01-12-2012, 12:44 PM
Indian Two Wheeler Industry
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INTRODUCTION
India is the second largest two-wheeler market in the world. Two-wheeler sales are growing stupendously in the country. Of the total automobiles sold in the country in 2010 -11, 76% were two-wheelers, showing their high demand due to convenience, affordability and efficiency. Segment-wise, motorcycles dominate the two-wheeler market and have attained the highest growth rate in recent past. In fact, India is the largest motorcycle manufacturer in the world and is fast emerging as an export base for global automobile players. Global two-wheeler makers are foraying into the Indian market to leverage from the country’s unmatched advantages. And with global assemblers entering India, the phenomenon of ‘follow-source’ is also happening. Now there are running parallel global networks of both assemblers and Tier-1 suppliers. The other reason for why two-wheeler manufacturers are flocking to the country is the excellent R&D and design services it provides. Increasing use of high-end software in auto designing and R&D has made the Indian auto majors leverage the software prowess of the country and gain an edge over their competitors. So foreign players also want to capitalize on this expertise to gain competitive advantage and expand their bottom lines. Presently, India is a largest market for motorcycles with low engine displacement (entry level bikes) as they offer good fuel economy and are cost-effective too. Motorcycle sales have been growing phenomenally since past many years in the country but the future will see some restructuring. Though motorcycle sales will keep growing impressively but the major surprise will come from scooter segment. The major two segment of two wheeler market shows a huge growth prospects for the automobile manufaturers presently and in future also.
Future of the Two wheeler Industry in India
India has always been one of the biggest destinations of automobile majors throughout the world. Not without any reason. It has the second largest two wheeler market in the world, fourth largest commercial vehicle market in the world and the eleventh largest passenger car market in the world. So as it is, it’s a very big and a potential hub for a lot of market leaders elsewhere in the world to come and invest.
Auto Expo is here again. And the biggest attraction this time around is the Rs. 1 lakh people's car from the greatest car manufacturers in India, the Tatas. Ratan Tata, as promised, launched the car called "Nano" today on the inaugural day of the Auto Expo 2008 at New Delhi. With more than 35 new passenger car models expected to hit the Indian roads in the coming financial year, it’s going to be rather interesting to watch the scenarios unfold in the Indian Automobile market.
First and the foremost, the main important question that has always been raised is, how is going to affect the two wheeler industry? Well that’s a really interesting and a debatable point. I have always been very keen to see how it’s going to unfold itself. With the introduction of the low price car, many feel its going to affect the two wheeler market. I have more than a couple of reasons to strongly believe it will not.
One main reason why I believe it is not going to affect too much is because as quoted by Tata, Rs. 1 lakh is going to be the dealer price (not ex showroom price) for the car. So lot remains to be added to it. VAT, excise duty, dealer margin, etc added on will give the ex showroom price. And on that one has to add the cost of registration, life tax, etc. So I don’t expect it, to create a hole in the buyers pocket less than Rs 1.4 lakhs minimum. And that’s only about the basic model. As the luxury increases, the cost escalates accordingly. A normal Indian two wheeler comes around a price tag of around Rs.50000. So I don’t think many people will pay three times more and go for a car, just because it is cheap.