Manufacturing India-2/3 Wheelers

India has raced ahead from the days of Vespa, Rajdoot and Bullet that were hot in demand by prospective bridegroom in India as dowry.


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.


Interestingly, however, based on CY2012 volumes, India is now the largest 2W market in the world with sales volumes of 13.8 million units (domestic), having overtaken China at 12.6 million units. In fact, while 2W sales volumes in India grew by 5.8% in CY2012 over the previous year, the domestic demand in both China and Indonesia (the second and third largest 2W markets, respectively) shrunk by 10.0% and 9.2%, respectively.

Interestingly, the three major manufacturers- HeroMotoCorp, Bajaj Auto and TVS Motors- are located near the three metros in North, West and South.

Hero Honda has taken new birth as two siblings; HeroMotoCorp and Hero. While the first one is the name of the company owned by the old Indian masters, Hero is fully owned Japanese company. The country’s largest two-wheeler maker HeroMotoCorp is set to kickstart its international business by foraying into new geographies by the end of this financial year, will design and develop all future products taking into account requirements in global markets all on its own.

Honda has challenged to become number one soon. It hopes to clock four million units annually from its three plants in Haryana, Rajasthan and Karnataka and to touch 10 million units by 2020, though this could be achieved even earlier.

Bajaj Auto Ltd. was known for scooter ‘Hamara Bajaj’, but has now gone whole hog for manufacturing motorcycles and is the second largest manufacturer of 2-wheelers.Bajaj Auto has also developed a quadricycle but it is waiting for the government permission for launching on road. TVS Motor has also dropped its Suzuki tag and is on its own as third largest manufacturer.

Yamaha, the Japanese two-wheeler major is planning to make India a hub for development as well as manufacturing of low-cost products and plans to launch a sub-$500 (under Rs 27,000) scooter and motorcycle, which would be its cheapest two-wheeler globally and sold across volume-laden markets such as China, Africa and Latin America. Japanese two-wheeler major Yamaha Motor Company (YMC) recently announced the establishment of Yamaha Motor Research & Development India (YMRI) at its Greater Noida facility is looking at leveraging India as a procurement hub to source the product and parts for its global market.

BMW Motorrad has gone for a tie-up with TVS Motor Company to leverage a cost competitive manufacturing base. “If you don’t have the best quality of a premium product, then you have problems later on. India is the right place for high-quality mass production.” According to Stephan Schaller, President, BMW Motorrad, Schaller who recently was in India, “India is the right place for high quality mass production — to source, produce, to ship to places in the world where we can sell them… and one of these places will also be India”.

All the three top Indian two wheelers manufacturers had successful tie ups with the Japanese manufacturers such as Honda, Kawasaki, and Suzuki. Today they are on own for their mass produced vehicles, but for the upper end product each have some strong tie-ups such as Bajaj with KTM of Austria and Kawasaki, TVS Motors with BMW. Bajaj Auto, distributor of Kawasaki Bikes in India, has recently launched Kawasaki Ninja 300 in the domestic market. It is mutually respectable working. As reported, Bajaj Auto International Holdings (BAIHBV), a Netherlands-based wholly-owned subsidiary of Bajaj Auto, has raised its stake in KTM Power Sports in an attempt to tighten its grip on Europe’s second-largest power sports bike manufacturer.TVS Motor and BMW Motorrad recently announced to jointly make sub-500cc bikes in India to be sold worldwide. As a result, TVS can now access the best in technology and R&D for its two-wheeler operations. In other words, the marketing end will have to gear up and capitalize on the BMW brand equity association to plan its strategy.

Indian 2- wheelers are contemporary in style and sleek in design and are gradually being accepted in the global markets too. The markets in more than fifty countries of Asia, Africa, Middle East, South America and even parts of Europe are gradually emerging as new destinations for the Indian two wheelers.

According to analysts, India is getting close to peak penetration levels. “Every fifth person in the addressable market owns a two-wheeler,” says a report by Macquarie Research, whose research accounted for the age group between 15 and 59 years of age and income greater than Rs.60,000 per month.

Honda Motorcycle and Scooter India (HMSI) recently launched its cheapest motorcycle in the mass commuter segment, the 110cc Dream Neo, to take on former partner HeroMotoCorp’s flagship model, Splendor.

Royal Enfield, the oldest player under new management is trying to make its presence felt. Even in present slowdown, Royal Enfield continues to buck the trend and has strong demand for its products with waiting period ranging from three to six months depending on the region. An all new 1, 50,000 units plant coming up very soon to reduce the waiting time.M&M is also trying after its acquisition of Kinetic Motors to be a major player in 2-wheeler. Many global players such as Harley Davidson, Hyosung, and Ducati of high-end motor cycles have entered India to grab that market that is going to grow. A new wave of electrical 2-wheelers is also trying to take advantage of the government subsidy that for better environmental advantages.

As under such a competitive market, the government of India has cleared the financial package for ailing Scooters India. One can very well imagine its political motive.

This entry was posted in management, manufacturing. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s