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Industry Analysis of Two Wheeler Market
Industry Analysis of Two Wheeler Market
Market
Agenda
• Industry Overview
• Market Players
• SWOT
• Industry Life Cycle and PLC
• Porter’s 5 forces
Industry Overview
Automobile Industry in India
• Market share
– 2 wheeler 76%
– Passenger vehicle 16.25%
– Commercial vehicle 4.35%
– 3 wheeler 4.4%
Overview
• Consolidated Industry
• Market size is 10,000-11,000 crores
• 80% of market share between
– Hero Motocorp- 41%
– Bajaj Motors- 25%
– TVS - 14%
Segmental Analysis
• Industry Segments
– Motorcycles- 78%
– Mopeds- 17%
– Scooters- 5%
Segmental Analysis
• Motorcycles
– Hero Motocorp- 56%
– Bajaj Motors- 25%
– TVS- 6%
• Scooters
– TVS- 19%
– Hero Motocorp- 16%
• Mopeds
– TVS- 49%
– Bajaj Motors- 32%
Segmental Analysis
2010-11 2011-12
• Segment Growth • Segment Growth
– Motorcycles- 24% – Motorcycles- 14%
– Scooters- 42% – Scooters- 26%
– Mopeds- 23% – Mopeds- 12%
Industry Happenings
• Hero Honda dissolved their joint venture in
2010
• Honda is the clear market leader in the fastest
growing scooter segment with over 50% of
market share in the segment
• Honda sells close to 100,000 units per month
Industry Happenings
• 125cc motorbikes has become a distinct
category
• Intense competition in the premium segment
of motorcycles
• By 2015-16 industry is expected to reach
maturity stage (ICRA)
Investment Required
• Investment required for a new entrant is
unknown as all the players are present for
more then 2decades and investment required
at that time cannot be compare to what is
needed today
Investment Required
• Hero invested 400 crores for an additional
plant capacity of 750,000 units
• Hero invested another 1100 crores for another
plant for a capacity of 1.2 million
• Hero invested another 500crores to expand its
existing capacity to increase capacity of
another 1 million
Capacity Utilization
• Hero Motocorp- 98%
• TVS- 86%
Expansion Plans
• Hero Motocorp
– 750,000 capacity plant in Rajasthan
– 1.2 million capacity which will increase to 1.8
million in next phase in Gujarat
– 1 million in expanding existing plants
• Bajaj Motors
– 1.26 million in expanding existing plants
• TVS
– No such plans
Market Size
• The current market size is 15.4 million units as
on 2011-12
• This is expected to reach 22 million units by
2015-16 (ICRA)
Future Capacity Utilization
• Hero Motocorp- 91%
• TVS- 72%
Net Profit
• Hero Motocorp- 9%
• Bajaj Motors- 15%
• TVS- 3%
Average Collection Period
• Hero Motocorp- 3 Days
• TVS- 13 Days
Average Age of Inventory
• Hero Motocorp- 13 Days
• TVS- 40 Days
Average Payment Period
• Hero Motocorp- 45 Days
• TVS- 49 Days
Cash Conversion Cycle
• Hero Motocorp- -30 Days
• TVS- 3 Days
Asset Turnover Ratio
• Hero Motocorp- 58%
• Bajaj- 50%
• TVS- 60%
CSF
To survive and prosper in an industry a firm
must meet 2 criteria
1. What do our customers want?
2. What does a firm need to do to survive
competition?
CSF
Prerequisites for success
Analysis of competition
•What drives competition?
Analysis of Demand •What are the main dimensions of
•Who are our customers? competition?
•What do they want? •How intense is competition?
•How can we obtain a superior
competitive position?
CSF
• To keep customer satisfied and loyal
• Clientele
• Product Design
• Market Segmentation
• Differentiation
• Servicing
• Low cost factor
Recent Events
• Mahindra recently entered scooter segment
• Hero and Honda split
– Both continue to operate in the market seperately
Future Outlook
• By 2013 India will become largest 2 wheeler
market in India
• India will over take China
• India+ China+ Indonesia=60% of global 2
wheeler market
• Among these 3, only India post positive
growth for FY 2012-13
• Replacement demand will be key contributor
Future Outlook
• Motorcycles:
– The growth rate of entry price segment is
expected to be lower then the industry (below
40,000)
– Competition is likely to intensify in executive
segment (price 40,000-50,000)
– Premium class segment is expected to grow at the
fastest rate (above 50,000)
Future Outlook
• Scooter:
– Expected to increase the market share steadily
– Expected to double in size by 2014-15
– Segment to reach profitability due to expansion
Market Players
HERO MOTOCORP
• Hero MotoCorp Ltd. (Formerly Hero Honda Motors
Ltd.) is the world's largest manufacturer of two -
wheelers, based in India.
BAJAJ GROUP
Ludhiana Veer
Motor Industrial
Agency Saroop corporation
Sons
industries
limited
BAJAJ MOTORS
• Bajaj Motors Limited was incorporated in 1986 and
started it’s commercial production
in 1989.
• BAJAJ MOTORS was started as a machining unit with
backward integration in
Forgings of Auto Components
• They are into manufacturing of auto components
mainly precision engine & transmission components
for Two Wheelers, Four Wheelers, Tractors and other
Heavy goods.
BAJAJ MOTORS
• Bajaj Discover
• Bajaj XCD
• Bajaj Avenger
Bajaj Motors
• Past strategy:
– Full reliance on scooter segment
• Impact:
– Was numero uno when scooter was a dominant
segment
– Lost out after the entry of motorcycles in the
market
Bajaj Motors
• Current Strategy