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PLACE

CHANNELS OF DISTRIBUTION:

As a company, dealers play a major role in serving customers, while growing and sustaining markets. Hero
Honda has a network of more than 3500 strong and dedicated Authorized dealers. A network that has
helped Hero Honda¶s name and its promise of reliable quality to every part of the country. The power of this
highly efficient and motivated network goes a long way to create goodwill for Hero Honda brand among
countless consumers besides creating availability and after sales services.

The channel of distribution is a direct dealer network. A direct dealer is a dealer who is authorized to
purchase the product directly from the company and sell.

PHYSICAL DISTRIBUTION:

Hero Honda has more than 3500 showrooms in India. Some of the Authorized dealers of Hero Honda
Karizma, in and around Bombay, are:

‡ Max Motors (Bombay)

‡ F. P. Motors (Bombay)

‡ Axis Motors (Thane)

‡ Ranjeet Motors (Thane)

‡ Ahir Motors (Kalyan)

‡ Spectra Motors (New Bombay)

‡ H. M. Motors (Panvel)
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Two- wheeler sales in the country have sky rocketed in the recent years, and the annual sales of motorcycles in India
expected to cross the 10 million mark by 2010. The low penetration of two-wheelers in the country 31 two-wheelers
per 1000 citizens (2004) leaves immense scope for the growth of the market. Overall the industry sales of two-
wheelers have grown by 15% from 6.57 million in 2004/2005 to 7.57 million in 2005/2006. The buoyant Indian
economy with a growth rate of around 8% per annum is further expected to fuel the growth of two wheelers in the
country.
The share of motorcycles have increased over the years, while that of other two-wheelers like geared scooters,
scooterettes and mopeds have shown a negative growth or remained stagnant. The two-wheelers have penetrated
7% of rural house hold and 24% of urban markets, thus it leaves an immense scope for the market to grow.
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he composition of the industry consists of motorcycles, scooters and mopeds. Over the past decade, there
has been a consumer preferential shift from mopeds to scooters and now motorcycles. On account of the
shift, the motorcycle segment dominates the two-wheeler industry with a market share of close to 80%. The
motorcycle segment is further sub divided into 3 classes, starting from the entry/economy class (Rs 30,000
± Rs 40,000), executive class (Rs 40,000 ± Rs 50,000) and the premium class (>Rs 50,000). The
motorcycle segment is primarily led by Hero Honda with a market share of ~59% followed by Bajaj Auto
(~18%), HMSI (~9%), TVS Motors (~7%) and Yamaha (~5%). On the other hand the scooter segment is
led by HMSI which has a dominant share of ~63% followed by TVS Motors (16%) and Hero Honda (~14%).
When it comes to the moped segment, it is primarily dominated by TVS Motorswith a market share of
~100%.

6 Type of consumers who demand it related to major leaders in Indian market


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If we analyze the motorcycle sub-segments then it would be visible that Bajaj Auto has a significant
presence in the premium segment with a market share of ~55% followed by Hero Honda (~22%), TVS
Motors (~13%) and HMSI (10%).

   
Hero Honda dominates this segment with a market share of ~70% followed by Bajaj Auto (20%), HMSI
(~6%) and TVS Motors (1%). This segment retrieves higher revenues from the rural areas, which are less
dependence on finance; therefore comparatively it is among the best performing segments
YTD.

 
This segment is a strong foothold for Bajaj Auto which has a market share of ~45%followed by Hero Honda
(~34%) and TVS Motors (~24%). This is the most competitive segment as all the 3players relatively have a
higher presence in the same. But this segment continues to be the worst hit due to the credit unavailability
and global slowdown. The industry has shown a CAGR of ~15% from FY04-FY07 on account of finance
availability from PSU Banks and private banks like ICICI Bank. But from FY08 ± FY09 YTD the industry has
shown a degrowth as most of the banks reduced their exposure in the auto finance domain given the
unfavorable macro economic
situation.

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The growing middle class population, prosperous rural India and the paucity of reliable public transport system is
leading to a large number of two wheelers added to the roads everyday. Indian roads in most cities, villages and
towns are narrow. Two-wheelers allow people to navigate such roads easily.

Fuel-efficiency is a huge advantage. With the cost of petrol increasing steadily, two-wheeler makes the daily travel
both affordable and convenient. Easy availability of auto finances at attractive schemes has made a two-wheeler a
must in most urban and rural homes.

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