Competition from Domestic as well as International players As on date, the domestic two wheeler industry is dominated by Indian players,

and international players are yet to play an important role. According to Crisinfac research, India is the second largest country in the world after China with regard to the target population. Thus, HHML is expected to face stiff competition from international players who are on the lookout for new markets to enter.

Bajaj Auto Ltd.: The flagship company of the Bajaj group initially started as an importing agent for Vespa scooters of Piaggio. Later, the scooter was renamed Bajaj due to a tie up with Piaggio. The company entered the motorcycle segment in the year 1986, with a technical collaboration with Kawasaki, with the launch of a Kawasaki 100cc motorcycle. Bajaj Auto is the second largest player in the two-wheeler segment. Due to the changing market scenario and changing industry dynamics, the company shifted from scooter manufacturing to motorcycle manufacturing. The real turnaround came for the company in 2001-02 with the launch of the Pulsar in the premium segment. Besides a domestic presence, the company also has significant presence in neighboring countries such as Bangladesh and Sri Lanka. The company also exports to Indonesia, Nigeria and China.

TVS Motors Ltd: TVS Motor Company Ltd was incorporated in 1982 as a joint venture between the TVS Group and Suzuki Motors of Japan. Suzuki ceased to be a shareholder of the company on the expiry of agreement in 2000-01. TVS is the third largest player in the two-wheeler segment. In the motorcycle segment, the Star City (economy segment ) and the Apache (premium segment ) models have helped the company to gain volumes and offset the decline in sales of other models, such as the Victor and the Centra (executive segment). The company has set up a new manufacturing facility in Himachal Pradesh with an initial investment of Rs 1.2 billion in April 2007. The plant has an annual production capacity of 400,000 units per annum scalable up to 600,000 units per annum. This plant mainly caters to the demand in North India, where the companys presence is minimal.

Advantage
1. Strong distribution with rural edge: Over the years, Hero Honda has built its distribution network of 550 dealers and 3,500 service centres.More than 2,000 rural channel partners work on the rural vertical through the Har Gaon Har Aangan program. Over the past four years, its distribution network has grown nearly 2x compared to peers.The distribution network is fairly spread across the rural and semi urban areas, leading to a strong growth of 23.6% in sales volumes in FY10. The rural sector contributes ~44% to Hero Hondas total sales volumes. 2. Technology Tie-up: HHMLs tie up with Honda Motors, Japan gives it an edge over the other domestic peers in two ways: The company does not have to earmark funds for technological research and can concentrate more on market expansion, and The companys access to ready-to-use technology of international standards gives it the opportunity to enter international markets as well. The company pays Honda Motors a royalty of approximately 2.4 per cent of net sales. 3. Dealer and service network: The dealer and after sales services network forms a crucial part of the success formula for any consumer product. The same applies in the case of the two wheeler industry.HHML has the highest number of service centers, (approximately 3,000) as well as the highest sales per dealer. HHML has added 50 dealers, 150 SSPs, 267 dealer representatives and 45 city agent works in FY08. 4. Concentration on rural areas: The rural market contributes approximately 45% of the total industry demand. But according to the study, only 10% of the households own a two-wheeler in the rural areas. Increase in the income levels in rural areas has boosted purchasing power. Looking ahead, it is expected that additional demand will be driven from rural areas. Hence, in order to make the most of changing dynamics, the players would have to change their strategies and focus on advertising geared towards the rural population, educational road shows, showcase product value, and expand their sales and distribution network. 5. Less dependence on Credit sales: HHML derives approximately 10% of its sales through financing. Its immediate competitors Bajaj Auto and TVS motor derive ~50 per cent of their sales through financing by NBFCs (source: CrisInfac). 6.Better in comparison: HHML derives approximately 10% of its total sales from credit sales as compared to approximately 50% for its peers. HHMLs relatively lesser dependence on credit sales in the environmentn of credit crunch provides it an edge over other domestic players.

7.Fuel Efficiency:Honda also receives high marks for overall fleet fuel efficiency. This is in large part a product of Honda being an industry leader in high fuel efficiency models that propelled it to popularity during times of high gas prices. The Honda CRX HF model was one of the first cars sold on the merits of its miserly gas mileage, and even though it was released in the late '80s, its gas mileage is on par with many of today's hybrids. More recently, Honda was one of the first car companies to release a hybrid vehicle in the Honda Odyssey and continues to lead the way with a huge selection of hybrid vehicles.

8.ReliabilityHonda has a remarkable reputation of quality building practices and parts, and this is not undeserved.Honda automobiles are consistently ranked very high in terms of quality by Consumer Reports as well as a multitude of other independent consumer groups. A testament to this quality is the sheer number of older Honda vehicles still running on the roads today.

SWOT Analysis Strength: Ability to understand customers need and wants. Recognized and established brand name. Effective advertising capability. Strong Research and Development. High competitive features.

Weakness: Hero is vulnerable in the joint venture because Honda motor much power Slow to react to market changes-slow innovation. Very difficult to cop up if contract discontinues. Opportunity: Global expansion into the Caribbean and Central America Expansion of target market(include women). Strong brand followers. Variants can be launched to increase the market share. Threats: Honda Motorcycles and scooters, India can take away market share and cause joint venture to go sour. Strong competition from Bajaj, Yamaha and TVS HHML is loosing a foothold in the export market which is now dominated by the Bajaj company has so