bhanu reort

8/12/2019 Bhanu Reort

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CHAPTER -1

INTRODUCTION


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CHAPTER -1

INTRODUCTION

An overview of two-wheeler industry

India, is the second largest producer of two-wheelers in the world. In the

last few years, the Indian two-wheeler industry has seen spectacular growth. The

country stands next to China and Japan in terms of production and sales

respectively.

Majority of Indians, especially the youngsters prefermotorbikes rather than cars.

Capturing a large share in the two-wheeler industry, bikes andscooters cover a

major segment. Bikes are considered to be the favorite among the youth

generation, as they help in easy commutation. Large variety of two wheelers are

available in the market, known for their latest technology and enhanced

mileage.Indian bikes,scooters and mopeds represent style and class for both men

and women in India.

Benefits of two wheelers

Two-wheelers are the most popular and highly sought out medium of

transport in India. The trend of owning two-wheelers is due to its-

Economical price

Safety

Fuel-efficient
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Comfort level

Before the Foreign Motor Cycle Entrance in Market:

There were three manufacturer in the motor cycle segment viz. Enfield,

ideal Jawa and Escorts while Enfield bullet was a four stroke, Jawa and the

Rajdoot were two stroke bikes. The motorcycle segments was initially dominated

by Enfield 350CC bikes and Escorts 175CC bike.

After the Foreign Motor Cycle Entrance in Market:

The two-wheeler market was opened to foreign competitor in the mid 80s.

And the then market leader Escort and Ensiled were caught unaware by the

onslaught of the 100CC bikes of the four Indo-Japanese joint venture. With the

availability of fuel-efficient low power bikes, demand swelled, resulting in Hero

Honda, then the only producer of four stroke bikes (1oocc category), gaining a

top/ The first Japanese motor cycle were introduced in the early eighties. TVS

Suzuki and Bajaj brought in the first two-stroke and four stroke engine motorcycle

respectively. There two player initially started with assembly of (KD kits, and later

on progressed to indigenous manufacturing. In the 90s the major growth for

motorcycle segment was brought in by Japanese motorcycles, which grew at a rate

of nearly 25% (AGR in the last five years). The industry had a smooth ride in the

50s, 60s and 70s when the government prohibited new entrees and strictly

controlled capacity expansion the industry saw a sudden growth in the 80s. Te


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industry witnessed a steady growth of 14% leading to a peak volume of 1,9 mn

vehicles in 1990.

In 1990 the entire automobile industry saw a drastic fallen demand. This

resulted in decline of 15% in 1991 and 8% in 1992 resulting in a production loss

of 0.4 mn vehicles. Baring Hero Honda, all the major producers suffered from

recession in Fy. 93 and 94 Bajaj 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 factors 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 profits.

The domestic two wheeler sales of 3.778mn in Fy 2000 the motor cycle share

represent 47.7% (41% in Fy 1999 (the motor cycle segment has gradually

increased its presence from 27% in Fy 92 to 47.7% in Fy 2000. Mainly at the

expense of the scooter and to some extent the moped segment.

It is expected that Motor cycle segment will continue to grow at an average

of 20% in Fy 01 this will increased demand for Motor cycle from 1.796 mn FY

2000 to 2.15 mn in FY 01 The supply of motor cycles as per the present trend will

increase from 2.08mn in FY 2000 to 2.38 mn in FY 01. The segment will be

witnessing several new entrants in FY 10, mainly in the four stroke sub segment

this will lead to an over supply situation and increase the competition of the


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Japanese segment. Motor cycle segment has witnessed tremendous of growth over

the past few year, the reason can be change in the buying behavious of the

consumer and the change in the trends.

In the last six 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 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 in

idea about the strides made by the motorcycle segment in the last eight years.

In (Percent) Motor Cycle

FY 93 25.2

FY 94 26.7

FY 95 29.5

FY 96 30.0

FY 97 33.3

FY 98 37.0

FY 99 41.0

FY 2000 47.6

2010 76.7

Source: SIAM


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The Indian motorcycle industry can be broadly categorized in the Indian

motorcycles and Indo-Japanese motorcycles. The Indo-Japanese motorcycle

segment is dominated by Hero Group, Bajaj and Escorts in collaboration with

Japanese vehicles manufactures Honda, Kawasaki and Yamaha respectively. The

Indian motorcycles segment is dominated by Bajaj (M 80), Escorts and Royal

Enfield.

In motorcycles sales, western region leads with a marker share of 40% of

the total motorcycle sales. South an north regions come second and third with a

market share of 27.5% and 17.4% of total motor cycle sales respectively.

Technologies and Usage of Motor Bikes:

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 labour intensive.

The capital requirement for a venture varies from segment to segment based on

amount of outsourcing.

Two-wheeler Market in India

Automobile, being the leader in product and process technologies of the

manufacturing sector, has been recognized as one of the major drivers of

economic growth. The Indian economy has been growing around 8% for the past

few years. This growth has enabled an overall change in the social status of the

Indian population. Additionally, every year, many rural areas and Tier-III cities


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are progressing to a higher status, opening immense growth opportunities for the

two- wheeler industry.

The two-wheeler market has emerged as the most vibrant and transforming

segment of the overall Indian automobile industry, witnessing an unprecedented

growth. Rising rural demand and fuel efficiency are among the major factors

boosting the growth in the market. Despite the economic slowdown, the Indian

automobile industry has been performing consistently well, compared to other

major markets of the world. The Indian two-wheeler market possesses a

significant potential, and is anticipated to grow at a CAGR of around 11% during

FY 2011- 2015 to reach 17.8 Million Units by FY 2015-end.

Our report has studied the Indian two-wheeler market from various perspectives. It

entails a detailed analysis of the market in terms of segments. Each section

sufficiently explains the current and future market trends, and the ongoing

developments in the Indian two-wheeler market. Our research also foresees

immense opportunities for various international and domestic players in this

segment.

The report has also considered the preferences by gender, and income levels as

part of macro-economic indicators to understand this market of India, which is one

of the worlds leading two-wheeler exporters.

Our report, Two Wheeler Market in India, has comprehensively analyzed the

emerging trends, like reviving of scooter segment and shooting demand for


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executive and premium segment bikes in two wheeler markets, which are expected

to prevail in near future. Our proposition in this report is likely to facilitate clients

in understanding the present and future outlook of the two wheeler market and

developments in the country. Further, we have also evaluated various government

regulations and initiatives that will provide the prerequisite boost to the two

wheeler market in India, and facilitate cutting-edge market intelligence to

intending clients while making investment decisions.

Five facts about India's growing two-wheeler market

Two-wheeler company Hero MotoCorp on Monday said its first bike without the

technology of erstwhile partner Honda will hit the market by 2014.

The bike could be developed in India or anywhere but it would be on a completely

new platform, managing director and CEO Pawan Munjal said.

The company continues to use Honda technology for its products after the break-

up of their joint venture, Hero Honda. It has a licence agreement with the Japanese

firm till 2014. The joint venture ended in December 2010.

Here are five things to know about the Indian two-wheeler industry:

According to industry body, the Society of Indian Automobile

Manufacturers, the Indian two-wheeler industry is expected to post an

annual growth of 11-12 per cent, and the market is expected to double

every four years till 2020. According to data from Nomura and Crisil, as


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many as 10 million two-wheelers were sold in India 2011-12. Vehicles in

the executive segment formed the bulk of sales at 6.5 million, followed by

the economy segment (1.8 million) and premium segment (1.7 million).

The recent series of hikes in the price of petrol have played a significant

role in the sale of two-wheelers, according to SIAM, as most first-time

four-wheeler buyers in rural India and tier II and tier III cities have deferred

their purchases. Two-wheelers account for a whopping 76 per cent of

market share in the automobile sector in Asias third-largest economy.

Passenger vehicles account for 16.25 per cent.

Barely 18 months after Indias most successful two-wheeler marriage

ended, Honda made its ambitions clear by launching the 110cc Dream

Yuga, its first low-cost motorcycle meant to target the budget market ruled

by Hero and Bajaj. The Dream Yuga comes at an attractive Rs 44,642, and

will compete with Heros Splendor, which costs Rs 42,950. The Splendor is

Indias top-selling bike.

Other two-wheeler companies such as Yamaha and Suzuki, too, are steadily

focusing on the mass-market segment in an attempt to dislodge the two

giantsHero and Bajaj. Yamaha last month announced a new $280 million

factory in India to nearly triple its capacity to 2.8 million motorcycles by

2018, while Suzuki Motor, which is expected to launch a mass-market


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offering soon, is building a new factory to take its India capacity to close to

one million motorcycles by 2014.

Hero has a market share of around 56 per cent in the overall domestic two-

wheeler market. At 25.5 per cent, Bajaj comes a distant second, but

maintains a healthy lead over Honda and TVS, which have 7.5 per cent and

6.2 per cent market share, respectively. In terms of volume growth over the

previous fiscal year, Hero leads with 16.5 per cent, followed by Honda

(13.6 per cent), Bajaj (7.4 per cent) and TVS Motors (minus 0.3 per cent).

Top brands from each stable are as follows: Hero Passion, Splendor and

Pleasure (scooter); BajajPulsar and Discover; Honda Unicorn, Twister

and Activa (scooter); TVSFlame, Apache and Scooty (scooter).

A little more than two decades after it began to open its economy in 1991, India

still counts as an emerging market. There's still plenty of room for growth in

product categories from alcohol to mobile phones, as a consumer revolution takes

hold among a middle class that is expanding rapidly.

Take two-wheelers, for instance. Data from the Society of Indian Automobile

Manufacturers show that sales of two-wheelers in India rose anastonishing 85

percentbetween 2007-2008 and 2011-2012, to 13.4 million units a year.

The two-wheeler market was one of the drivers of India's consistent double-digit

growth, reflecting exploding demand for fuel-efficient transport in rural areas --
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where public transport is often poor or nonexistent -- and from specific segments

of the urban population such as students, office workers and working women.

(Much of the advertising for scooters is directed at the last category, such as a

commercial featuring the Bollywood film-star Priyanka Chopra with the tagline,

"Why should boys have all the fun?")

The market for two-wheelers in India, though,may have peaked earlier than most

others. Demand rose just 2.9 percent in the last financial year, even though a host

of multinational companies, including the Japanese brands Honda, Suzuki and

Yamaha, have recently entered the Indian market to compete with the big

domestic brands owned by the market leaders, Hero MotoCorp Ltd. andBajaj

Auto Ltd. (as well as other significant players such asTVS MotorsandMahindra

Two Wheelers).

The phase of exceptionally high growth is probably over, with the two-wheeler

market having come close to its maximum penetration level in a slowing

economy. But that might not be not such a bad thing. After surviving years of

ferocious competition domestically, and swiftly leading an undeveloped market

into a state of maturity, Indian two-wheeler manufacturers have begun to take

amore global view.As demand at home cools, the Splendors, Boxers, Passions

and Scootys are increasingly turning up on other continents.

The next phase of expansion for Indian two-wheeler companies will probably be

built on exports to other emerging markets in Asia, Africa and Latin America.
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This week, in the business newspaper Mint, Shally Seth Mohile took stock of

these trends in a report titled "Two-wheeler firms eye Africa, Latin America":

Indian two-wheeler makers, finding the going tough in a domestic market that is

close to saturation point, are breaking new ground in markets such as Africa and

Latin America. Rising labour costs in China, which is the biggest exporter of two-

wheelers to these markets, are helping the Indian cause. ...

In India, an economic downturn, high borrowing costs and increasing fuel prices

have slowed sales growth. Combined two-wheeler sales in India remained flat at

57,51,267 units in the five months from April to August, compared with 57,10,176

units in the same period a year ago, according to the Society of Indian Automobile

Manufacturers, or SIAM. After expanding at a brisk pace for several years, sales

rose by a mere 3% in fiscal 2013.

The story of Hero MotoCorp might be seen as a sign of the increased willingness

of the Indian automobile industry to think globally, a stark contrast to the

protectionism habitually sought by Indian industry in the decades after

independence.

In December 2010, the companypulled the plug on Hero Honda, its 26-year-old

joint venture with Honda Motor Co.,buying out the Japanese auto giant in India, a

transaction valued at close to $2 billion. Part of its reason for doing so was that it

was limited by the terms of the joint venture to exporting two-wheelers only to

those markets where Honda wasn't already present.
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Three years later, Hero remains the leading player in India's two-wheeler market

(even as its former partner, Honda, has set up its own operations in India and risen

quickly to beat outBajaj Auto for second position). But it has a lot of catching up

to do overseas.

In the years that Hero Honda had remained restricted to South Asia, Bajaj had

madesignificant progress in reaching out to emerging markets elsewhere. It is

now the market leader inNigeria,has a significant presence in many markets in

Latin America, and exports make up almost35 percent of its revenue from

motorcycle sales (it also makes three-wheelers). Eventually, the company expects

sales from exports to surpass domestic revenue.

Earlier this year, Heroannounced ambitious plans to expand the company's

presence to more than 50 countries by the end of the decade and keep pace around

the world with Bajaj. The company, which currently exports about200,000 two-

wheelers annually (Bajaj, by comparison, sells more than 1 million) said that it

would soon be selling two-wheelers in Kenya, Burkina Faso, Ivory Coast, Ecuador

and Peru, and that it planned to set up a manufacturing unit in Colombia. In a2011

profile of the company's chief executive officer, Pawan Munjal, Samar Srivastava

wrote of the company's plans to make up for lost time in the global market:

Tapping into Africa, Latin America and South East Asia, the three markets the

company plans to get into, will be a tough challenge. First off, the company has

decided that it will not play the price game there, which would bring it in direct
http://articles.economictimes.indiatimes.com/2013-08-03/news/41034016_1_scooter-india-scooter-sales-motorcycle-saleshttp://www.dnaindia.com/money/1601883/report-bajaj-auto-sees-exports-overtaking-local-saleshttp://www.globalbajaj.com/nigeria/englishhttp://articles.economictimes.indiatimes.com/2012-07-22/news/32788596_1_export-plans-motorcycle-sales-bajaj-autohttp://www.business-standard.com/article/companies/as-competition-heats-up-in-india-hero-heads-overseas-113091701118_1.htmlhttp://www.thehindubusinessline.com/companies/hero-motocorp-picks-up-49-stake-in-us-firm/article4868755.ecehttp://www.thehindubusinessline.com/companies/hero-motocorp-picks-up-49-stake-in-us-firm/article4868755.ecehttp://forbesindia.com/printcontent/30072http://forbesindia.com/printcontent/30072http://forbesindia.com/printcontent/30072http://forbesindia.com/printcontent/30072http://www.thehindubusinessline.com/companies/hero-motocorp-picks-up-49-stake-in-us-firm/article4868755.ecehttp://www.thehindubusinessline.com/companies/hero-motocorp-picks-up-49-stake-in-us-firm/article4868755.ecehttp://www.business-standard.com/article/companies/as-competition-heats-up-in-india-hero-heads-overseas-113091701118_1.htmlhttp://articles.economictimes.indiatimes.com/2012-07-22/news/32788596_1_export-plans-motorcycle-sales-bajaj-autohttp://www.globalbajaj.com/nigeria/englishhttp://www.dnaindia.com/money/1601883/report-bajaj-auto-sees-exports-overtaking-local-saleshttp://articles.economictimes.indiatimes.com/2013-08-03/news/41034016_1_scooter-india-scooter-sales-motorcycle-sales


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competition with Chinese brands. So it is more likely that it will end up competing

with homegrown Bajaj and erstwhile partner Honda in these markets. The belief

inside Hero is that if Bajaj can export a million motorcycles, then there is no

reason why they cannot, in time, notch up similar numbers.

Mahindra Two Wheelersannounced last month that it was going to make three

models available in Latin America with the aim of doubling exports to 20 percent

of overall sales. Cumulatively, these developments signal a global ambition on the

part of one of the few manufacturing sectors in India that can hope to hold its own

against Chinese goods.

Two-wheeler sales in India are spread across three main product categories:

motorcycles, scooters, and mopeds. While in the previous decade, scooters were

the largest selling product category, in the current one, consumer preferences

appear to have shifted decisively in favour of motorcycles, which now account for

over 80 percent of total two-wheeler sales in India. The rural market, a key

demand driver for the two-wheeler industry as a whole, has been a significant

contributor to the shift in preference towards motorcycles. With their longer wheel

base and better mileage, motorcycles enjoy preference over scooters, especially in

country-sides, as they ride well over long distances and uneven roads, besides

being perceived to have a superior style quotient. However, given the practicality

of scooters, especially in urban areas, their demand is likely to be sustained. As a

product category, scooters have also undergone an image makeover, having
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metamorphosed into vehicles with cleaner technology, gearless options, and

features targeted at female commuters

Higher segment motorcycles in gain prominence although entry-

level bikes remain volume leaders

Motorcycle models with a sticker price of up to Rs. 40,000 comprise the entry -

price segment, which largely consists of 100cc bikes. This segment is currently

dominated by the CD Deluxe model of Hero Honda Motor Limited (HHML) and

Platina of Bajaj Auto Limited (BAL). The two wheelers being a relatively small

ticket item, has customers usually belonging to the most vulnerable and

economical section, within the universe of motorcycle buyers. The segments

profitability for two-wheeler manufacturers declined in 2007-08, with volumes

falling and price competition getting more intense. The Rs. 40-50,000 mid-price

segment is largely concentrated around 100-135cc models of various players and

account for bulk in volumes, which is approximately 63 percent in motorcycles.

HHML remains a strong market leader in the mid-price segment with its highly

successful Passion and Splendor models. BAL has Discover and Pulsar 135 in this

range. The premium price segment (Rs. 55,000 and above) is currently

dominated by BAL with its Pulsar range of motorcycles.


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RURAL MARKETING INITIATIVES

Honda tapped into the interiors of the country, with an aim to penetrate a larger

market with their two wheelers, especially in the rural areas. The company uses IT

for the co- ordination with the channel partners and updation of the sales details of

two wheelers in the rural areas. This helps the company in demand forecasting of

the two wheelers in the region. They initiated programs like Har Gaon, Har

Aangan and Service Har Jagan, in the rural areas of few states in India. There is a

network of over 2000 rural sales channel partners set up by Hero Honda, who

constantly extend these programs on the state and the national level. As a part of

the Ride Safe Programs, the company has appointed rural sales executives, who

conduct free check-ups, bike camps, loan melas, test ride camps, awareness camps

on programs like Genuine Spare Parts, GoodLife Program, Hero Honda

Advantage and educate people on safety riding, maintenance etc. Hero Honda also

conducted these camps in association with Monsanto, Godrej Aadhar, IIFCO etc

all across the country. Through these programs, Hero Honda aims to escalate the

volume growth of their two wheelers. Additionally, the company has set up many

kiosks and displays in the DCM Hariyali Kisaan Bazaar Centres in the rural areas

in the Indian states of Uttar Pradesh, Madhya Pradesh, Haryana, Punjab and

Uttaranchal, as a part of its branding activities.


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Chapter-2

Indian Two-Wheeler Industry: A Perspective


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Indian Two-Wheeler Industry: A Perspective

Automobile is one of the largest industries in global market. Being the leader in

product and process technologies in the manufacturing sector, it has been

recognised as one of the drivers of economic growth. During the last decade,

well-directed efforts have been made to provide a new look to the automobile

policy for realising the sector's full potential for the economy. Steps like abolition

of licensing, removal of quantitative restrictions and initiatives to bring the policy

framework in consonance with WTO requirements have set the industry in a

progressive track. Removal of the restrictive environment has helped restructuring,

and enabled industry to absorb new technologies, aligning itself with the global

development and also to realise its potential in the country. The liberalisation

policies have led to continuous increase in competition which has ultimately

resulted in modernisation in line with the global standards as well as in substantial

cut in prices. Aggressive marketing by the auto finance companies have also

played a significant role in boosting automobile demand, especially from the

population in the middle income group.

Evolution of Two-wheeler Industry in India

Two-wheeler segment is one of the most important components of the automobile

sector that has undergone significant changes due to shift in policy environment.

The two-wheeler industry has been in existence in the country since 1955. It


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consists of three segments viz. scooters, motorcycles and mopeds. According to

the figures published by SIAM, the share of two-wheelers in automobile sector in

terms of units sold was about 80 per cent during 2003-04. This high figure itself

is suggestive of the importance of the sector. In the initial years, entry of firms,

capacity expansion, choice of products including capacity mix and technology, all

critical areas of functioning of an industry, were effectively controlled by the State

machinery. The lapses in the system had invited fresh policy options that came

into being in late sixties. Amongst these policies, Monopolies and Restrictive

Trade Practices (MRTP) and Foreign Exchange Regulation Act (FERA) were

aimed at regulating monopoly and foreign investment respectively. This

controlling mechanism over the industry resulted in: (a) several firms operating

below minimum scale of efficiency; (b) under-utilisation of capacity; and (c)

usage of outdated technology. Recognition of the damaging effects of licensing

and fettering policies led to initiation of reforms, which ultimately took a more

prominent shape with the introduction of the New Economic Policy (NEP) in

1985.

However, the major set of reforms was launched in the year 1991 in response to

the major macroeconomic crisis faced by the economy. The industrial policies

shifted from a regime of regulation and tight control to a more liberalised and

competitive era. Two major results of policy changes during these years in two-


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wheeler industry were that the, weaker players died out giving way to the new

entrants and superior products and a sizeable increase in number of brands entered

the market that compelled the firms to compete on the basis of product attributes.

Finally, the two-wheeler industry in the country has been able to witness a

proliferation of brands with introduction of new technology as well as increase in

number of players. However, with various policy measures undertaken in order to

increase the competition, though the degree of concentration has been lessened

over time, deregulation of the industry has not really resulted in higher level of

competition.

A Growth Perspective

The composition of the two-wheeler industry has witnessed sea changes in the

post-reform period. In 1991, the share of scooters was about 50 per cent of the

total 2-wheeler demand in the Indian market. Motorcycle and moped had been

experiencing almost equal level of shares in the total number of two-wheelers. In

2003-04, the share of motorcycles increased to 78 per cent of the total two-

wheelers while the shares of scooters and mopeds declined to the level of 16 and 6

per cent respectively. A clear picture of the motorcycle segment's gaining

importance during this period is exhibited by the Figures 1, 2 and 3 depicting total

sales, share and annual growth during the period 1993-94 through 2003-04.


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National Council of Applied Economic Research (NCAER) had forecast two-

wheeler demand during the period 2002-03 through 2011-12. The forecasts had


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been made using econometric technique along with inputs obtained from a

primary survey conducted at 14 prime cities in the country. Estimations were

based on Panel Regression, which takes into account both time series and cross

section variation in data. A panel data of 16 major states over a period of 5 years

ending 1999 was used for the estimation of parameters. The models considered a

large number of macro-economic, demographic and socio-economic variables to

arrive at the best estimations for different two-wheeler segments. The projections

have been made at all India and regional levels. Different scenarios have been

presented based on different assumptions regarding the demand drivers of the two-

wheeler industry. The most likely scenario assumed annual growth rate of Gross

Domestic Product (GDP) to be 5.5 per cent during 2002-03 and was anticipated

to increase gradually to 6.5 per cent during 2011-12. The all-India and region-

wise projected growth trends for the motorcycles and scooters are presented in

Table 1. The demand for mopeds is not presented in this analysis due to its already

shrinking status compared to' motorcycles and scooters.

It is important to remember that the above-mentioned forecast presents a long-

term growth for a period of 10 years. The high growth rate in motorcycle segment

at present will stabilise after a certain point beyond which a condition of

equilibrium will set the growth path. Another important thing to keep in mind

while interpreting these growth rates is that the forecast could consider the trend

till 1999 and the model could not capture the recent developments that have taken


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place in last few years. However, this will not alter the regional distribution to a

significant extent.

Table 1 suggests two important dimensions for the two-wheeler industry. The

region-wise numbers of motorcycle and scooter suggest the future market for these

segments. At the all India level, the demand for motorcycles will be almost 10

times of that of the scooters. The same in the western region will be almost 20

times. It is also evident from the table that motorcycle will find its major market in

the western region of the country, which will account for more than 40 per cent of

its total demand. The south and the north-central region will follow this. The

demand for scooters will be the maximum in the northern region, which will

account for more than 50 per cent of the demand for scooters in 2011-12.

Table 1: Demand Forecast for Motorcycles and Scooters for 2011-12

2-Wheeler Segment Regions

South West North-Central East & North-East All India

Motorcycle2835(12.9)

4327(16.8)

2624(12.5)

883(11.1)

10669(14.0)

Scooter203(2.6)

219(3.5)

602(2.8)

99(2.0)

1124(2.08)

Note:Compound Annual Rate of Growth during 2002-03 and 2011-12 is presented inparenthesisSource: I ndian Automobile Industry: Optimism in the Air , Industry I nsight, NCAER


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The present economic situation of the country makes the scenario brighter for

short-term demand. Real GDP growth was at a high level of 7.4 per cent during

the first quarter of 2004. Both industry and the service sectors have shown high

growth during this period at the rates of 8.0 and 9.5 per cent respectively.

However, poor rainfall last year will pull down the GDP growth to some extent.

Taking into account all these factors along with other leading indicators including

government spending, foreign investment, inflation and export growth, NCAER

has projected an average growth of GDP at 6.7 per cent during the tenth five-year

plan. Its mid-term forecast suggests an expected growth of 7.4 per cent in GDP

during 2004-05 to 2008-09. Very recently, IMF has portrayed a sustained global

recovery in World Economic Outlook. A significant shift has also been observed

in Indian households from the lower income group to the middle income group in

recent years. The finance companies are also more aggressive in their marketing

compared to previous years. Combining all these factors, one may visualise a

higher growth rate in two-wheeler demand than presented in Table 1, particularly

for the motorcycle segment.

There is a large untapped market in semi-urban and rural areas of the country. Any

strategic planning for the two-wheeler industry needs to identify these markets

with the help of available statistical techniques. Potential markets can be identified

as well as prioritised using these techniques with the help of secondary data on

socio-economic parameters. For the two-wheeler industry, it is also important to


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identify the target groups for various categories of motorcycles and scooters. With

the formal introduction of secondhand car market by the reputed car

manufacturers and easy loan availability for new as well as used cars, the two-

wheeler industry needs to upgrade its market information system to capture the

new market and to maintain its already existing markets. Availability of easy

credit for two-wheelers in rural and smaller urban areas also requires more

focussed attention. It is also imperative to initiate measures to make the presence

of Indian two-wheeler industry felt in the global market. Adequate incentives for

promoting exports and setting up of institutional mechanism such as Automobile

Export Promotion Council would be of great help for further surge in demand for

the Indian two-wheeler industry.


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Indian Two-Wheeler Industry: Rural India to be the next growth frontier

India is seeing the penetration of two-wheelers increasing at a rapid pace driven by

the rise in the household incomes, reducing trend in excise duties and hitherto easy

availability of two-wheeler finance. Though the two wheeler industry is presently

passing through a rough patch, we project the long term outlook to be healthy with

increase in penetration levels.

This report on The Indian Two-Wheeler Industry gives valuable insight of the

industry encompassing its evolution in India, its characteristics, demand drivers,

Government regulations and trends in duties, commentary on industry players and

competition and the trends in domestic sales and exports. The trends are analysed

in depth for various vehicle segments, namely motorcycles, scooters, mopeds and

electric two-wheelers, further sub-classified based on the engine capacity. Various

segments and sub-segments are appropriately associated with the relevant products

and companies for enhancing the understanding of the competitive scenario in the

industry. The cost analysis presented in the report will help the reader identify the

critical cost items and their trends. The company section in the report provides

detailed profiles of the top three players in the industry, including their financial

and operational data and product range.

The report presents our forecasts of domestic as well as export sales for each of

the next five years till FY 2014, separately for all the segments. We have


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developed a robust model for forecasting domestic sales. It takes into account the

cost of owning a two-wheeler, age demographics and income distribution of the

populace. It also attempts to quantitatively adjust for qualitative factors like

current economic scenario and outlook, consumer confidence level and persuasive

sales techniques of dealers and vehicle financers.

We have done a cross country analysis and penetration of two wheelers for the 20

big cities vis a vis the income levels in those cities, other urban areas and rural

areas and quantified the opportunity in each of these markets. This analysis helps

gauging the opportunity for two-wheeler manufacturers in different regions across

India.


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Ignition Kick/electronic Kick/Electronic Kick/Electronic

Engine

Power(bph)

6.5-9 7-8 and above 2-3

Weight(Kg) 90-100 >100 60-70

Fuel Efficiency

(kms Per liter)

50-75 50-80+ 70-80

Load carrying

Lowest

High Highest Low


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Segmental Market Share

The Indian two-wheeler industry has undergone a significant change over the past

10 years with the preference changing from scooters and mopeds to motorcycles.

The scooters segment was the largest till FY 1998, accounting for around 42% of

the two-wheeler sales (motorcycles and mopeds accounted for 37%) and 21 % of the

market respectively, that year). However, the motorcycles segment that had

witnessed high growth (since FY1994) became larger than the scooter segment in

terms of market share for the. first time in FY1999. Between FY1996 and

9MFY2005, the motorcycles segment more than doubled its share of the two-

wheeler industry to 79% even as the market shares of scooters and mopeds stood

lower at 16%> and 5%, respectively.


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Trends in Segmental Share in I ndustry Sales (FY1996-9MFY2005)

While scooter sales declined sharply by 28% in FY2001, motorcycle sales reported

a healthy growth of 20%), indicating a clear shift in consumer preference. This

shift, which continues, has been prompted by two major factors: change in the

country's demographic profile, and technological advancements.

Over the past 10-15 years the demographic profile of the typical two-wheeler

customer has changed. The customer is likely to be salaried and in the first job.

With a younger audience, the attributes that are sought of a two-wheeler have also

changed. Following the opening up of the economy and the increasing exposure

levels of this new target audience, power and styling are now as important as

comfort and utility.

The marketing pitch of scooters has typically emphasized reliability, price,

comfort and utility across various applications. Motorcycles, on the other hand,

have been traditionally positioned as vehicles of power and style, which are rugged

and more durable. These features have now been complemented by the

availability of new designs and technological innovations. Moreover, higher

mileage offered by the executive and entry-level models has also attracted interest

of two-wheeler customer. Given this market positioning of scooters and

motorcycles, it is not surprising that the new set of customers has preferred

motorcycles to scooters. With better ground clearance, larger wheels and better


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Supply

Manufacturers

As the following graph indicates, the Indian two-wheeler industry is highly

concentrated, with three players-Hero Honda Motors Ltd (HHML), Bajaj Auto

Ltd (Bajaj Auto) and TVS Motor Company Ltd (TVS) - accounting for over 80% of

the industry sales as in 9MFY2005. The other key players in the two-wheeler

industry are Kinetic Motor Company Ltd (KMCL), Kinetic Engineering Ltd

(KEL), LML Ltd (LML), Yamaha Motors India Ltd (Yamaha), Majestic Auto

Ltd (Majestic Auto), Royal Enfield Ltd (REL) and Honda Motorcycle & Scooter

India (P) Ltd (HMSI).

Although the three players have dominated the market for a relative long period

of time, their individual market shares have undergone a major change. Bajaj Auto

was the undisputed market leader till FY2000, accounting for 32% of the two-

wheeler industry volumes in the country that year. Bajaj Auto dominance arose

from its complete hold over the scooter market. However, as the demand started

shifting towards motorcycles, the company witnessed a gradual erosion of its

market share. HHML, which had concentrated on the motorcycle segment, was

the main beneficiary, and almost doubled its market share from 20% in FY2000 to


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40% in 9MFY2005 to emerge as the market leader. TVS. On the other hand,

witnessed an

overall decline in market share from 22% in FY2000 to 18% in 9MFY2005. The

share of TVS in industry sales fluctuated on a year on year basis till FY2003 as it

changed its product mix but has declined since then.

Impact Analysis - Two wheelers

Robust demand to continue

After an 11.4 per cent growth in 2003-04, two-wheeler sales surged by over 17

per cent year-on-year (Y-o-Y) for the first 10 months of 2004-05. Sales growth, led

by the sales of motorcycles, escalated consistently during the April to January

period due to increasing household incomes, easy availability of finance, and the

success of certain new models launched during the period.

Two-wheeler demand is expected to grow at a healthy rate of 11-12 per cent from

2004-05 to 2005-06. Rising household incomes, frequent new model launches and

the increasing penetration of finance and distribution will act as key growth

drivers.

The motorcycle segment witnessed stupendous growth in 2004-05 (20.3 per cent

Y-o-Y) after a moderate performance (growth of 13.7 per cent Y-o-Y) in 2003-


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04. The buoyant growth in this segment will be maintained on account of the entry

of global players like Honda Motors and Suzuki (entry expected in 2005) and the

domestic players' growing focus on motorcycles. The segment is expected to grow

by 12-13 per cent in 2005-06.

Led by the ungeared segment, scooter sales are likely to grow by 8 per cent, while

moped

Sales are expected to stagnate or decline marginally in 2005-06.

Budget Impact

Neutral impact on the two-wheeler segment

A. The reduction in the import duty on used two-wheelers will not affect the

industry...

B. The hike in the excise duty on steel will not affect the industry, as cenvat credit

can

be availed for the same.

C. The extension up to March 2007 of 150 per cent deduction on R&D

expenditure


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will marginally benefit domestic two-wheeler players, such as TVS Motors,

Bajaj

Auto and Kinetic.

D. The reduction in personal tax rates will increase household disposable income,

which is a positive for two-wheeler demand.


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Prices and Duties.

Two wheelers Tariffs

(Per cent ) Customs Excise

2009-10 2010-11 2011-12 2012-13

Two wheelers 61.2 61.2 16.3 16.3

Steel items 5.1 5.1 12.2 16.3

Engines and engine

parts

20.4 15.3 16.3 16.3

Other components 20.4 15.3 16.3 16.3

Secure: CRIS INFAC

Major Players

Company name Impact Impact factors

Bajaj Auto Ltd. Neutral A,B,C,D

Honda Motors Ltd. Neutral A,B,C,D

TVS Motors Company

Ltd.

Neutral A,B,C,D

Hero Motorcorp Neutral A,B,C,D


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CHAPTER-3

ORGANIZATIONAL PROFILE OF THE COMPANY


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History and Background of Honda Motorcycles

Honda Motorcycle and Scooter India, Private Limited (HMSI)is the wholly

owned Indian subsidiary ofHonda Motor Company, Limited,Japan. Founded in

1999, it was the fourth Honda automotive venture in India, afterHero

Honda,Kinetic Honda Motor Ltd andHonda Siel Cars India.

The entry of Honda into the Indian market as HMSI began with the launch of

theHonda Activa, a 100 cc scooter. A slightly modified trendier version of the

Activa was soon launched, as theHonda Dio.Honda Eterno was launched

thereafter to add to the portfolio of HMSI's scooters.

TheHonda Unicorn was the firstmotorcycle released by HMSI. TheHonda

Shine has since been released.

The Honda story is the story of one man, Soichiro Honda, and his unparalleled

achievement of bringing motor cycles to the masses. Soichiro Honda was a racer,

a businessman, and a manufacturer. But most of all he was a dreamer. He dreamed

of a better way of making piston rings, founded a small company, and began

production. He dreamed of giving people everywhere an economical form of

transportation, and began producing small motorcycles, including one built in

1949 called the D-Type Dream.

He also loved racing too. So his company built bigger and faster machines, two,

four, five and six-cylinder race bikes and won the Isle of Man.
http://en.wikipedia.org/wiki/Hondahttp://en.wikipedia.org/wiki/Hero_Hondahttp://en.wikipedia.org/wiki/Hero_Hondahttp://en.wikipedia.org/wiki/Kinetic_Hondahttp://en.wikipedia.org/wiki/Honda_Siel_Cars_Indiahttp://en.wikipedia.org/wiki/Honda_Activahttp://en.wikipedia.org/wiki/Honda_Diohttp://en.wikipedia.org/w/index.php?title=Honda_Eterno&action=edit&redlink=1http://en.wikipedia.org/wiki/Honda_Unicornhttp://en.wikipedia.org/wiki/Motorcyclehttp://en.wikipedia.org/wiki/Honda_Shinehttp://en.wikipedia.org/wiki/Honda_Shinehttp://en.wikipedia.org/wiki/Honda_Shinehttp://en.wikipedia.org/wiki/Honda_Shinehttp://en.wikipedia.org/wiki/Motorcyclehttp://en.wikipedia.org/wiki/Honda_Unicornhttp://en.wikipedia.org/w/index.php?title=Honda_Eterno&action=edit&redlink=1http://en.wikipedia.org/wiki/Honda_Diohttp://en.wikipedia.org/wiki/Honda_Activahttp://en.wikipedia.org/wiki/Honda_Siel_Cars_Indiahttp://en.wikipedia.org/wiki/Kinetic_Hondahttp://en.wikipedia.org/wiki/Hero_Hondahttp://en.wikipedia.org/wiki/Hero_Hondahttp://en.wikipedia.org/wiki/Honda


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Honda Dio

The Honda Dio is a stylish version of the Honda Activa, having almost the same

technical specifications. The engine is slightly more powerful. The Dio is targeted

at young people. Honda calls it India's first "motoscooter".

Honda Eterno

Advertised as the "Geared Surprise" prior to launch, the Honda Eterno is a 4-

stroke, 150 cc scooter. Honda claims that the Eterno gives the best mileage in its

class.


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Honda Unicorn

The Honda Unicorn is HMSI's first motorcycle for the Indian market. It is

powered by a newly developed 4-stroke, 149 cc engine. The Unicorn is the first

bike in India to incorporate the mono suspensionsystem. The bike is touted as the

"Flying Machine" by Honda.


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Honda Shine

Marketed as the "Dream Machine", the Honda Shine has the newly developed 125

cc Optimaxengine. The motorcycle is targeted at the mid-range motorcycle

segment.


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Honda CBF Stunner

This bike is a 125 cc bike with a sporty fairing, producing approximately 11 bhp.

Honda CB Unicorn Dazzler

This bike is a stylish commuter. It has the same 149.1 cc Unicorn's engine, but has

high lift cams. It produces 14 bhp of power and around 12.8 NM of torque.


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The factory

The HMSI factory is built on a plot of 52 acres (210,000 m2)

atManesar,Gurgaon district ofHaryana. Construction of the factory was

completed in January 2001. The initial production capacity was 100,000 scooters

per year, which is currently 6,00,000 scooters. The motorcycle production capacity

is 10,00,000 per annum. The initial investment was Rs. 215crores and has now

grown to 800 crores.

ISO 14001

Current performers of major players in the market

Two Wheeler flash update -

The two-wheeler majors announced impressive volume numbers for

October 2010. The motorcycle volumes of the top three players registered a 23.2%

yoy and 15% mom growth during October 2010 to 463,649 units. This was in spite

of shradh, which is considered an inauspicious period, during the first week of

October. All the top three players registered healthy numbers, which is an

encouraging sign for the coming festive season.
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Honda Motors Ltd

Table: Motorcycle volumes

2010 2011 Growth (%)

April 196,024 134,318 45.9

May 212,177 163,582 29.7

June 200,922 160,889 24.9

July 205,654 143,141 43.7

August 191,635 145,730 31.5

September 217,507 157,583 38.0

October 245,475 207,472 18.3

Cumulative sales during April to September in FY05 increased by 32.1% yoy to

1,469,394 units.

Exports during October 2010were up 65% yoy to 5,558 units.


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Honda Motors Ltd.

Table: Motorcycle sales volume

2010 2011 Growth (%)

April 90,532 71,074 27.4

May 87,663 87,217 0.5

June 97,595 82,239 18.7

July 103,260 77,966 32.4

August 106,745 76,487 39.6

September 126,420 95,680 32.1

October 143,491 107,115 34.0

Cumulative sales for motorcycles during April to October in FY05 grew by

26.4% yoy to 755,706 units. Honda Motors sales during October 2010 increased

by 13.5% on a mom basis, largely due to sales of its Shine and Activa models

that have been accepted well in the market. With this, it improved its market.

Total sales for Hero Honda Auto increased 12.6% yoy to 995,111 units

during the April to October 2009 period as against 884,001 units between April to

October 2010.


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Activa volumes stood at 90,222 units while the Discover sold 19,632 units in

October. The Shine models continued their leadership in the premium segment by

selling 23,107 units.


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Hero Motor Corp.

Hero Honda is a part of the Hero Group of companies. Hero Honda Motor

Limited was established in 1984 in joint venture with Honda Motors of Japan to

manufacture motorcycles. The Hero Group and Japans Honda Motor Company

each owns 26 percent stake in Hero Honda. The remaining shareholding is in with

financial institutions and public. Hero Honda is a leader in the two wheeler

segment in the country, and even claims to be the worlds largest two wheeler

company in its advertising. It produces motorcycles Ambition, Splendor,

Passion, CD100 SS, CBZ, Karizma, and Dawn. During the year ended

march 31, 2003; Hero Honda has recorded a 17.7 percent rise in sales at 1.67

million motorcycles with its turnover of Rs. 5,194.58 crore.

Plant Location:

HHML had two plants:

One located at Dharuhera, Haryana near Delhi

And other at Gurgaon, 30 kms away from the existing plant.


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PRODUCTS OF HONDA

Honda Aviator

Honda Activa

Honda Dio

Honda Eterno

Honda Unicorn

Honda Shine

Honda CBF Stunner


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TVSSuzuki

A leading producer of automotive components, the TVS group was formed

as a transport company in 1911. Originally incorporator in 1982 as India

motorcycles Pvt. Ltd. to produce motorcycles in collaboration with Suzuki, Japan,

the company later went public under the banner Ind-Suzuki Motorcycles Limited,

which was later renamed TVS Suzuki Limited. The perfect blend between the best

design engineers and the latest technology made TVS-Suzuki one of the leading

two-wheeler manufacturers in the country.

Product range

TVS Victor GL109 cc. Victor GLX- 124cc, Centra- 99 cc , Fiero F2, FX-

147 .5 cc, Scooty pep- 75 cc.

Plant Location

TVS first plant is located at hosur, in the state of Tamil Nadu. Second plant

at Byathlli village near Mysory about 70 kms from Bangalore (Karnataka) for

manufacture of scooter.


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Yamaha (YML)

EYML was a joint venture between Escort Ltd. the flagship company of the

Escorts Group, and the global giant, Yamaha Motors Co. Ltd. of Japan. Ever since

dinging the first technical assistance agreement between the two companies in

1985, Yamaha Motor company Limited (YMC) and Escorts motorcycles. In

November 1995, the tow companies established the joint venture company,

Escorts Yamaha Motors Limited, based on a 50-50 capital investment. In June

2000, that investment ratio was changed to 74% for YMC and 26% for Escorts

Limited, and YMC assumed managerial control of the company with the name

being changed to Yamaha Motors Escort Limited (YMEL). It then undertook

numerous measures to build the companys motorcycles manufacturing and

marketing operations. In June 2001, an agreement was reached between YMC and

Escort Ltd. under which YMC acquired the remaining 26% of the stock held by

Escorts. The stated aims of this move to make YMEL a 100% YMC subsidiary

were to increase the overall speed of managerial and business decision, to improve

produce development capabilities and production efficiency, while also

strengthening the marketing organization.

Products:

Crux -R100 cc, Enticer/ Deluxe124 cc, Fazer123 cc , Libero LX106

cc.


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Feature Challenges for Honda Motors

Indian companies e.g. LML, Kinetic motors try to catch the market share of major

players. In addition to domestic competition, another competitive threat took shape

in the form of cheap Chinese imports when import restrictions were lifted in 2001.

A relatively unknown company named Monto Motors in Alwar (Rajasthan) was

the first to import Semi-Knocked- down (SKD) kits form one of the top

motorcycle manufactures in Chine. A 72 cc motorbike form China cost the

customer Rs. 27,000 on road, a 125 cc would cost Rs. 33,000, and a 250cc

motorbike would cost Rs. 36,000. the Indian models seemed frightfully expensive

in comparison. In early 2002, a moped cost around Rs. 22,000, a 100 cc motorbike

cost around Rs. 45, 000, and a 125 cc motorcycle cost around Rs. 50,000. The

domestic tow wheeler industry was bounds to feel the pinch, especially in the mid

and lower price segments of the motorcycle, scooter, and moped segments.

THE Indianautomobile two-wheeler industry reported a strong double digit

volume growth of 17 percent in Q1, 2011-12 (YoY); even as several other

automobile segments showed signs of a cyclical dip in growth during this period.

While the northward movement in macro-economic variables including inflation,

fuel prices and interest rates has been the nemesis of the automobile industry at

large, the two-wheeler industry has been relatively less impacted so far. ICRA

believes that the resilience shown by the two-wheeler industry volumes is likely to

persist, a large base not withstanding, with the industry looking on course to
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record yet another year of double- digit growth. However, the situation may

change in the event of higher than expected decline in Indias GDP growth or

persistent inflationary pressures over a longer period.

Overall, ICRA expects the two-wheeler industry to report a volume growth of ~13

percent in 2011-12 and a volume CAGR of 10-12 percent over the next five years

to reach a size of 21-23 million units by 2015-16. Our growth outlook is built on

the strength of the various structural growth drivers associated with the two-

wheeler industry comprising of favorable demographic profile, moderate two-

wheeler penetration levels (in relation to several other emerging markets), under

developed public transport system, growing urbanization and expected strong

replacement demand, besides moderate share of financed purchases.

Segment-Wise Analysis

The strong double-digit volume growth of 17.5 percent recorded by the

motorcycles segment in Q1, 2011-12 was not consistent across segments Entry,

Executive and Premium. The volume growth was a blend of: The flattish growth

(~three percent) of the entry segment (bikes having price less than `40,000) which

accounts for around 16percent of the total domestic motorcycles sales volumes.

The steady growth (~17 percent) of the executive segment (bikes in the `40,000-

50,000 price range), which accounts for around 65 percent of the total domestic

motorcycles sales volumes.


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Chapter-4

CUSTOMER SATISFACTION TOWARDS

TWO WHEELER


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About customer satisfaction

The two-wheeler market in India is the biggest contributor to the automobile

industry, with a size of `100,000 million. Today's customers are becoming harder

to please. They are smarter, more price conscious, more demanding, less

forgiving, and collect information about many more competitors with equal or

better offers. The interaction between consumer expectations and actual product

performance produces either satisfaction or dissatisfaction. At the higher levels of

satisfaction, customers are likely to re-purchase and even speak well of the

company and its products. The study aimed to assess expectations, perceptions,

and post purchase behaviour of Mahindra scooter customers, which will enable

both the manufacturer and the distributors to know about the customers'

expectations, perceptions, and post purchase behaviour, that in turn helps to

reduce the post purchase dissonance and aids in enhancing customer satisfaction.

Customer satisfaction occurs when the experience obtained from transaction match

expectation. Customer may forget experience that match expectation although,

customers will generally notice and also remember those experience that deviated

from expectation.

This stage is particularly known as dissatisfaction results in to a feeling of dissonance

in case where an experience obtains from product/sendee falls short of expectations.


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In opposite situation i.e. state of satisfaction it may result in to repurchase of product

/service as case may be.

One has to accept the fact that people i.e. employee in an organization play a crucial

role in determining, and delivering of the level of service quality and ultimately

consumers satisfaction. It has been observed that even manufacturing organization

have gradually realized the fact that along with tangible offering, intangible customer

service the only possible distinct way to cerate a point of differentiation and

positioning in to the competitors. It is needless to state companies need to manage

customer contact effectively where the desired outcome is a satisfied customer.

Customer's satisfaction data customer data provides early warning sing of problems

before they show up in revenue and down in profit.

Customer satisfaction

Customer satisfaction is the to success. Getting your customer to tell you Whats

good about your products or services, and where you need improvement Helps

you to ensure that your business measures up to their expectations. The Attached

file contains a customer satisfaction survey form designed to help gather. This

important information . it was designed to make it easy for customer to fill out and

To make it easy for you to quickly customize to exactly match your company

activities.


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It also includes suggestion for distributing the form. Ensuring that customer that

will Return the form, and following up on comments.

Here are a few principles given by Steve smith.

The goal is to exceed customer expectation.

The more the employee satisfaction, the more the customer satisfaction.

Customer satisfaction is necessary, but not sufficient how many times do

satisfied customer switch brands? Answer, a lot.

All initiative must be derived from defined problems. For instance ,

dissatisfied customers dont buy. Thats an example of a clear problem.

Initiative must produce either measurable or conceptual benefits.

Distinguish between the two benefits types.

The plan must be clear and congruent.

The plan must be resonate with the VP and at least a minority of managers

who agree with the objective and initiative.

The following items amplify customer satisfaction given by stevesmith

Quality of a companys product and service.

Quality of the relationship between the co agent the customer.

Responsiveness

Thoroughness

Creativity


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Customer satisfaction: Honda leaves other brands

sniffing the dust

Honda ranks the highest in customer satisfaction with after-sales service in

Thailand, according to the JD Power Asia Pacific 2013 Thailand Customer Service

Index (CSI) Study.

Among the 10 brands included in the study, Honda ranks highest in overall

customer satisfaction for the first time since the study's inception in 2000, with an

overall CSI score of 902. Honda performs particularly well in service initiation,

service advisory and service facility, the study stated.

The 2013 CSI Study, now in its 14th year, measures overall satisfaction among

vehicle owners who visit an authorised dealer/service centre for maintenance or

repairs during the first 12 to 24 months of ownership. The study is based on

responses from 3,463 new-vehicle owners who purchased their vehicles between

January 2011 and April 2012 and took their vehicles for service to an authorised

dealer or service centre between July 2012 and April 2013. The study was fielded

between January and April 2013.

According to JD Power, the process of initiating the service experience and

handing the vehicle over to service-centre staff has become the second most

important area for overall customer satisfaction with after-sales service at

authorised service centres. The study measures new vehicle owner satisfaction

with the after-sales service process by examining dealership performance in five


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factors: service initiation; service advisory; service facility; vehicle pick-up; and

service quality. Dealership service performance is reported as an index score based

on a 1,000-point scale. The contribution of the service initiation factor to the

overall CSI index has increased to 26 per cent in 2013 from 12 per cent in 2012.

Service quality, while remaining a factor with the most impact on overall

satisfaction, decreases to 29 per cent from 42 per cent in 2012.

"As service quality improves and the traffic at service centres dramatically

increases as a result of market growth, customers are concerned about long queues

and have therefore become increasingly interested in the appointment process, a

dealer's flexibility to accommodate their schedule and how prompt and thorough

the handover process is," said Loic Pean, senior manager at JD Power Asia

Pacific.

Overall customer satisfaction averages 889 in 2013, a 43-point improvement from

2012. Across the industry, satisfaction has increased year over year in all factors,

particularly in service advisory (+48 points) and service quality (+47). Satisfaction

scores for all nameplates have also improved, compared to 2012.

"Despite the growing number of customers, service centres have improved at

attending to customers more promptly, putting them at ease and fully


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understanding their service needs, ensuring a more efficient service," said Pean.

"On the other hand, cost estimates are provided less often in 2013, and insufficient

seating space in the service centre waiting area during peak service hours has

become an issue. Dealers may be able to avoid this situation and increase

satisfaction among their customers by notifying them in advance and encouraging

them to come during off-peak hours, particularly on weekdays or later in the

morning."

The study also finds that among the reasons customers select their service centre is

that vehicle owners are increasingly considering mechanics' skills, speedy service

and the use of original equipment and parts, and also positive recommendations

from acquaintances and their own past experience.

"Customers have alternative servicing options, and delivering a superior service

experience is starting to pay off for dealerships," said Pean. "As overall

satisfaction with after-sales service dramatically increases, we indeed observe that

a much greater number of customers are not only likely to revisit their service

centre for post-warranty service and recommend it to their friends and family, but

are also willing to travel a longer distance to get there."


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Against this backdrop, Honda has developed word-less service information

(in the form of a pair of leaflets) for customers in emerging nations as well

as picture-based training materials as part of an effort to value customer in

these markets.

The leaflets, which comprise maintenance and repair editions, are designed

so that they can be easily understood, even by customers who cannot read,

so that they can enjoy their motorcycle with peace of mind over the long

term. In fiscal 2013, Honda Manufacturing (Nigeria) distributed a hanging,

laminated chart that could be displayed even where there were no walls. In

addition to arranging for it to be hung at motorcycle taxi stations for viewing

by motorcycle taxi drivers, a key customer group, the company sent the

charts to repair shops.

The picture-based training materials consist of a careful compilation of the

minimum necessary work procedures so that instructors can offer training

anywhere even electricity infrastructure is poor in the field.

Honda Manufacturing (Nigeria) includes a leaflet with each motorcycle sold.

Working with associations of local repair shops, the company has also held

45 training tours during 2012, reaching a total of 1,830 mechanics so far.

During 2013, it plans to continue the program, offering 30 tours for 1,200


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mechanics.

In addition to providing educational opportunities to the market in order to

create an environment in which customers can receive maintenance and

repair service whenever and wherever they need by going beyond dealer

service, these activities help customers maintain the performance of their

motorcycles and use them safely.

They also help make ownership more economical by improving fuel

economy, lowering CO2emissions, and lengthening the motorcycle service

life. Going forward, Honda will strive to improve customer satisfaction by

providing higher-quality service to offer peace of mind and trustworthiness

to customers worldwide.

A roadside service business working on motorcycles, a common sight in

emerging nations


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Picture-based training

Checking training materials an actual motorcycle

A motorcycle taxi rider looks at a hanging chart


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Chapter-5

RESEARCH METHODOLOGY


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Objective of the study

The following were the objectives of the study;

To study the customer perspective about Honda two wheeler.

To generate a demographic profile of Honda owners.

To know about the satisfaction level of Honda users.

To explore the reasons for preferring Honda two wheeler.

Data was collected from both sources relating to the objectives of study


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NEED FOR THE STUDY

There exists a severe competition in the automobile industry, especially in two

wheeler sector. All the companies are trying to get dominant market share and new

models are introduced into the market with new features.

The company wants to know the preference level of their customer and gauge the

future expectation. The company wants to know the brand preference in

themotorcycles with a special reference to Honda, to lead them in product design,

the modification of product attributes and consequent benefits to the user, with

reference to the models on offer as well as now models.


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Scope of Project

This project deals with over all working of Honda Motors. The only thing Honda

Motors needs to worry about is the goals it has to achieve. Honda Motors

primary goal is to achieve the overall satisfaction of the customers by introducing

new & advantageous for customers so as to gain more & more profit for the

company. The scope of Honda Motors wide & growing with a rapid rate.

The basic scope of the project deals with study of market by offering Value Added

Services and retention of the Customer.


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Chapter-6

Analysis and Interpretation


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Q-2 Gender /sex..

No of male No. of female

90 10

90% two-wheeler users are male and only 10% users are female

Fig .1-Showing Gender

90%

10%

male

female


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Q.3- What kind of 2-wheeler do you own?

Type of 2-

wheeler

Scooter/Scooty Motorcycle Total

No. of 2-

Wheeler

66 34 100

Fig: 2Showing % of kinds of two-wheelers

20%

80%

Scooter/Scooty Motorcycle


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Q.4 - Please mentioned the Model

Name of the brand No. of Motorcycle Percentage

Honda Activa 47 47%Honda Dio 19 19%

Honda Unicorn 7 7%

Honda Shine 9 9%

Honda CBF Stunner 14 14%

Honda CB Unicorn Dazzler 4 4%

Total 100 100%

Fig.3- Showing % of Motorcycle brand

47%

19%

7%

9%

14%4%

Honda Activa Honda Dio Honda Unicorn

Honda Shine Honda CBF Stunner Honda CB Unicorn Dazzler


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Q.5 What was the mode of purchase?

Cash down Financed Total

80 20 100

Fig. 5Showing % of Mode of purchase

80%

20%

Cash down Financed


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Q. 6- In case of (ii) who finance the purchase of two-wheeler? (For Honda

Motorcycle)

Family

member

Bank Dealer Total

40 30 30 100

Fig.7- Showing % of Mode of Finance of Honda Users

Around 40% financed by family member, 30% financed by bank and

around 30% financed by dealer.

40%

30%

30%

Family member Bank Dealer


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Q 8- please indicate your satisfaction using the following scale:

Statement Total 100 users

H.S. S. N.S.N.D D. S.D

Overall performance 20 30 20 20 10

After sale service 14 26 20 30 20

Behaviourism ofDealer

15 20 25 30 10

Behaviours ofdealers Staff

20 30 25 15 10

Fig.12- Showing satisfaction levels among Honda owners

20

30

20 20

10

14

26

20

30

20

15

20

25

30

10

20

30

25

15

10

0

5

10

15

20

25

30

35

H.S. S. N.S.N.D D. S.D

Overall performance

After sale service

Behaviourism of Dealer

Behaviours of dealers Staff


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.

Q-9 What is your primary occupation?(a) Businessman (b) Govt. Employee (c) Private Employee(d) Housewife (e) Student (f) Other (Please specify)

0%

100%

Scooter/Scooty 20


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Q-10 Will you suggest anybody to purchase Honda two wheeler?(a) Yes (b) No

Honda Unicorn

44%

Honda Shine

56%

Chart Title


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Q-11 According to your opinion which companys two wheeler arebetter at present.

(a) Honda (b) Bajaj (c) Yamaha (d) Hero(e) Others (Please specify)

63%

21%

5% 11%

Honda Bajaj Yamaha Hero


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Q-12 Do you want any changes in Honda two wheeler?(a) Yes (b) No

100%

40


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Q-13 Why are you choose Honda two wheeler?(a) Good quality (b) Good features (c) Affordable Price(d) High brand name (e) Others

30%

40%

10%

10%

10%

Good quality Good features Affordable Price

High brand name Others


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Limitation

1. Mostly people who may be right responded were not interested because

they had less time to show their feeling /experiences thus the responses may

not be genuine.

2. Relatively medium sample size was chosen due to time constraints.

3. It is particularly impossible for a smaller segment of a population (100

respondents) to exactly represent the population.

4. There are no specific criteria for the selection of companies or brand except

the availability of complete information from a variety of sources such as

magazines journals and Internet etc.

5. As the project involves marketing research using questionnaire, views

expressed by respondents are confined to the elements of questionnaire.

6. The data emerged from the study may not be the true picture as study was

restricted only to certain parts of Aligarh.

7. Some respondents were not interested in the questionnaire so they filled the

information with less interest.

8. Time and cost were two other important factors.


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Analysis

THE Indianautomobile two-wheeler industry reported a strong double digit

volume growth of 17 percent in Q1, 2011-12 (YoY); even as several other

automobile segments showed signs of a cyclical dip in growth during this period.

While the northward movement in macro-economic variables including inflation,

fuel prices and interest rates has been the nemesis of the automobile industry at

large, the two-wheeler industry has been relatively less impacted so far. ICRA

believes that the resilience shown by the two-wheeler industry volumes is likely to

persist, a large base not withstanding, with the industry looking on course to

record yet another year of double- digit growth. However, the situation may

change in the event of higher than expected decline in Indias GDP growth or

persistent inflationary pressures over a longer period.

Overall, ICRA expects the two-wheeler industry to report a volume growth of ~13

percent in 2011-12 and a volume CAGR of 10-12 percent over the next five years

to reach a size of 21-23 million units by 2015-16. Our growth outlook is built on

the strength of the various structural growth drivers associated with the two-

wheeler industry comprising of favorable demographic profile, moderate two-

wheeler penetration levels (in relation to several other emerging markets), under

developed public transport system, growing urbanization and expected strong

replacement demand, besides moderate share of financed purchases.
http://ahmedabad.yellowpages.co.in/Automobile+Two+Wheelerhttp://ahmedabad.yellowpages.co.in/Automobile+Two+Wheeler


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Segment-Wise Analysis

The strong double-digit volume growth of 17.5 percent recorded by the

motorcycles segment in Q1, 2011-12 was not consistent across segments Entry,

Executive and Premium. The volume growth was a blend of: The flattish growth

(~three percent) of the entry segment (bikes having price less than `40,000) which

accounts for around 16percent of the total domestic motorcycles sales volumes.

The steady growth (~17 percent) of the executive segment (bikes in the `40,000-

50,000 price range), which accounts for around 65 percent of the total domestic

motorcycles sales volumes.

The fast growing (~30 percent) premium segment (bikes having price greater than

`50,000) which accounts for around 19 percent of total domestic motorcycles sales

volumes.

The Indianautomobile motorcycles segment continues to be dominated by Hero

MotoCorp (erst while Hero Honda) which has been recording sequential gains in

market share over the last three quarters. The top three players accounted for 88.2

percent of the industrys volumes in Q1, 2011-12 (92 percent in 2007-08), with

Honda Motorcycles having overtaken TVS since Q1, 2010-11 as the third largest

player, behind Hero MotoCorp and Bajaj Auto.
http://ahmedabad.yellowpages.co.in/Automobile+Motorcyclehttp://ahmedabad.yellowpages.co.in/Automobile+Motorcycle


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Chapter-6

Conclusion and Suggestions


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Recommendation:

After 2000 the market share of mopeds has been decreasing and preference

for motorcycles and scooters/ scooty has been on the rise.

Around 66% respondents were scooter owners.

After Honda, Bajaj is the second largest motorcycle company in Aligarh.

Honda Shine is competitor of Bajaj pulsar DTSi in the primium segment.

Bajaj, Yamaha, TVS are the main competitors of Honda.

Fuel efficiency, looks, sitting comfort safety featured, pick up maintenance

cost of two wheeler, engine technology, strength of material handling are

very important features for Honda users.


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Suggestions

Most of the Honda owners are satisfied with their vehicles over all

performance and after sales service being offered by the company..

Most of the customers were found to be talking along with them, their

father as well as friends during the final visit for purchase.

Few customers are not satisfied with the behaviour of dealer / staff so

company should brief / instruct than that how to behave with the customer.

There should be training program for employees of the dealer where they

should be taught the benefits of creating their customers well.

We have to take some actions to create new changes for innovation Honda

two wheeler.


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Conclusion


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Conclusion

The growth of the Indian middle class along with the growth of the economy over

the past few years has attracted global auto majors to the Indian market. India

provides trained manpower at competitive costs making India a favoured global

manufacturing hub. There has been a steady economic revival in the market

complimented by high disposable incomes. An amalgamation of increasing per

capita incomes, growing working population and growth of Indian middle class

has been the major growth drivers for the two wheeler industry.

There has been an increasing demand for automobiles and auto components in the

Indian and globally automobile segment. In India, there is a constant focus of

research and development and product development. There has been a steady entry

of global players in the automobile market introducing many products in various

segments of automobiles namely, the two wheelers, three-wheelers, four-wheelers

etc.

The two wheeler industry per say has recorded a healthy volume growth in 2012-

13, largely due to favourable demand and supply factors. The most important

factor that the two wheeler industry should emphasise on is sustaining this growth

over a longer period of time. Since, the industry landscape has been evolving,

there will be many competitors entering the market by positioning and

repositioning product portfolios, innovating products to serve new market segment

and emphasising more on the rural and semi-urban markets.


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Hero Honda Motors Ltd is one of the major players in the two wheeler segment.

The company has been conferred the title of being the largest two wheeler

manufacturing company in India and the Worlds No. 1 two wheeler company in

terms of volume growth. The company claims that its motorcycles are one of the

most preferred motorcycles in the country. Along with striving constantly to

innovate and differentiate with respect to its competitors, the company has been

committed to provide customer satisfaction, quality and cost effectiveness.

Hero Honda, being the largest motorcycle manufacturer in India and the second

largest across the globe, it is vital to maintain a good relationship with its suppliers

and also its customers. With a view to meet the objective of improving

information exchange, streamlining operations and effective business

relationships, the company has implemented powerful self-service features of

mySAPTM Supplier Relationship Management (mySAP SRM) plus the e-

commerce capabilities of mySAP Customer Relationship Management (mySAP

CRM)

Honda has been aggressive in respect to its innovation to introduce new two

wheelers every year and caters to a wide variety of requirements across all the

segments. It claims to be the technology pioneer in the two wheeler industry. Its

growth is largely due to the capability of reaching a wide market, new geographies

and growth markets. The company has been pumping considerable amount of

finances in branding building and promotional activities. These activities mainly


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emphasise product launches and new campaign launch opportunities. The

company is a part of many innovative marketing campaigns that revolve around

sports like cricket, hockey, golf etc along with sponsoring the recent Common

Wealth Games 2010. Furthermore, the company has also been aggressively

involved in the arena of entertainment with sponsorships of highly watched reality

shows, television award events etc.

bhanu reort

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