Bad ______

Ques no.13 Give your rating for your rating.

1. 1 rating ______ 3. 4 rating ___
2. 2.5 rating _____ 4. 5 rating ___

REFERENCES AND BIBLIOGRAPHY

 Financial Express
 The Hindustan Times
 Indian Express
 Magazines
 A&M

105
Websites

 www.bajajauto.com
 www.heromotocorp.com
 www.google.com
 www.indiainfoline.com
 www.automobile.com

106
THANKYOU

107