After witnessing tremendous growth, two wheeler industry is dipping downwards towards sluggish demand and single digit growth. As estimated by us, two wheeler industry reported growth merely of 6% in September 2012 quarter as compared to 15 % last year in same period.
Downfall in economic growth, drying out of rural demand, hike in petrol price and interest rate, increasing cost, over supply due to increasing competition from MNCs have left Indian domestic two wheeler market at a stagnant point.
In July-September quarter 2012, third largest two-wheeler maker of domestic Indian market, Bajaj Auto reported 10 % fall in motorcycle sales to 9.29 lakh units. Its domestic motorcycle sales fell by 12% to 6,01,876. It's three wheeler sales were down by 12 % to 1.21 lakh units. Its exports also fell by 5% per cent during the quarter on Y-o-Y basis. TVS Motors equally had a slope down in sales falling by almost 30% to 2.86 lakh units in current year as compared to 4 lakh units last year in same period. Their net profit was down by 40% in September quarter Y-o-Y. Their exports fell by 36 %. Hero MotoCorp posted its worst sales decline in any quarter for the past decade with a 14% dip to 13.32 lakh two wheelers, down from the 15.44 lakh sold in the same quarter last year. According to reports, this year's quarterly sale by domestic players is supported largely by piling up of inventory at their respective dealers.
At the same time, there is another side to this coin. Domestic players are losing grounds and MNC players like Honda, Suzuki & Yamaha are strengthening their position in Indian market.
Honda which operates a wholly owned subsidiary Honda Motorcycle and Scooters India had posted impressive gains as its sales increased 43.40% to 7,04,803 units in the first quarter of FY13 compare to 4,91,510 units sold last year in the same quarter. Honda wants
The company, which recently appointed Bollywood star Akshay Kumar as its brand ambassador, has so far invested Rs 5,000 crore in
Besides this, the firm is all set to start production at the upcoming 3rd plant in Narsapur facility in Kolar district, near Bengaluru from January 2013. In order to further improve its after-sales service network, it will start an additional second line of production in its 2nd plant in Rajasthan in March 2013 to achieve its targets. HMSI will set up 20 zonal offices (currently 5) with centers imparting training to nearly 2,000 technicians from within the dealers' network in the next two years.
Suzuki and Yamaha are as determined to push the envelope aggressively while Piaggio has already launched Vespa and looking forward for much more to come. Suzuki , with its continued investment in its current plant in Gurgaon, as well as setting up on new plant in Rohtak ( Haryana), plans to deliver 1 million two wheelers by 2014. Suzuki showed growth of 38.50 % in September 2012 quarter with a rise of sale from 83,082 units sold last year to 1,15,086 units sold this year in same quarter.
Yamaha plans to invest Rs 1500 crore on capacity expansion and new product development in the next two years, as it looks forward to sell 10 lakh two-wheelers by 2014 in
Market leader, Hero MotoCorp, who recently parted ways with Honda, is looking forward for capturing a larger chunk of market. Hero MotoCorp recently announced an investment of over Rs 2575 crore in setting up two new plants, expanding capacity at existing plants and in building an integrated R&D centre (at Kukas in Rajasthan). With this expansion, total installed capacity of the company would be touching more than nine million units in two years' time, which is equal to 7.5 lakhs units per month. They have the benefit to have the most advanced technology that Honda had given them.
Recent research shows that Bajaj started giving away huge discounts of around Rs.3000-Rs.5000 after the festive season from end of November 2012. Hero & TVS are heard to follow similar trend.
The point to capture here is clear. Moderating demand of two wheeler along with increasing competition from Japanese makers is indeed a threat to our domestic players. When the market is slowing down and competition from technologically superior MNC players is stiffening, who is losing the game? The answer can be found in our recent results where domestic players like Bajaj, TVS, and Hero have began the downward ride.
As seen in the past with the other industries of
Click on given below link for upcoming production plant of two wheeler industry
http://www.autocarindia.com/
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