Brings Power to the People with the mighty 150cc ‘Bharat Bike’ at Rs 42,000 only
Positioned as the ‘Bharat’ bike, the Boxer is designed to provide a comfortable riding experience in all kind of demanding situations and to reach out to customers beyond the big cities and towns.
The new Boxer is the first of its kind – designed for use and abuse in all kinds of terrain. Conventional 100 cc bikes perform adequately on smooth roads but are not geared to handle the tough terrain outside the cities. The Boxer’s 150cc engine delivers 12 Ps power and 12.26 Nm torque – nearly 50% more than the standard 100 cc’s – to make a demanding commute with any kind of load and on any kind of terrain situation far easier. The bike boasts of host of other strength advantages in terms of its rugged frame, swing arm and chassis, metal body parts, twin spring SNS suspension and a heavy duty carrier. The wider tyre ensures both grip and stability for any road and load condition.
What more the Boxer 150 with an electric start sports an attractive price tag of Rs 42,000 – a customer can now a own a 150 cc at the price less than that of most 100cc bikes.
This launch is a part of our strategy of providing relevant differentiated products to meet the needs of a variety of consumers. A significant segment of consumers in the smaller towns need a powerful, rugged utility bike. The Boxer has been designed as an “SUV on two wheels” to specifically meet their requirement.
The focus of the bike is on performance with a bigger engine, a bigger frame, bigger tyres, bigger suspension, bigger headlights and a bigger seat, we feel that this one fits the bill for the mighty “Bharat” bike that the real India needs.”
Currently smaller 100cc bikes are dominant in the towns and villages across the country. This big Bharat bike with a bigger heart provides Bajaj Auto with a huge opportunity to attract consumers looking out for a safe comfortable ride on the roughest of roads.
Need of the hour is better governance, says Rahul Bajaj, Chairman, Bajaj Auto
Everyone in the corporate sector and in the government knows what has to be done. We don't need an expert to tell us what to do for infrastructure, energy, inflation, or growth. These are all known. But there is no political will to do the right thing.
The two major parties — Congress and BJP — keep blaming each other. Political expediency prevails. Each party is looking at retaining or coming back to power. They pay lip service to growth and welfare of the poor.
I strongly recommend that while Congress and BJP may continue to oppose each other politically, it's about time they joined hands to implement the right economic policies on which there is, by and large, a consensus. Otherwise, we shall see our political parties criticising each other, working towards elections and not worrying about the good of the nation.
One hope I have springs from the recent election results in states like Bihar, Tamil Nadu, Delhi, Gujarat and West Bengal where the electorate has rewarded performance and thrown out parties considered corrupt and nonperforming.
However, after the next parliamentary elections (whenever they take place. I am not saying May 2014...there may be a mid-term election)...I believe the political and economic situation will improve substantially due to Anna Hazare's movement and the many new laws — the Lokpal bill, judicial accountability bill, whistle blower bill, etc — that will come into force soon. I am convinced, corruption and inefficiencies in the functioning of the government and the private sector will come down substantially.
The two major parties — Congress and BJP — keep blaming each other. Political expediency prevails. Each party is looking at retaining or coming back to power. They pay lip service to growth and welfare of the poor.
I strongly recommend that while Congress and BJP may continue to oppose each other politically, it's about time they joined hands to implement the right economic policies on which there is, by and large, a consensus. Otherwise, we shall see our political parties criticising each other, working towards elections and not worrying about the good of the nation.
One hope I have springs from the recent election results in states like Bihar, Tamil Nadu, Delhi, Gujarat and West Bengal where the electorate has rewarded performance and thrown out parties considered corrupt and nonperforming.
However, after the next parliamentary elections (whenever they take place. I am not saying May 2014...there may be a mid-term election)...I believe the political and economic situation will improve substantially due to Anna Hazare's movement and the many new laws — the Lokpal bill, judicial accountability bill, whistle blower bill, etc — that will come into force soon. I am convinced, corruption and inefficiencies in the functioning of the government and the private sector will come down substantially.
Honda to launch scooter, bike to get 2.1 m sales
With the commissioning of its second plant and launch of new models, Honda Motorcycle & Scooters India (HMSI) is confident of achieving its FY12 sales target of 2.1 million, despite a slow down outlook. The company also plans to launch a new scooter and a bike next year.
While other two wheeler makers such as Hero MotoCorp, Bajaj and TVS reported fall in sales in the range of 5-15 per cent in October when compared with September this year, Honda Motorcycle managed to maintain its sales volumes with a marginal drop in sales. The company sold 178,181 two wheelers in October, against 178,146 units in September.
“We expect this growth momentum to continue. We plan to sell 21 lakh units from our Manesar and Tapukara plant and end the fiscal FY’11-12 with an estimated 27 per cent growth over 16.56 lakh units sold in FY’10-11. We are on track to achieve this target,” NK Rattan, vice-president – sales and marketing, HMSI told Financial Chronicle.
The second plant of HMSI at Tapukara, Rajasthan commenced operations in July this year. Already the first phase of 0.6 million units production capacity has been completed. At the second factory in Rajasthan, it intends to increase the total capacity of 1.2 million units by March 2012. “This shall ease out the waiting period to less than one month,” Rattan said.
He also said the present order booking is around two months and the company is in a position to serve the customers faster. “Aviator and CBF Stunner are doing very well,” he added, but didn’t provide the details.
The company is mulling more launches to boost sales further. It plans to introduce a new scooter model at the upcoming Auto Expo in New Delhi in January, followed by a motorcycle targeted at youngsters early next fiscal.
Further, to meet the growing demand in South India, the company has recently laid the foundation stone of its third plant in Karnataka. With its expansion from 16.5 lakh units in FY2010-11 to 40 lakh units in early half of 2013, the company hopes to reduce waiting periods for all its products.
“HMSI continues to maintain its leadership position in the scooters segment through its flagship brand Activa (besides Aviator and Dio) enjoying a market share of 45.4 per cent in Q2, 2011- 12,” according to Subrata Ray, senior vice-president – corporate ratings, Icra.
While other two wheeler makers such as Hero MotoCorp, Bajaj and TVS reported fall in sales in the range of 5-15 per cent in October when compared with September this year, Honda Motorcycle managed to maintain its sales volumes with a marginal drop in sales. The company sold 178,181 two wheelers in October, against 178,146 units in September.
“We expect this growth momentum to continue. We plan to sell 21 lakh units from our Manesar and Tapukara plant and end the fiscal FY’11-12 with an estimated 27 per cent growth over 16.56 lakh units sold in FY’10-11. We are on track to achieve this target,” NK Rattan, vice-president – sales and marketing, HMSI told Financial Chronicle.
The second plant of HMSI at Tapukara, Rajasthan commenced operations in July this year. Already the first phase of 0.6 million units production capacity has been completed. At the second factory in Rajasthan, it intends to increase the total capacity of 1.2 million units by March 2012. “This shall ease out the waiting period to less than one month,” Rattan said.
He also said the present order booking is around two months and the company is in a position to serve the customers faster. “Aviator and CBF Stunner are doing very well,” he added, but didn’t provide the details.
The company is mulling more launches to boost sales further. It plans to introduce a new scooter model at the upcoming Auto Expo in New Delhi in January, followed by a motorcycle targeted at youngsters early next fiscal.
Further, to meet the growing demand in South India, the company has recently laid the foundation stone of its third plant in Karnataka. With its expansion from 16.5 lakh units in FY2010-11 to 40 lakh units in early half of 2013, the company hopes to reduce waiting periods for all its products.
“HMSI continues to maintain its leadership position in the scooters segment through its flagship brand Activa (besides Aviator and Dio) enjoying a market share of 45.4 per cent in Q2, 2011- 12,” according to Subrata Ray, senior vice-president – corporate ratings, Icra.
Govt plans Rs 2,500-cr fund for auto component sector
A special fund meant for technology and modernisation of the industry is now likely to find its way in the 12th Five-Year Plan. In a culmination of requests by the auto component sector spanning three years, the Government plans to set up a Rs 2,500 crore development fund for the auto component sector.
According to documents accessed by Business Line, the new initiative called ‘Technology Upgradation and Development Scheme' would aim to give the $40-billion domestic component industry access to finance at reduced rates of interest. This has been suggested in the Report of the Working Group on Automobile Sector for the 12th Five-Year plan (2012-17).
Soft loans
The ‘Auto Component Technology Development Fund' will also be created under the same scheme. This would be used for financing half of the project cost through soft loans, with an interest subvention of four per cent that would be met from the fund corpus.
The total corpus of this fund will be to the tune of Rs 2,500 crore, though the initial funding needed to be pumped in by the Government for the “interest subvention requirement” would be around Rs 300 crore, a senior official said.
“We have been pushing for this for the last three years. We had asked for a Rs 7,500 crore fund over five years, but as an interest subvention. The industry will require Rs 15,000 crore in the period for research and upgradation, so we were looking for the Government to put up half of that amount,” Mr Vinnie Mehta, Director-General, Automotive Component Manufacturers' Association said.
More competitive
With many global automakers setting up base at home and the market showing steady growth, such a fund is expected to make the domestic industry much more competitive in terms of high technology component development. A lot of top-end electronic, electrical and some key materials (steel alloys/plastics) are imported.
“The industry lacks access to new technology, because it's small in size by global standards. Currently, the customer gives us the blueprint and we just produce, but now we want to do more value addition. We have identified three key areas – light weighting, processes and emissions,” Mr Mehta said.
The industry, which aims to almost triple its size to $115 billion by 2020, envisages annual capital investment of up to $3 billion.
Separately, an ‘Automotive Component Cluster Development Programme' is also being planned. This would look at process and productivity improvement in the sector.
According to documents accessed by Business Line, the new initiative called ‘Technology Upgradation and Development Scheme' would aim to give the $40-billion domestic component industry access to finance at reduced rates of interest. This has been suggested in the Report of the Working Group on Automobile Sector for the 12th Five-Year plan (2012-17).
Soft loans
The ‘Auto Component Technology Development Fund' will also be created under the same scheme. This would be used for financing half of the project cost through soft loans, with an interest subvention of four per cent that would be met from the fund corpus.
The total corpus of this fund will be to the tune of Rs 2,500 crore, though the initial funding needed to be pumped in by the Government for the “interest subvention requirement” would be around Rs 300 crore, a senior official said.
“We have been pushing for this for the last three years. We had asked for a Rs 7,500 crore fund over five years, but as an interest subvention. The industry will require Rs 15,000 crore in the period for research and upgradation, so we were looking for the Government to put up half of that amount,” Mr Vinnie Mehta, Director-General, Automotive Component Manufacturers' Association said.
More competitive
With many global automakers setting up base at home and the market showing steady growth, such a fund is expected to make the domestic industry much more competitive in terms of high technology component development. A lot of top-end electronic, electrical and some key materials (steel alloys/plastics) are imported.
“The industry lacks access to new technology, because it's small in size by global standards. Currently, the customer gives us the blueprint and we just produce, but now we want to do more value addition. We have identified three key areas – light weighting, processes and emissions,” Mr Mehta said.
The industry, which aims to almost triple its size to $115 billion by 2020, envisages annual capital investment of up to $3 billion.
Separately, an ‘Automotive Component Cluster Development Programme' is also being planned. This would look at process and productivity improvement in the sector.
Hero raises wages across the board
In the middle of an economic slowdown, an across-the-board pay increase qualifies as a counter-intuitive response. But that’s exactly what Hero MotoCorp Ltd, the world’s biggest two-wheeler maker, has done, according to three people familiar with the development.
For white-collar employees, the pay has been raised as much as 30%, while workers at the Dharuhera plant have got a monthly increase of Rs. 6,500 each. The firm is drawing up a similar pay structure for workers at its Gurgaon and Haridwar plants.
The move isn’t so much counter-intuitive as reflective of the new ground reality that prevails across Haryana’s industrial estates in the Gurgaon-Manesar-Dharuhera belt. No company wants to go through what Maruti Suzuki India Ltd, the country’s biggest car maker, had to endure in the past few months.
A series of strikes at Maruti’s Manesar plant led to an estimated loss in revenue of Rs. ,500 crore for the company and took a substantial bite out of passenger car sales, especially since it took place on the eve of the festival season, traditionally a time of increased demand.
Hero’s wage increase will help ensure that there’s no disaffection among workers, reeling under the effects of spiralling inflation, as the company seeks to expand globally and step up vehicle development.
The idea is to infuse confidence among employees before we embark on a new journey,” said a top company official, seeking anonymity. “Our intent was very clear. We want to be a global company, and in order to do that, we have to hold all our stakeholders together.”
Hero has 5,700 employees in all, according to a spokesperson who didn’t provide a break-up of white- and blue-collar workers..
The pay increase for blue-collar workers will be spread over three years depending on their staying with Hero. In the first year, they will be paid 50% of the increase, and 25% each will get added to their pay in the second and third years.
Hero confirmed the pay revision for white-collar employees, but did not comment on workers’ pay, in an emailed response. It said the company gives utmost importance to the welfare of employees and their families.
“In keeping with this objective, the company, as a matter of practice, undertakes revision of the compensation and benefit systems from time to time,” a company spokesperson said in the email. “As a part of this routine initiative, we have also recently undertaken a revision of the compensation structure across the board within the company.”
Another person familiar with the development said the step was aimed at stemming departures, especially after the company parted ways with former joint venture partner Honda Motor Co. Ltd.
“The white-collar employees have got a pay hike of 30%,” this Hero employee said on condition of anonymity. “The exercise is an attempt to contain attrition as people had started leaving the firm after the split.”
The company did not respond to a question on whether attrition was a reason for such a step. Neither did it explain the rationale behind such an exercise in the middle of the fiscal year.
It said the move “aims at providing alignment to the best global practices in the area of compensation and benefits, thus ensuring that we truly unleash the human potential and create a sense of achievement as we stride towards our new goals”.
The second person cited said the wage structure for blue-collar workers in the Gurgaon plant is up for renewal in 2012. “Wages of Dharuhera workers were revised earlier this year,” he said.
Despite most sectors, including cars and commercial vehicles, suffering a slump, two-wheeler sales have not been hit and Hero has benefited from that.
The increase in staff cost will not have much impact on profit as there has been a rise in net sales, which have widened the margin to 15.8% in the second quarter of the current fiscal from 11.2% in the third quarter last fiscal, said Nikhil Deshpande, a sector analyst with PINC Research, a Mumbai-based brokerage firm.
“The staff cost will remain around 3% (of net sales). I think raw material costs will impact its margin more than the expenditure made on its employees,” he said. The staff cost has gone up to Rs. 180 crore from Rs. 156 crore in the same period.
The company sold 3.5 million units in the seven months to October, registering a growth of 18.54% from the year-ago period. In the first two quarters of this fiscal, Hero posted record net profits of Rs. 558 crore and Rs. 604 crore, respectively.
Staff costs are set to increase further as Hero looks to expand operations overseas and it invests heavily in its own research and development (R&D), said an expert with a leading consultancy, who did not want to be named.
“They have been on a hiring spree since the beginning of this year,” he said. “Most of the hiring is taking place in the R&D department as it wants to be self-dependent for technology and it wants that to happen as soon as possible.”
The company has been actively strengthening its R&D team by hiring engineers from rivals such as Bajaj Auto Ltd and TVS Motor Co. Ltd. Hindustan Times reported in March that the company has appointed long-term Bajaj Auto veteran T.M. Balaraman as a technical adviser to its R&D team.
Since then, it has hired at least 250 engineers and plans to take on at least 100 more in the coming months. The company plans to deploy its R&D executives in areas such as regulations, design, technology and engine development to bring a greater focus to the growing talent pool. It is also in the process of setting up its own R&D centre.
“Besides, they should be able to start their export operations in this fiscal. This will require a massive investment for creating a marketing network abroad,” said the expert with the consultancy firm..
For white-collar employees, the pay has been raised as much as 30%, while workers at the Dharuhera plant have got a monthly increase of Rs. 6,500 each. The firm is drawing up a similar pay structure for workers at its Gurgaon and Haridwar plants.
The move isn’t so much counter-intuitive as reflective of the new ground reality that prevails across Haryana’s industrial estates in the Gurgaon-Manesar-Dharuhera belt. No company wants to go through what Maruti Suzuki India Ltd, the country’s biggest car maker, had to endure in the past few months.
A series of strikes at Maruti’s Manesar plant led to an estimated loss in revenue of Rs. ,500 crore for the company and took a substantial bite out of passenger car sales, especially since it took place on the eve of the festival season, traditionally a time of increased demand.
Hero’s wage increase will help ensure that there’s no disaffection among workers, reeling under the effects of spiralling inflation, as the company seeks to expand globally and step up vehicle development.
The idea is to infuse confidence among employees before we embark on a new journey,” said a top company official, seeking anonymity. “Our intent was very clear. We want to be a global company, and in order to do that, we have to hold all our stakeholders together.”
Hero has 5,700 employees in all, according to a spokesperson who didn’t provide a break-up of white- and blue-collar workers..
The pay increase for blue-collar workers will be spread over three years depending on their staying with Hero. In the first year, they will be paid 50% of the increase, and 25% each will get added to their pay in the second and third years.
Hero confirmed the pay revision for white-collar employees, but did not comment on workers’ pay, in an emailed response. It said the company gives utmost importance to the welfare of employees and their families.
“In keeping with this objective, the company, as a matter of practice, undertakes revision of the compensation and benefit systems from time to time,” a company spokesperson said in the email. “As a part of this routine initiative, we have also recently undertaken a revision of the compensation structure across the board within the company.”
Another person familiar with the development said the step was aimed at stemming departures, especially after the company parted ways with former joint venture partner Honda Motor Co. Ltd.
“The white-collar employees have got a pay hike of 30%,” this Hero employee said on condition of anonymity. “The exercise is an attempt to contain attrition as people had started leaving the firm after the split.”
The company did not respond to a question on whether attrition was a reason for such a step. Neither did it explain the rationale behind such an exercise in the middle of the fiscal year.
It said the move “aims at providing alignment to the best global practices in the area of compensation and benefits, thus ensuring that we truly unleash the human potential and create a sense of achievement as we stride towards our new goals”.
The second person cited said the wage structure for blue-collar workers in the Gurgaon plant is up for renewal in 2012. “Wages of Dharuhera workers were revised earlier this year,” he said.
Despite most sectors, including cars and commercial vehicles, suffering a slump, two-wheeler sales have not been hit and Hero has benefited from that.
The increase in staff cost will not have much impact on profit as there has been a rise in net sales, which have widened the margin to 15.8% in the second quarter of the current fiscal from 11.2% in the third quarter last fiscal, said Nikhil Deshpande, a sector analyst with PINC Research, a Mumbai-based brokerage firm.
“The staff cost will remain around 3% (of net sales). I think raw material costs will impact its margin more than the expenditure made on its employees,” he said. The staff cost has gone up to Rs. 180 crore from Rs. 156 crore in the same period.
The company sold 3.5 million units in the seven months to October, registering a growth of 18.54% from the year-ago period. In the first two quarters of this fiscal, Hero posted record net profits of Rs. 558 crore and Rs. 604 crore, respectively.
Staff costs are set to increase further as Hero looks to expand operations overseas and it invests heavily in its own research and development (R&D), said an expert with a leading consultancy, who did not want to be named.
“They have been on a hiring spree since the beginning of this year,” he said. “Most of the hiring is taking place in the R&D department as it wants to be self-dependent for technology and it wants that to happen as soon as possible.”
The company has been actively strengthening its R&D team by hiring engineers from rivals such as Bajaj Auto Ltd and TVS Motor Co. Ltd. Hindustan Times reported in March that the company has appointed long-term Bajaj Auto veteran T.M. Balaraman as a technical adviser to its R&D team.
Since then, it has hired at least 250 engineers and plans to take on at least 100 more in the coming months. The company plans to deploy its R&D executives in areas such as regulations, design, technology and engine development to bring a greater focus to the growing talent pool. It is also in the process of setting up its own R&D centre.
“Besides, they should be able to start their export operations in this fiscal. This will require a massive investment for creating a marketing network abroad,” said the expert with the consultancy firm..
M&M's Kinetic Motors buyout yet to reap benefits 3years on
Three years and nearly three hundred crore rupees later, Mahindra & Mahindra, the country’s largest utility vehicles maker, is struggling to secure the two-wheeler beachhead it won by buying Kinetic Motors. The purchase of 80% in Kinetic had made the group India’s only automaker serving the full menu of two-wheelers, cars, electric vehicles, SUVs, tractors and trucks.
Times were better in mid-2008 and the two-wheeler market was booming, but the decision still seemed fraught with risks: Any newcomer would run into fierce competition from the frugal engineering capabilities and vast network of Hero MotoCorp (then Hero Honda), Bajaj Auto and TVS Motor. The business logic, according to the company, was that a large chunk of the market was still ‘under-penetrated’.
Did the logic work?
Over a year after chairman Anand Mahindra called its upcoming bikes Stallio and the Mojo the “potent blend of global technology and innovation taking the category to the...
next level,” both seem to have sputtered.
Earlier this year, Mahindra Two Wheelers was forced to recall the 110 cc Stallio, the lone horse in its motorcycle stable, after gearbox complaints surfaced. There are no Stallios available in the market today. Dealers say the company is planning a relaunch, and that the Stallio will be available next month. This could not be independently verified. There is no sign yet of the much-hyped 300-cc Mojo either. At present, the company has four scooter models – Duro, Kine, Flyte and Rodeo.
According to the Society of Indian Automobile Manufacturers, the company's October production fell 28.85% to 12,843 units while in the April-October period, it declined 5.4% to 93,376 units. In the seven-month period since the beginning of the fiscal, sales inched up 3.4% to 92,168 units. In October, its sales stood at 17,933 units, down 2.69%.
According to available data, losses quadrupled from Rs 22.40crore in 2008-09 to Rs 96.9 crore in 2009-10. Industry sources said M&M, which paid Rs 110 crore to purchase Kinetic, had to follow it up with Rs 180 crore more to wipe out losses. The funds were infused in two tranches: on June 28 and July 1. Kinetic, which still holds 20% stake in the company brought Rs 30 crore, taking the total investment post-acquisition to nearly Rs 210 crore.
Confirming the development, a company spokesperson said the move brought out the “commitment of Mahindra Group to the two-wheeler business”. The spokesperson said that since acquisition, Mahindra Two Wheeler (MTWL) has invested its funds in significantly upgrading its R&D facilities and adding new manufacturing capacity. “MTWL made a capital call on its shareholders to fund its ambitious growth plans. The shareholders have provided adequate funding to grow the business. We will continue to invest in our growth and the success
Times were better in mid-2008 and the two-wheeler market was booming, but the decision still seemed fraught with risks: Any newcomer would run into fierce competition from the frugal engineering capabilities and vast network of Hero MotoCorp (then Hero Honda), Bajaj Auto and TVS Motor. The business logic, according to the company, was that a large chunk of the market was still ‘under-penetrated’.
Did the logic work?
Over a year after chairman Anand Mahindra called its upcoming bikes Stallio and the Mojo the “potent blend of global technology and innovation taking the category to the...
next level,” both seem to have sputtered.
Earlier this year, Mahindra Two Wheelers was forced to recall the 110 cc Stallio, the lone horse in its motorcycle stable, after gearbox complaints surfaced. There are no Stallios available in the market today. Dealers say the company is planning a relaunch, and that the Stallio will be available next month. This could not be independently verified. There is no sign yet of the much-hyped 300-cc Mojo either. At present, the company has four scooter models – Duro, Kine, Flyte and Rodeo.
According to the Society of Indian Automobile Manufacturers, the company's October production fell 28.85% to 12,843 units while in the April-October period, it declined 5.4% to 93,376 units. In the seven-month period since the beginning of the fiscal, sales inched up 3.4% to 92,168 units. In October, its sales stood at 17,933 units, down 2.69%.
According to available data, losses quadrupled from Rs 22.40crore in 2008-09 to Rs 96.9 crore in 2009-10. Industry sources said M&M, which paid Rs 110 crore to purchase Kinetic, had to follow it up with Rs 180 crore more to wipe out losses. The funds were infused in two tranches: on June 28 and July 1. Kinetic, which still holds 20% stake in the company brought Rs 30 crore, taking the total investment post-acquisition to nearly Rs 210 crore.
Confirming the development, a company spokesperson said the move brought out the “commitment of Mahindra Group to the two-wheeler business”. The spokesperson said that since acquisition, Mahindra Two Wheeler (MTWL) has invested its funds in significantly upgrading its R&D facilities and adding new manufacturing capacity. “MTWL made a capital call on its shareholders to fund its ambitious growth plans. The shareholders have provided adequate funding to grow the business. We will continue to invest in our growth and the success
FIIs scale up Investment in Auto Sector
Even as weak cues from global markets have triggered exit alarms, foreign institutional investors (FIIs) have scaled up their investments in domestic automobile companies in the second quarter of the current financial year.
According to data available from the Bombay Stock Exchange (BSE), FII inflows have increased across the board in passenger vehicle, commercial vehicle and two-wheeler manufacturing companies between July and September.
While FIIs’ stake in Hero MotoCorp has increased to 34.8 per cent in the July-September period from 33.7 per cent the previous quarter, in TVS Motor it has risen to 4.7 per cent from 3.5 per cent. For Bajaj Auto, too, FIIs’ stake rose marginally to 15.9 per cent in the quarter.
An analyst with a Mumbai-based brokerage said: “While the overall sales have slowed in the industry, two-wheeler companies have posted strong volume growth in the second quarter.
Additionally, with commodity prices falling, their profitability is likely to improve in the coming quarters. They are proving to be relatively safe bets for FIIs.”
At 17.4 per cent, volume growth in the two-wheeler segment has outpaced that of the industry (14.4 per cent).
While net sales of these three companies have expanded 15-20 per cent, net profit for TVS zoomed 39.5 per cent. Hero MotoCorp and Bajaj Auto saw their net profits rising 19.39 per cent and six per cent, respectively. Higher realisations and stable commodity prices helped Bajaj Auto and TVS Motor expand operating margins.
Data compiled by the Business Standard Research Bureau show FIIs have taken out Rs 10,565 crore between July and September — the highest this calendar year. While FIIs had pulled out Rs 1,038 crore in the April-June quarter, the combined withdrawal had been higher at Rs 7,931 crore in the January-March quarter.
Interestingly, while passenger vehicle sales growth slowed down to a meagre 1.84 per cent between April and September, FIIs continued to raise stake in Maruti Suzuki and Mahindra & Mahindra (M&M).
Industry experts say, low vehicle penetration levels mean that long-term prospects in the Indian market hold good. So, investments have continued to rise in the sector.
Therefore, FII stake in Maruti Suzuki went to 19.2 per cent, while in M&M it increased to 26.4 per cent from 23.6 per cent in the previous quarter. Robust commercial vehicle sales also helped Ashok Leyland scale up FII interest by 20 per cent to 16.2 per cent on a quarter-on-quarter basis.
The Society of Indian Automobile Manufacturers, the industry body, pointed out that despite a sense of market slowdown, India remained the second fastest-growing passenger vehicle market in the world, with 9.9 per cent increase in sales in January-August period.
Germany topped the list, growing by 11.20 per cent in the period. US, Brazil and China followed, reporting growth rates of 9.3 per cent, 7.5 per cent and six per cent growth, respectively.
According to data available from the Bombay Stock Exchange (BSE), FII inflows have increased across the board in passenger vehicle, commercial vehicle and two-wheeler manufacturing companies between July and September.
While FIIs’ stake in Hero MotoCorp has increased to 34.8 per cent in the July-September period from 33.7 per cent the previous quarter, in TVS Motor it has risen to 4.7 per cent from 3.5 per cent. For Bajaj Auto, too, FIIs’ stake rose marginally to 15.9 per cent in the quarter.
An analyst with a Mumbai-based brokerage said: “While the overall sales have slowed in the industry, two-wheeler companies have posted strong volume growth in the second quarter.
Additionally, with commodity prices falling, their profitability is likely to improve in the coming quarters. They are proving to be relatively safe bets for FIIs.”
At 17.4 per cent, volume growth in the two-wheeler segment has outpaced that of the industry (14.4 per cent).
While net sales of these three companies have expanded 15-20 per cent, net profit for TVS zoomed 39.5 per cent. Hero MotoCorp and Bajaj Auto saw their net profits rising 19.39 per cent and six per cent, respectively. Higher realisations and stable commodity prices helped Bajaj Auto and TVS Motor expand operating margins.
Data compiled by the Business Standard Research Bureau show FIIs have taken out Rs 10,565 crore between July and September — the highest this calendar year. While FIIs had pulled out Rs 1,038 crore in the April-June quarter, the combined withdrawal had been higher at Rs 7,931 crore in the January-March quarter.
Interestingly, while passenger vehicle sales growth slowed down to a meagre 1.84 per cent between April and September, FIIs continued to raise stake in Maruti Suzuki and Mahindra & Mahindra (M&M).
Industry experts say, low vehicle penetration levels mean that long-term prospects in the Indian market hold good. So, investments have continued to rise in the sector.
Therefore, FII stake in Maruti Suzuki went to 19.2 per cent, while in M&M it increased to 26.4 per cent from 23.6 per cent in the previous quarter. Robust commercial vehicle sales also helped Ashok Leyland scale up FII interest by 20 per cent to 16.2 per cent on a quarter-on-quarter basis.
The Society of Indian Automobile Manufacturers, the industry body, pointed out that despite a sense of market slowdown, India remained the second fastest-growing passenger vehicle market in the world, with 9.9 per cent increase in sales in January-August period.
Germany topped the list, growing by 11.20 per cent in the period. US, Brazil and China followed, reporting growth rates of 9.3 per cent, 7.5 per cent and six per cent growth, respectively.
Electric two wheelers get costlier, sales drop
The sales growth of electric two-wheelers is scaling down following the price hike announced by the some manufacturers in their attempt to reduce the impact the depreciation of domestic unit in the last few weeks.
According to the figures provided by Society of Manufacturers of Electric Vehicles, as many as 5 to 6 companies have announced the 3-4 per cent price hike in their products since October in order to offset the impact of currency fluctuations.
At present, electric two-wheelers are available between Rs 26,000 and Rs 40,000 on the basis of specifications and models.
On the backdrop of Rupee fall, the sales of the electric two-wheelers has dropped after prices of the products were increase since October due to falling rupee.
As per Mr Sohinder Gill, Society of Manufacturers of Electric Vehicles (SMEV) Director, the market is growing at a rate of around 40 per cent, as against 50-60 per cent sales growth being witnessed till October in the current fiscal.
The people were attracted towards eco-friendly electric vehicles on the back of rising prices of the fossil fuels. For the whole financial year, SMEV is looking forward a 50-55 per cent growth as the market may gain momentum.
According to the figures provided by Society of Manufacturers of Electric Vehicles, as many as 5 to 6 companies have announced the 3-4 per cent price hike in their products since October in order to offset the impact of currency fluctuations.
At present, electric two-wheelers are available between Rs 26,000 and Rs 40,000 on the basis of specifications and models.
On the backdrop of Rupee fall, the sales of the electric two-wheelers has dropped after prices of the products were increase since October due to falling rupee.
As per Mr Sohinder Gill, Society of Manufacturers of Electric Vehicles (SMEV) Director, the market is growing at a rate of around 40 per cent, as against 50-60 per cent sales growth being witnessed till October in the current fiscal.
The people were attracted towards eco-friendly electric vehicles on the back of rising prices of the fossil fuels. For the whole financial year, SMEV is looking forward a 50-55 per cent growth as the market may gain momentum.
HMSI Launches New Unicorn Dazzler
Honda Motorcycle & Scooter India (HMSI) today launched a new variant of its 150 cc bike -- CB Unicorn Dazzler, priced up to Rs 66,198 (ex-showroom, Delhi.)
The new Deluxe variant of CB Unicorn Dazzler will be available by the end of November, 2011, the company said in a statement.
Technical specifications of both standard and deluxe variants will remain the same, it added.
While deluxe variant will be available in two colours and is priced at Rs 66,198 (ex-showroom, Delhi), the standard variant is priced at Rs 65,198 (ex-showroom, Delhi).
Driven by a 150cc engine, the CB Unicorn Dazzler has a power of 14 BHP and comes with tubeless tyres and alloy wheels. It is BS-III norms compliant.
The new Deluxe variant of CB Unicorn Dazzler will be available by the end of November, 2011, the company said in a statement.
Technical specifications of both standard and deluxe variants will remain the same, it added.
While deluxe variant will be available in two colours and is priced at Rs 66,198 (ex-showroom, Delhi), the standard variant is priced at Rs 65,198 (ex-showroom, Delhi).
Driven by a 150cc engine, the CB Unicorn Dazzler has a power of 14 BHP and comes with tubeless tyres and alloy wheels. It is BS-III norms compliant.
Yamaha Scooter will come by 2012
YAMAHA, the company which had created havoc in the past days by launching various popular & renowned motor bikes, will now launch a new variety of scooter in the market by 2012. Experiments have already been started from now-a-days for this. New production works of YAMAHA will be started at Surajpur and Faridabad. The spokesperson of the Company has said that, the all new YAMAHA Scooter will be stylish, high-speed & comfortable like YAMAHA motorcycle and will win the hearts of customers. The vehicle, which has been developed in Japan will appear in the Indian market in a new getup. Company has decided to invest Rs. 10 Crores in the market, for this new make of Scooter. This vehicle will make entry in to the Indian market in 2012.
The Yamaha-Mahindra tie up confusion persists
Twice we have brought you rumours that Yamaha and Mahindra were tying up in India. Though we said that one should never say never, we were extremely sceptical of the possibility of the tie up since we did not see any reason why Yamaha needed Mahindra.
The idea that Mahindra’s distribution network would be used by Yamaha in return for giving technology to Mahindra was at best preposterous, since Yamaha has a full fledged dealer and distributor network. Now we hear that the understanding between the two companies will be like that of Hero MotoCorp and Honda, where Honda sells its own bikes but also sells technology to Hero. Such an arrangement will not benefit Yamaha in any manner and on the contrary can hurt the prospects of Yamaha brand. Along with this news comes the news that Yamaha has said no to a tie up of any kind. This seems to be the most realistic but somehow we have feeling that this is not the end of rumours of the proposed tie-up.
The idea that Mahindra’s distribution network would be used by Yamaha in return for giving technology to Mahindra was at best preposterous, since Yamaha has a full fledged dealer and distributor network. Now we hear that the understanding between the two companies will be like that of Hero MotoCorp and Honda, where Honda sells its own bikes but also sells technology to Hero. Such an arrangement will not benefit Yamaha in any manner and on the contrary can hurt the prospects of Yamaha brand. Along with this news comes the news that Yamaha has said no to a tie up of any kind. This seems to be the most realistic but somehow we have feeling that this is not the end of rumours of the proposed tie-up.
Triumph Motorcycle will open assembly unit in India
It seems like India is going to become global hub of Super bike within next 10 to 20 years. After entry of Harley Davidson, BMW and Hyosung, UK based Triumph motorcycle is also planning to enter in Indian sports bike market.
Peter Huckin export sales coordinator at Triumph said “Regarding our current situation, we are considering options for how and when to enter the Indian market. We see the market as having strong potential now and especially for the future.”
The Leicestershire based Triumph motorcycle is more than 100 year old company. It started motorcycle manufacturing in the year of 1902. Currently it produces motorcycle engine size ranging from 675cc to 2,300cc. It has some very popular brands like Thunderbird, Bonneville, Tiger, Trident and Daytona.
It has very popular model like Speed Triple, Rocket III, and Daytona 675. According to guardian newspaper of UK the company sold 45,501 units of motorcycle in the year 2009-10 ending on 30th June which is 1.5% down compare to last year 46,225 units. However the company is able to gain market share as the market for above 500cc motorcycle shrunk by 18%. It is now has 17% market share in UK ahead of four Japanese giant Honda, Yamaha, Kawasaki and Suzuki.
Peter Huckin, export sales coordinator at Triumph also said, “Triumph manufactures a variety of models under the segment of Roadsters, Supersports, Adventure, Touring, Classics and Cruisers. Its engine size ranges from 675cc to a massive 2,300cc.
It is to be noted that globally the sales of above 500cc motorcycle is fallen by almost 50% from its peak three years ago. In order to maintain and increase its market share Triumph is exploring new markets. India which is second largest two wheeler market in the world has seen sales of more than 1.3 millions two wheeler in the October month. In India the sports bike market is growing at 40% rate which is considerable enough to attract global sports bike manufacture Triumph.
Triumph may enter in India via CBU rate. The CBU (Completely Built unit) route attracts 110% import duty but it gives comfort of not establishing an assembling plant. This is major advantage for luxury motorcycle segment when the sale is not large enough to open assembly plant. Harly Davidson did the same thing. It entered in India with CBU route and later decided to set up assembly plant.
The cost of Triumph bikes ranges from £5,999 (Rs. 4.35 lakhs) to £12694 (Rs. 9.20 lakhs) OTR in UK. In India the prices will attract 110% import duty so expect Triumph bike starting ex-showroom price around Rs. 7 to 8 lakh.
The Leicestershire based Triumph motorcycle is more than 100 year old company. It started motorcycle manufacturing in the year of 1902. Currently it produces motorcycle engine size ranging from 675cc to 2,300cc. It has some very popular brands like Thunderbird, Bonneville, Tiger, Trident and Daytona.
It has very popular model like Speed Triple, Rocket III, and Daytona 675. According to guardian newspaper of UK the company sold 45,501 units of motorcycle in the year 2009-10 ending on 30th June which is 1.5% down compare to last year 46,225 units. However the company is able to gain market share as the market for above 500cc motorcycle shrunk by 18%. It is now has 17% market share in UK ahead of four Japanese giant Honda, Yamaha, Kawasaki and Suzuki.
Peter Huckin, export sales coordinator at Triumph also said, “Triumph manufactures a variety of models under the segment of Roadsters, Supersports, Adventure, Touring, Classics and Cruisers. Its engine size ranges from 675cc to a massive 2,300cc.
It is to be noted that globally the sales of above 500cc motorcycle is fallen by almost 50% from its peak three years ago. In order to maintain and increase its market share Triumph is exploring new markets. India which is second largest two wheeler market in the world has seen sales of more than 1.3 millions two wheeler in the October month. In India the sports bike market is growing at 40% rate which is considerable enough to attract global sports bike manufacture Triumph.
Triumph may enter in India via CBU rate. The CBU (Completely Built unit) route attracts 110% import duty but it gives comfort of not establishing an assembling plant. This is major advantage for luxury motorcycle segment when the sale is not large enough to open assembly plant. Harly Davidson did the same thing. It entered in India with CBU route and later decided to set up assembly plant.
The cost of Triumph bikes ranges from £5,999 (Rs. 4.35 lakhs) to £12694 (Rs. 9.20 lakhs) OTR in UK. In India the prices will attract 110% import duty so expect Triumph bike starting ex-showroom price around Rs. 7 to 8 lakh.
The Leicestershire based Triumph motorcycle is more than 100 year old company. It started motorcycle manufacturing in the year of 1902. Currently it produces motorcycle engine size ranging from 675cc to 2,300cc. It has some very popular brands like Thunderbird, Bonneville, Tiger, Trident and Daytona.
It has very popular model like Speed Triple, Rocket III, and Daytona 675. According to guardian newspaper of UK the company sold 45,501 units of motorcycle in the year 2009-10 ending on 30th June which is 1.5% down compare to last year 46,225 units. However the company is able to gain market share as the market for above 500cc motorcycle shrunk by 18%. It is now has 17% market share in UK ahead of four Japanese giant Honda, Yamaha, Kawasaki and Suzuki.
Peter Huckin, export sales coordinator at Triumph also said, “Triumph manufactures a variety of models under the segment of Roadsters, Supersports, Adventure, Touring, Classics and Cruisers. Its engine size ranges from 675cc to a massive 2,300cc.
It is to be noted that globally the sales of above 500cc motorcycle is fallen by almost 50% from its peak three years ago. In order to maintain and increase its market share Triumph is exploring new markets. India which is second largest two wheeler market in the world has seen sales of more than 1.3 millions two wheeler in the October month. In India the sports bike market is growing at 40% rate which is considerable enough to attract global sports bike manufacture Triumph.
Triumph may enter in India via CBU rate. The CBU (Completely Built unit) route attracts 110% import duty but it gives comfort of not establishing an assembling plant. This is major advantage for luxury motorcycle segment when the sale is not large enough to open assembly plant. Harly Davidson did the same thing. It entered in India with CBU route and later decided to set up assembly plant.
The cost of Triumph bikes ranges from £5,999 (Rs. 4.35 lakhs) to £12694 (Rs. 9.20 lakhs) OTR in UK. In India the prices will attract 110% import duty so expect Triumph bike starting ex-showroom price around Rs. 7 to 8 lakh.
The Leicestershire based Triumph motorcycle is more than 100 year old company. It started motorcycle manufacturing in the year of 1902. Currently it produces motorcycle engine size ranging from 675cc to 2,300cc. It has some very popular brands like Thunderbird, Bonneville, Tiger, Trident and Daytona.
It has very popular model like Speed Triple, Rocket III, and Daytona 675. According to guardian newspaper of UK the company sold 45,501 units of motorcycle in the year 2009-10 ending on 30th June which is 1.5% down compare to last year 46,225 units. However the company is able to gain market share as the market for above 500cc motorcycle shrunk by 18%. It is now has 17% market share in UK ahead of four Japanese giant Honda, Yamaha, Kawasaki and Suzuki.
Peter Huckin, export sales coordinator at Triumph also said, “Triumph manufactures a variety of models under the segment of Roadsters, Supersports, Adventure, Touring, Classics and Cruisers. Its engine size ranges from 675cc to a massive 2,300cc.
It is to be noted that globally the sales of above 500cc motorcycle is fallen by almost 50% from its peak three years ago. In order to maintain and increase its market share Triumph is exploring new markets. India which is second largest two wheeler market in the world has seen sales of more than 1.3 millions two wheeler in the October month. In India the sports bike market is growing at 40% rate which is considerable enough to attract global sports bike manufacture Triumph.
Triumph may enter in India via CBU rate. The CBU (Completely Built unit) route attracts 110% import duty but it gives comfort of not establishing an assembling plant. This is major advantage for luxury motorcycle segment when the sale is not large enough to open assembly plant. Harly Davidson did the same thing. It entered in India with CBU route and later decided to set up assembly plant.
The cost of Triumph bikes ranges from £5,999 (Rs. 4.35 lakhs) to £12694 (Rs. 9.20 lakhs) OTR in UK. In India the prices will attract 110% import duty so expect Triumph bike starting ex-showroom price around Rs. 7 to 8 lakh.
The Leicestershire based Triumph motorcycle is more than 100 year old company. It started motorcycle manufacturing in the year of 1902. Currently it produces motorcycle engine size ranging from 675cc to 2,300cc. It has some very popular brands like Thunderbird, Bonneville, Tiger, Trident and Daytona.
It has very popular model like Speed Triple, Rocket III, and Daytona 675. According to guardian newspaper of UK the company sold 45,501 units of motorcycle in the year 2009-10 ending on 30th June which is 1.5% down compare to last year 46,225 units. However the company is able to gain market share as the market for above 500cc motorcycle shrunk by 18%. It is now has 17% market share in UK ahead of four Japanese giant Honda, Yamaha, Kawasaki and Suzuki.
Peter Huckin, export sales coordinator at Triumph also said, “Triumph manufactures a variety of models under the segment of Roadsters, Supersports, Adventure, Touring, Classics and Cruisers. Its engine size ranges from 675cc to a massive 2,300cc.
It is to be noted that globally the sales of above 500cc motorcycle is fallen by almost 50% from its peak three years ago. In order to maintain and increase its market share Triumph is exploring new markets. India which is second largest two wheeler market in the world has seen sales of more than 1.3 millions two wheeler in the October month. In India the sports bike market is growing at 40% rate which is considerable enough to attract global sports bike manufacture Triumph.
Triumph may enter in India via CBU rate. The CBU (Completely Built unit) route attracts 110% import duty but it gives comfort of not establishing an assembling plant. This is major advantage for luxury motorcycle segment when the sale is not large enough to open assembly plant. Harly Davidson did the same thing. It entered in India with CBU route and later decided to set up assembly plant.
The cost of Triumph bikes ranges from £5,999 (Rs. 4.35 lakhs) to £12694 (Rs. 9.20 lakhs) OTR in UK. In India the prices will attract 110% import duty so expect Triumph bike starting ex-showroom price around Rs. 7 to 8 lakh.
The Leicestershire based Triumph motorcycle is more than 100 year old company. It started motorcycle manufacturing in the year of 1902. Currently it produces motorcycle engine size ranging from 675cc to 2,300cc. It has some very popular brands like Thunderbird, Bonneville, Tiger, Trident and Daytona.
It has very popular model like Speed Triple, Rocket III, and Daytona 675. According to guardian newspaper of UK the company sold 45,501 units of motorcycle in the year 2009-10 ending on 30th June which is 1.5% down compare to last year 46,225 units. However the company is able to gain market share as the market for above 500cc motorcycle shrunk by 18%. It is now has 17% market share in UK ahead of four Japanese giant Honda, Yamaha, Kawasaki and Suzuki.
Peter Huckin, export sales coordinator at Triumph also said, “Triumph manufactures a variety of models under the segment of Roadsters, Supersports, Adventure, Touring, Classics and Cruisers. Its engine size ranges from 675cc to a massive 2,300cc.
It is to be noted that globally the sales of above 500cc motorcycle is fallen by almost 50% from its peak three years ago. In order to maintain and increase its market share Triumph is exploring new markets. India which is second largest two wheeler market in the world has seen sales of more than 1.3 millions two wheeler in the October month. In India the sports bike market is growing at 40% rate which is considerable enough to attract global sports bike manufacture Triumph.
Triumph may enter in India via CBU rate. The CBU (Completely Built unit) route attracts 110% import duty but it gives comfort of not establishing an assembling plant. This is major advantage for luxury motorcycle segment when the sale is not large enough to open assembly plant. Harly Davidson did the same thing. It entered in India with CBU route and later decided to set up assembly plant.
The cost of Triumph bikes ranges from £5,999 (Rs. 4.35 lakhs) to £12694 (Rs. 9.20 lakhs) OTR in UK. In India the prices will attract 110% import duty so expect Triumph bike starting ex-showroom price around Rs. 7 to 8 lakh.
Peter Huckin export sales coordinator at Triumph said “Regarding our current situation, we are considering options for how and when to enter the Indian market. We see the market as having strong potential now and especially for the future.”
The Leicestershire based Triumph motorcycle is more than 100 year old company. It started motorcycle manufacturing in the year of 1902. Currently it produces motorcycle engine size ranging from 675cc to 2,300cc. It has some very popular brands like Thunderbird, Bonneville, Tiger, Trident and Daytona.
It has very popular model like Speed Triple, Rocket III, and Daytona 675. According to guardian newspaper of UK the company sold 45,501 units of motorcycle in the year 2009-10 ending on 30th June which is 1.5% down compare to last year 46,225 units. However the company is able to gain market share as the market for above 500cc motorcycle shrunk by 18%. It is now has 17% market share in UK ahead of four Japanese giant Honda, Yamaha, Kawasaki and Suzuki.
Peter Huckin, export sales coordinator at Triumph also said, “Triumph manufactures a variety of models under the segment of Roadsters, Supersports, Adventure, Touring, Classics and Cruisers. Its engine size ranges from 675cc to a massive 2,300cc.
It is to be noted that globally the sales of above 500cc motorcycle is fallen by almost 50% from its peak three years ago. In order to maintain and increase its market share Triumph is exploring new markets. India which is second largest two wheeler market in the world has seen sales of more than 1.3 millions two wheeler in the October month. In India the sports bike market is growing at 40% rate which is considerable enough to attract global sports bike manufacture Triumph.
Triumph may enter in India via CBU rate. The CBU (Completely Built unit) route attracts 110% import duty but it gives comfort of not establishing an assembling plant. This is major advantage for luxury motorcycle segment when the sale is not large enough to open assembly plant. Harly Davidson did the same thing. It entered in India with CBU route and later decided to set up assembly plant.
The cost of Triumph bikes ranges from £5,999 (Rs. 4.35 lakhs) to £12694 (Rs. 9.20 lakhs) OTR in UK. In India the prices will attract 110% import duty so expect Triumph bike starting ex-showroom price around Rs. 7 to 8 lakh.
The Leicestershire based Triumph motorcycle is more than 100 year old company. It started motorcycle manufacturing in the year of 1902. Currently it produces motorcycle engine size ranging from 675cc to 2,300cc. It has some very popular brands like Thunderbird, Bonneville, Tiger, Trident and Daytona.
It has very popular model like Speed Triple, Rocket III, and Daytona 675. According to guardian newspaper of UK the company sold 45,501 units of motorcycle in the year 2009-10 ending on 30th June which is 1.5% down compare to last year 46,225 units. However the company is able to gain market share as the market for above 500cc motorcycle shrunk by 18%. It is now has 17% market share in UK ahead of four Japanese giant Honda, Yamaha, Kawasaki and Suzuki.
Peter Huckin, export sales coordinator at Triumph also said, “Triumph manufactures a variety of models under the segment of Roadsters, Supersports, Adventure, Touring, Classics and Cruisers. Its engine size ranges from 675cc to a massive 2,300cc.
It is to be noted that globally the sales of above 500cc motorcycle is fallen by almost 50% from its peak three years ago. In order to maintain and increase its market share Triumph is exploring new markets. India which is second largest two wheeler market in the world has seen sales of more than 1.3 millions two wheeler in the October month. In India the sports bike market is growing at 40% rate which is considerable enough to attract global sports bike manufacture Triumph.
Triumph may enter in India via CBU rate. The CBU (Completely Built unit) route attracts 110% import duty but it gives comfort of not establishing an assembling plant. This is major advantage for luxury motorcycle segment when the sale is not large enough to open assembly plant. Harly Davidson did the same thing. It entered in India with CBU route and later decided to set up assembly plant.
The cost of Triumph bikes ranges from £5,999 (Rs. 4.35 lakhs) to £12694 (Rs. 9.20 lakhs) OTR in UK. In India the prices will attract 110% import duty so expect Triumph bike starting ex-showroom price around Rs. 7 to 8 lakh.
The Leicestershire based Triumph motorcycle is more than 100 year old company. It started motorcycle manufacturing in the year of 1902. Currently it produces motorcycle engine size ranging from 675cc to 2,300cc. It has some very popular brands like Thunderbird, Bonneville, Tiger, Trident and Daytona.
It has very popular model like Speed Triple, Rocket III, and Daytona 675. According to guardian newspaper of UK the company sold 45,501 units of motorcycle in the year 2009-10 ending on 30th June which is 1.5% down compare to last year 46,225 units. However the company is able to gain market share as the market for above 500cc motorcycle shrunk by 18%. It is now has 17% market share in UK ahead of four Japanese giant Honda, Yamaha, Kawasaki and Suzuki.
Peter Huckin, export sales coordinator at Triumph also said, “Triumph manufactures a variety of models under the segment of Roadsters, Supersports, Adventure, Touring, Classics and Cruisers. Its engine size ranges from 675cc to a massive 2,300cc.
It is to be noted that globally the sales of above 500cc motorcycle is fallen by almost 50% from its peak three years ago. In order to maintain and increase its market share Triumph is exploring new markets. India which is second largest two wheeler market in the world has seen sales of more than 1.3 millions two wheeler in the October month. In India the sports bike market is growing at 40% rate which is considerable enough to attract global sports bike manufacture Triumph.
Triumph may enter in India via CBU rate. The CBU (Completely Built unit) route attracts 110% import duty but it gives comfort of not establishing an assembling plant. This is major advantage for luxury motorcycle segment when the sale is not large enough to open assembly plant. Harly Davidson did the same thing. It entered in India with CBU route and later decided to set up assembly plant.
The cost of Triumph bikes ranges from £5,999 (Rs. 4.35 lakhs) to £12694 (Rs. 9.20 lakhs) OTR in UK. In India the prices will attract 110% import duty so expect Triumph bike starting ex-showroom price around Rs. 7 to 8 lakh.
The Leicestershire based Triumph motorcycle is more than 100 year old company. It started motorcycle manufacturing in the year of 1902. Currently it produces motorcycle engine size ranging from 675cc to 2,300cc. It has some very popular brands like Thunderbird, Bonneville, Tiger, Trident and Daytona.
It has very popular model like Speed Triple, Rocket III, and Daytona 675. According to guardian newspaper of UK the company sold 45,501 units of motorcycle in the year 2009-10 ending on 30th June which is 1.5% down compare to last year 46,225 units. However the company is able to gain market share as the market for above 500cc motorcycle shrunk by 18%. It is now has 17% market share in UK ahead of four Japanese giant Honda, Yamaha, Kawasaki and Suzuki.
Peter Huckin, export sales coordinator at Triumph also said, “Triumph manufactures a variety of models under the segment of Roadsters, Supersports, Adventure, Touring, Classics and Cruisers. Its engine size ranges from 675cc to a massive 2,300cc.
It is to be noted that globally the sales of above 500cc motorcycle is fallen by almost 50% from its peak three years ago. In order to maintain and increase its market share Triumph is exploring new markets. India which is second largest two wheeler market in the world has seen sales of more than 1.3 millions two wheeler in the October month. In India the sports bike market is growing at 40% rate which is considerable enough to attract global sports bike manufacture Triumph.
Triumph may enter in India via CBU rate. The CBU (Completely Built unit) route attracts 110% import duty but it gives comfort of not establishing an assembling plant. This is major advantage for luxury motorcycle segment when the sale is not large enough to open assembly plant. Harly Davidson did the same thing. It entered in India with CBU route and later decided to set up assembly plant.
The cost of Triumph bikes ranges from £5,999 (Rs. 4.35 lakhs) to £12694 (Rs. 9.20 lakhs) OTR in UK. In India the prices will attract 110% import duty so expect Triumph bike starting ex-showroom price around Rs. 7 to 8 lakh.
The Leicestershire based Triumph motorcycle is more than 100 year old company. It started motorcycle manufacturing in the year of 1902. Currently it produces motorcycle engine size ranging from 675cc to 2,300cc. It has some very popular brands like Thunderbird, Bonneville, Tiger, Trident and Daytona.
It has very popular model like Speed Triple, Rocket III, and Daytona 675. According to guardian newspaper of UK the company sold 45,501 units of motorcycle in the year 2009-10 ending on 30th June which is 1.5% down compare to last year 46,225 units. However the company is able to gain market share as the market for above 500cc motorcycle shrunk by 18%. It is now has 17% market share in UK ahead of four Japanese giant Honda, Yamaha, Kawasaki and Suzuki.
Peter Huckin, export sales coordinator at Triumph also said, “Triumph manufactures a variety of models under the segment of Roadsters, Supersports, Adventure, Touring, Classics and Cruisers. Its engine size ranges from 675cc to a massive 2,300cc.
It is to be noted that globally the sales of above 500cc motorcycle is fallen by almost 50% from its peak three years ago. In order to maintain and increase its market share Triumph is exploring new markets. India which is second largest two wheeler market in the world has seen sales of more than 1.3 millions two wheeler in the October month. In India the sports bike market is growing at 40% rate which is considerable enough to attract global sports bike manufacture Triumph.
Triumph may enter in India via CBU rate. The CBU (Completely Built unit) route attracts 110% import duty but it gives comfort of not establishing an assembling plant. This is major advantage for luxury motorcycle segment when the sale is not large enough to open assembly plant. Harly Davidson did the same thing. It entered in India with CBU route and later decided to set up assembly plant.
The cost of Triumph bikes ranges from £5,999 (Rs. 4.35 lakhs) to £12694 (Rs. 9.20 lakhs) OTR in UK. In India the prices will attract 110% import duty so expect Triumph bike starting ex-showroom price around Rs. 7 to 8 lakh.
The Leicestershire based Triumph motorcycle is more than 100 year old company. It started motorcycle manufacturing in the year of 1902. Currently it produces motorcycle engine size ranging from 675cc to 2,300cc. It has some very popular brands like Thunderbird, Bonneville, Tiger, Trident and Daytona.
It has very popular model like Speed Triple, Rocket III, and Daytona 675. According to guardian newspaper of UK the company sold 45,501 units of motorcycle in the year 2009-10 ending on 30th June which is 1.5% down compare to last year 46,225 units. However the company is able to gain market share as the market for above 500cc motorcycle shrunk by 18%. It is now has 17% market share in UK ahead of four Japanese giant Honda, Yamaha, Kawasaki and Suzuki.
Peter Huckin, export sales coordinator at Triumph also said, “Triumph manufactures a variety of models under the segment of Roadsters, Supersports, Adventure, Touring, Classics and Cruisers. Its engine size ranges from 675cc to a massive 2,300cc.
It is to be noted that globally the sales of above 500cc motorcycle is fallen by almost 50% from its peak three years ago. In order to maintain and increase its market share Triumph is exploring new markets. India which is second largest two wheeler market in the world has seen sales of more than 1.3 millions two wheeler in the October month. In India the sports bike market is growing at 40% rate which is considerable enough to attract global sports bike manufacture Triumph.
Triumph may enter in India via CBU rate. The CBU (Completely Built unit) route attracts 110% import duty but it gives comfort of not establishing an assembling plant. This is major advantage for luxury motorcycle segment when the sale is not large enough to open assembly plant. Harly Davidson did the same thing. It entered in India with CBU route and later decided to set up assembly plant.
The cost of Triumph bikes ranges from £5,999 (Rs. 4.35 lakhs) to £12694 (Rs. 9.20 lakhs) OTR in UK. In India the prices will attract 110% import duty so expect Triumph bike starting ex-showroom price around Rs. 7 to 8 lakh.
Past imperfect future tense for India INC
CEOs, bankers say worse than current slowdown is uncertainty on coming quarters, prepare survival plans.
This year’s ‘Diwali Dhamaka’ didn’t quite live up to its name. And, Future Group chairman Kishore Biyani, who has copyright on the famous ad tagline, admits even steep discounts didn’t help much in many regions this year.
“Diwali sales in many regions have been inconsistent. They have slowed. There were weaknesses in certain categories,” he says.
Biyani’s flagship listed company, Pantaloon Retail, saw growth of only 3.5 per cent in same-store sales in the second quarter of this year in its value segment. That’s the lowest in the past eight quarters.
Engineering heavyweight Larsen & Toubro has a similar concern. “Conditions have undergone a sea change. There has been a slowing of investment and projects are getting reviewed,” says chief financial officer R Shankar Raman.
India Inc stares at a combination of unfavourable factors — high interest rates, almost double-digit inflation, eroding consumer confidence and all-round global economic sluggishness. It’s no surprise that it’s the first quarter in two years when the Nifty 50 companies saw a fall in profits. And, a combination of subdued sales and high costs have kept operating margins from expanding; in the September quarter, they fell 400 basis points over the year.
Koushik Chatterjee, group CFO, Tata Steel, says the higher coking coal prices in India have hit margins. Though Tata Steel Europe posted a 19 per cent growth in sales, operating profit fell 43 per cent due to lower steel prices and higher coking coal and iron ore prices.
Car manufacturers are perhaps the worst hit. Maruti Suzuki had started the year with a target to increase sales by 13 per cent; Suzuki chairman O Suzuki brought it down to only five per cent. “Even that is difficult to achieve. I will be happy with three per cent growth, but that can be possible only if we sell well in the next few months,” says managing director R C Bhargava.
Two-wheeler companies are better off, as 70 per cent of their sales are in cash and rural sales are still on course. Even then, last year’s magic growth is a distant memory. However, Bajaj Auto’s MD, Rajiv Bajaj, downplays the sombre mood: “There are some concerns as sales growth has been only two per cent in October, but that is because the festival season was in October, so our peak sales were in September. So, the slow growth is artificial. We will surely not see 20 per cent growth like last year but it could be anything from eight to 12 per cent.”
While the slowdown was anticipated, what is causing concern is the way forward. Take L&T. The 23 per cent slump in orders in the engineering and construction segment in the second quarter was bad enough; what is worse is that L&T has reduced the full year outlook for order inflows to just five per cent, from the earlier 15 per cent.
Fearing a demand slowdown, fresh investments by many companies are on hold. And, infrastructure projects such as roadways are moving at a snail’s pace. Listen to ICICI Bank MD & CEO Chanda Kochhar: “The current credit growth is still coming from past sanctions that are now getting disbursed. The new approval rate has gone down, as there are no projects or very few projects coming for financial closure.”
Some bankers are even expecting credit growth to shrink to 14 per cent in the next financial year from an expected 18 per cent this year, as companies prefer to wait and watch rather than take a loan at high cost.
Chiefs of construction and infrastructure businesses agree. “Large orders for the infrastructure and construction sector have dropped by 36 per cent over last year,” said a worried Ajit Gulabchand, chairman and managing director of Hindustan Construction Corporation.
Industries dependent on infrastructure growth are seeing red ahead. In the past 12 months, for instance, the steel industry added eight million tonnes of capacity, based on the assumption that sales growth would be at last year’s level of 12 per cent. “Steel consumption by the auto industry has gone down. The intensity of steel consumption has got adversely impacted because construction, real estate and infrastructure projects are not coming up. So, steel demand is not more than 3.5 to four per cent,” says Malay Mukherjee, CEO of Essar Steel.
In real estate, the growing number of unsold inventory could pose serious problems to companies in the next few months. “I think home sales are half of last year’s levels. If this slowdown persists, it will be really tough for developers. Developers have to absorb four to five per cent of the interest which buyers pay and do something to sell their products,” says Pujit Aggarwal, managing director and CEO, Orbit Corporation, a Mumbai-based developer.
Even FMCG (fast moving consumer goods) companies, which had declared decent revenue growth numbers in the second quarter, primarily because they have partly passed on the rise in raw material costs to consumers, are circumspect about the future, as rural demand is slowing. Marico chairman Harsh Mariwala says there is always a lag effect of three to six months for FMCG in demand and, “I think we will see the slowdown in the next few quarters. Government finances are strained, so we don’t think they will be able to pump in more money through various rural schemes like NREGS and push rural demand any more.”
Dabur India, which has increased its product prices at least twice this year, says it will have no choice but to sacrifice margins if raw material prices do not come down. Dabur CEO Sunil Duggal said, “We had to increase our prices by seven per cent, but our cost increase was 10 per cent. But if raw material costs continue to go up, we cannot go on increasing prices, so we will have to sacrifice margins instead of our market share. Rural offtake has got more affected than urban demand,” he added.
Some are hoping rural markets will save them. Videocon Industries’ chairman Venugopal Dhoot said he had expected sales to grow by around 25 per cent, but he would be happy if that number was between 12 and 15 per cent. “Rural sales, however, continue to be good,” he said.
The silver lining is that India Inc is aware of the new reality and is going back to the drawing board for survival strategies. Clearly, the 2008 lessons have been learnt. Many looking at exporting out of trouble, with the dramatic depreciation of the rupee a great help for some. “The depreciation has given us a new opportunity. We are pushing exports and hope 20 per cent of our sales will come from there,” says Dhoot, who is pushing TV exports more aggressively. Bajaj Auto saw a growth of 40 per cent in its export sales growth in April-June; last year, the growth was 20 per cent. “We are now aggressively pushing for exports of two-wheelers, which will help us tide over the slowdown in the domestic market,” says Bajaj.
Auto companies are hoping new car launches will do the trick. At least 55 new models for vehicles will be launched in the Auto Expo in January next year from all top companies. Maruti Suzuki is talking to Fiat, which has surplus capacity in its plant so that it can quickly get more diesel engines to power its cars and push up sales in the remaining months. It is also pushing through an aggressive plan under which the 200-odd vendors will have to cut their costs by three per cent, which will save them about Rs 700 crore.
The other good news is unlike 2008, no company is yet looking at mass layoffs. They are, instead, looking at multi-tasking of existing employees. “A one-size fits all, across the board salary reduction or layoffs are not the immediate reaction. Companies know retaining key talent is crucial; the focus is on optimisation,” says Vivek Nath, managing director, India, of Towers Watson India, a human resource firm.
That’s something everybody is hoping for — that India Inc is in a better position than in 2008 to cope with the long winter ahead.
This year’s ‘Diwali Dhamaka’ didn’t quite live up to its name. And, Future Group chairman Kishore Biyani, who has copyright on the famous ad tagline, admits even steep discounts didn’t help much in many regions this year.
“Diwali sales in many regions have been inconsistent. They have slowed. There were weaknesses in certain categories,” he says.
Biyani’s flagship listed company, Pantaloon Retail, saw growth of only 3.5 per cent in same-store sales in the second quarter of this year in its value segment. That’s the lowest in the past eight quarters.
Engineering heavyweight Larsen & Toubro has a similar concern. “Conditions have undergone a sea change. There has been a slowing of investment and projects are getting reviewed,” says chief financial officer R Shankar Raman.
India Inc stares at a combination of unfavourable factors — high interest rates, almost double-digit inflation, eroding consumer confidence and all-round global economic sluggishness. It’s no surprise that it’s the first quarter in two years when the Nifty 50 companies saw a fall in profits. And, a combination of subdued sales and high costs have kept operating margins from expanding; in the September quarter, they fell 400 basis points over the year.
Koushik Chatterjee, group CFO, Tata Steel, says the higher coking coal prices in India have hit margins. Though Tata Steel Europe posted a 19 per cent growth in sales, operating profit fell 43 per cent due to lower steel prices and higher coking coal and iron ore prices.
Car manufacturers are perhaps the worst hit. Maruti Suzuki had started the year with a target to increase sales by 13 per cent; Suzuki chairman O Suzuki brought it down to only five per cent. “Even that is difficult to achieve. I will be happy with three per cent growth, but that can be possible only if we sell well in the next few months,” says managing director R C Bhargava.
Two-wheeler companies are better off, as 70 per cent of their sales are in cash and rural sales are still on course. Even then, last year’s magic growth is a distant memory. However, Bajaj Auto’s MD, Rajiv Bajaj, downplays the sombre mood: “There are some concerns as sales growth has been only two per cent in October, but that is because the festival season was in October, so our peak sales were in September. So, the slow growth is artificial. We will surely not see 20 per cent growth like last year but it could be anything from eight to 12 per cent.”
While the slowdown was anticipated, what is causing concern is the way forward. Take L&T. The 23 per cent slump in orders in the engineering and construction segment in the second quarter was bad enough; what is worse is that L&T has reduced the full year outlook for order inflows to just five per cent, from the earlier 15 per cent.
Fearing a demand slowdown, fresh investments by many companies are on hold. And, infrastructure projects such as roadways are moving at a snail’s pace. Listen to ICICI Bank MD & CEO Chanda Kochhar: “The current credit growth is still coming from past sanctions that are now getting disbursed. The new approval rate has gone down, as there are no projects or very few projects coming for financial closure.”
Some bankers are even expecting credit growth to shrink to 14 per cent in the next financial year from an expected 18 per cent this year, as companies prefer to wait and watch rather than take a loan at high cost.
Chiefs of construction and infrastructure businesses agree. “Large orders for the infrastructure and construction sector have dropped by 36 per cent over last year,” said a worried Ajit Gulabchand, chairman and managing director of Hindustan Construction Corporation.
Industries dependent on infrastructure growth are seeing red ahead. In the past 12 months, for instance, the steel industry added eight million tonnes of capacity, based on the assumption that sales growth would be at last year’s level of 12 per cent. “Steel consumption by the auto industry has gone down. The intensity of steel consumption has got adversely impacted because construction, real estate and infrastructure projects are not coming up. So, steel demand is not more than 3.5 to four per cent,” says Malay Mukherjee, CEO of Essar Steel.
In real estate, the growing number of unsold inventory could pose serious problems to companies in the next few months. “I think home sales are half of last year’s levels. If this slowdown persists, it will be really tough for developers. Developers have to absorb four to five per cent of the interest which buyers pay and do something to sell their products,” says Pujit Aggarwal, managing director and CEO, Orbit Corporation, a Mumbai-based developer.
Even FMCG (fast moving consumer goods) companies, which had declared decent revenue growth numbers in the second quarter, primarily because they have partly passed on the rise in raw material costs to consumers, are circumspect about the future, as rural demand is slowing. Marico chairman Harsh Mariwala says there is always a lag effect of three to six months for FMCG in demand and, “I think we will see the slowdown in the next few quarters. Government finances are strained, so we don’t think they will be able to pump in more money through various rural schemes like NREGS and push rural demand any more.”
Dabur India, which has increased its product prices at least twice this year, says it will have no choice but to sacrifice margins if raw material prices do not come down. Dabur CEO Sunil Duggal said, “We had to increase our prices by seven per cent, but our cost increase was 10 per cent. But if raw material costs continue to go up, we cannot go on increasing prices, so we will have to sacrifice margins instead of our market share. Rural offtake has got more affected than urban demand,” he added.
Some are hoping rural markets will save them. Videocon Industries’ chairman Venugopal Dhoot said he had expected sales to grow by around 25 per cent, but he would be happy if that number was between 12 and 15 per cent. “Rural sales, however, continue to be good,” he said.
The silver lining is that India Inc is aware of the new reality and is going back to the drawing board for survival strategies. Clearly, the 2008 lessons have been learnt. Many looking at exporting out of trouble, with the dramatic depreciation of the rupee a great help for some. “The depreciation has given us a new opportunity. We are pushing exports and hope 20 per cent of our sales will come from there,” says Dhoot, who is pushing TV exports more aggressively. Bajaj Auto saw a growth of 40 per cent in its export sales growth in April-June; last year, the growth was 20 per cent. “We are now aggressively pushing for exports of two-wheelers, which will help us tide over the slowdown in the domestic market,” says Bajaj.
Auto companies are hoping new car launches will do the trick. At least 55 new models for vehicles will be launched in the Auto Expo in January next year from all top companies. Maruti Suzuki is talking to Fiat, which has surplus capacity in its plant so that it can quickly get more diesel engines to power its cars and push up sales in the remaining months. It is also pushing through an aggressive plan under which the 200-odd vendors will have to cut their costs by three per cent, which will save them about Rs 700 crore.
The other good news is unlike 2008, no company is yet looking at mass layoffs. They are, instead, looking at multi-tasking of existing employees. “A one-size fits all, across the board salary reduction or layoffs are not the immediate reaction. Companies know retaining key talent is crucial; the focus is on optimisation,” says Vivek Nath, managing director, India, of Towers Watson India, a human resource firm.
That’s something everybody is hoping for — that India Inc is in a better position than in 2008 to cope with the long winter ahead.
55 launches lined up at January's Auto Expo
A slowdown in sales will not deny car lovers the opportunity to size up new automobile beauties. Car companies are hardly deterred by the sector’s woes when it comes to launching new models. January’s Auto Expo in Delhi has as many as 55 launches lined up.
The last edition (in 2010) featured 50 launches, including 10 global debuts. But, the sales growth back then was impressive. The show itself is getting bigger. There will be more than 50 participants at January’s expo against 42 the last time.
New players include Peugeot Citroen, which is in the process of setting up a manufacturing plant in Gujarat, super car manufacturer Bugatti, Japanese commercial vehicle maker Isuzu, Kamaz Vectra, a Russian company that makes trucks in India, local name Garware Motors, which has started selling superbikes, Daimler Commercial Vehicles, BMW Motorrad, off-road vehicle maker Polaris and the UK-based Triumph Motorcycles. Bajaj Auto’s much awaited small car, which promises to have the best mileage in its class, will be unveiled at the show.
The launch is crucial as it will also be the first time the company's partners Nissan-Renault (for whom it has built the car) will get a close look at the offering. The decision to go ahead with the project or call if off will be made thereafter.
Maruti Suzuki will unveil two cars: a concept sports utility vehicle (SUV) and a new product the company has refused to reveal any details about. Sources in Tata Motors say it will launch a passenger vehicle and a commercial vehicle at the Auto Expo but not the diesel Nano. A concept car is, however, expected to be on display.
Peugeot is expected to showcase its 508 Sedan, the first product it will launch in 2014, apart from other cars it plans to bring to India. Industry sources say Renault's small car Pulse is also expected to be launched at the expo. Ford is likely to launch EcoSport, a mini-SUV.
In the two-wheeler segment, Yamaha will show its range of scooters, an area it is entering. Piaggio will showcase a motorcycle for the first time. Bajaj Auto will bring its KTM bikes to the show. Mahindra & Mahindra, analysts say, will launch a whole host of two-wheeler offerings.
To promote electric vehicles, the organisers will for the first time have a procession of theirs. Companies expected to participate in this segment include General Motors, Tata Motors (a hybrid bus will be showcased), Renault and Maruti Suzuki, among others.
In the super luxury class, the usual suspects, Ferrari, Porsche, Maserati, Lamborghini and Rolls Royce, will make their presence felt.
Event organiser SIAM (the Society of Indian Automobile Manufacturers) is having to deal with space constraints due to the high interest.
SIAM senior director Sugato Sen said, “The built-up area available at Pragati Maidan is around 70,000 sq metres. The requirement is to the tune of 100,000-110,000 sq metres. We have asked members to curtail their floor space requirement up to 30 per cent.” Nearly 1.2 million people visited the expo last year.
The last edition (in 2010) featured 50 launches, including 10 global debuts. But, the sales growth back then was impressive. The show itself is getting bigger. There will be more than 50 participants at January’s expo against 42 the last time.
New players include Peugeot Citroen, which is in the process of setting up a manufacturing plant in Gujarat, super car manufacturer Bugatti, Japanese commercial vehicle maker Isuzu, Kamaz Vectra, a Russian company that makes trucks in India, local name Garware Motors, which has started selling superbikes, Daimler Commercial Vehicles, BMW Motorrad, off-road vehicle maker Polaris and the UK-based Triumph Motorcycles. Bajaj Auto’s much awaited small car, which promises to have the best mileage in its class, will be unveiled at the show.
The launch is crucial as it will also be the first time the company's partners Nissan-Renault (for whom it has built the car) will get a close look at the offering. The decision to go ahead with the project or call if off will be made thereafter.
Maruti Suzuki will unveil two cars: a concept sports utility vehicle (SUV) and a new product the company has refused to reveal any details about. Sources in Tata Motors say it will launch a passenger vehicle and a commercial vehicle at the Auto Expo but not the diesel Nano. A concept car is, however, expected to be on display.
Peugeot is expected to showcase its 508 Sedan, the first product it will launch in 2014, apart from other cars it plans to bring to India. Industry sources say Renault's small car Pulse is also expected to be launched at the expo. Ford is likely to launch EcoSport, a mini-SUV.
In the two-wheeler segment, Yamaha will show its range of scooters, an area it is entering. Piaggio will showcase a motorcycle for the first time. Bajaj Auto will bring its KTM bikes to the show. Mahindra & Mahindra, analysts say, will launch a whole host of two-wheeler offerings.
To promote electric vehicles, the organisers will for the first time have a procession of theirs. Companies expected to participate in this segment include General Motors, Tata Motors (a hybrid bus will be showcased), Renault and Maruti Suzuki, among others.
In the super luxury class, the usual suspects, Ferrari, Porsche, Maserati, Lamborghini and Rolls Royce, will make their presence felt.
Event organiser SIAM (the Society of Indian Automobile Manufacturers) is having to deal with space constraints due to the high interest.
SIAM senior director Sugato Sen said, “The built-up area available at Pragati Maidan is around 70,000 sq metres. The requirement is to the tune of 100,000-110,000 sq metres. We have asked members to curtail their floor space requirement up to 30 per cent.” Nearly 1.2 million people visited the expo last year.
TI Cycles's electric scooter biz picking up speed
After stagnating for over a year, TI Cycles' electric scooter segment is slowly showing signs of revival.
The company launched the BSA-branded electric scooters in 2009. “For about one-and-a-half years after launch the business was good, before it began to stagnate,” says Mr Rajesh Mani, General Manager – Marketing.
Mr Mani blames the influx of brands in the market, especially Chinese players, “who could not give consumers good service on products.” The category thus was badly hit as consumers began to view it with scepticism, adds Mr Mani.
Electric scooter is a nascent market in India at 40,000 units in 2010-11 — down from 60,000 the previous year. For nearly a year, TI Cycles' electric scooters business was flat. “But it has gained fillip in the first half of this year with strong double-digit growth. Growth has especially picked up in the second quarter,” says Mr Mani. Electric scooters registered volume growth of 79 per cent for the second quarter on a lower base.
“With rising petrol costs and government subsidies, we expect the momentum to continue through the year.” (The Government provides subsidy of 20 per cent on ex-factory price of electric vehicles.)
TI Cycles attributes the revival to “rationalisation of product mix” and “focus on key markets” — Tamil Nadu, Gujarat Kerala, Delhi, and Andhra Pradesh — where the company has a strong service back-up or petrol prices are high.
“In 2009, we launched a slew of products in the e-scooter segment. Today, we are focussed on two products — the high-speed scooter at 50 km/hour, costing Rs 38,000 — and the mid-range scooter (Rs 25,000, 30 kmph).”
The company is set to launch a low-cost model for Rs 22,000 (25 kmph).
Also, Chinese players are no longer in the market and consumer confidence is back, adds Mr Mani.
BSA e-scooters are sold through 65-odd ‘BSA Motors' showrooms. The electric scooter has found takers in students, old people, women and small-time traders, says Mr Mani.
E-scooters are assembled at a plant in Ambattur, Chennai. While motor is imported from China, other parts are indigenous.
Revenues
TI Cycles clocked revenues of Rs 1,100 crore last year. About 85 per cent came the cycles and 8 per cent from fitness products; electric scooters and others account for the rest. “E-scooters don't account for chunk of revenues but they are an important part of our business.”
Other players in the e-scooter market are Hero and Yo.
The company launched the BSA-branded electric scooters in 2009. “For about one-and-a-half years after launch the business was good, before it began to stagnate,” says Mr Rajesh Mani, General Manager – Marketing.
Mr Mani blames the influx of brands in the market, especially Chinese players, “who could not give consumers good service on products.” The category thus was badly hit as consumers began to view it with scepticism, adds Mr Mani.
Electric scooter is a nascent market in India at 40,000 units in 2010-11 — down from 60,000 the previous year. For nearly a year, TI Cycles' electric scooters business was flat. “But it has gained fillip in the first half of this year with strong double-digit growth. Growth has especially picked up in the second quarter,” says Mr Mani. Electric scooters registered volume growth of 79 per cent for the second quarter on a lower base.
“With rising petrol costs and government subsidies, we expect the momentum to continue through the year.” (The Government provides subsidy of 20 per cent on ex-factory price of electric vehicles.)
TI Cycles attributes the revival to “rationalisation of product mix” and “focus on key markets” — Tamil Nadu, Gujarat Kerala, Delhi, and Andhra Pradesh — where the company has a strong service back-up or petrol prices are high.
“In 2009, we launched a slew of products in the e-scooter segment. Today, we are focussed on two products — the high-speed scooter at 50 km/hour, costing Rs 38,000 — and the mid-range scooter (Rs 25,000, 30 kmph).”
The company is set to launch a low-cost model for Rs 22,000 (25 kmph).
Also, Chinese players are no longer in the market and consumer confidence is back, adds Mr Mani.
BSA e-scooters are sold through 65-odd ‘BSA Motors' showrooms. The electric scooter has found takers in students, old people, women and small-time traders, says Mr Mani.
E-scooters are assembled at a plant in Ambattur, Chennai. While motor is imported from China, other parts are indigenous.
Revenues
TI Cycles clocked revenues of Rs 1,100 crore last year. About 85 per cent came the cycles and 8 per cent from fitness products; electric scooters and others account for the rest. “E-scooters don't account for chunk of revenues but they are an important part of our business.”
Other players in the e-scooter market are Hero and Yo.
Volumes to drive two-wheeler growth
Volumes to drive two-wheeler growth WE highlight the fact that financial benefits, in the form of tax-free manufacturing locations and export incentives, played a significant role in the robust earnings growth for all the top three twowheeler manufacturers during FY08-FY11.
However, with excise duties now bottoming out, tax-free periods lapsing and export incentives likely to come down, we believe earnings growth from hereon would be driven by volume growth and competitive positioning in the market. After the exit of Honda, entry of high-end bikes of Yamaha, new ambitions of Hero and waning financial benefits, it is important to take a relook at the framework to play this space. We have weighted certainty of volume growth as our key criteria and the ability to withstand competition as the other. Surprisingly, TVS scores are more favourable on these counts compared with Bajaj, given its insulated portfolio. Hero qualifies as our top pick because it is the right incumbent to capitalise on the mobility opportunities in India. We would accumulate at every dip in the immediate future.
However, with excise duties now bottoming out, tax-free periods lapsing and export incentives likely to come down, we believe earnings growth from hereon would be driven by volume growth and competitive positioning in the market. After the exit of Honda, entry of high-end bikes of Yamaha, new ambitions of Hero and waning financial benefits, it is important to take a relook at the framework to play this space. We have weighted certainty of volume growth as our key criteria and the ability to withstand competition as the other. Surprisingly, TVS scores are more favourable on these counts compared with Bajaj, given its insulated portfolio. Hero qualifies as our top pick because it is the right incumbent to capitalise on the mobility opportunities in India. We would accumulate at every dip in the immediate future.
Mahindra launches dual - tone Rodeos
Dual colour schemes appear to have become the hot new trend amongst a gamut of two-wheeler manufacturers in India and the latest homegrown bike maker to join this fashion bandwagon is Mahindra 2 Wheelers, which has just introduced an all-new two-tone Special Edition version of its very popular Rodeo model.
The bi-colour scheme on the new Mahindra Rodeo models, namely the Sterling Black and the Scarlet Black, now gives the scooters’ already sporty stance an added sheen, making the bikes an absolute treat to both ride and to look at.
The bi-colour scheme on the new Mahindra Rodeo models, namely the Sterling Black and the Scarlet Black, now gives the scooters’ already sporty stance an added sheen, making the bikes an absolute treat to both ride and to look at.
Yamaha aims to sell more than 4 lakh bikes
“We target to increase the capacity to 10 lakh units per annum from 6 lakh units at present," India Yamaha Motor national business head Roy Kurian said
Two-wheeler maker India Yamaha Motor said it will expand its production capacity by 4 lakh units next year with an investment of about Rs50 crore.
"We are targeting to increase our production and sales as we are witnessing very good demand for our products. We target to increase the capacity to 10 lakh units per annum from 6 lakh units at present," India Yamaha Motor national business head Roy Kurian said. The company will enhance the capacity of its Surajpur plant in Uttar Pradesh. Asked about the investment for this, Kurian said: "It will take about $10 million. We will only set up a separate line at the plant." India Yamaha Motor has another plant in Faridabad, where it manufacturers engines.
"We are targeting to sell 10 lakh vehicles in the domestic market by 2014. This year we are expecting to sell 3.3 lakh units in the domestic market," Kurian said. He said the company is aiming to sell 4.5 lakh units in 2012 and 7 lakh units in 2013. "On the export front, we are hoping to sell 1.7 lakh units in this year. It will grow in the next few years," Kurian said, adding the company is expecting to sell a total of 10 lakh two-wheelers in 2013.
Last year the company had sold a total of 3.8 lakh units, which included exports.
The company currently has a total sales point of about 1,200 outlets. "We are increasing our reach gradually. Next year, we will be adding 400-500 sales points," he said. The company is aiming to have 2,000-2,500 sales points across the country by 2014, he added.
India Yamaha Motor had reported 26.82% increase in its total sales in October 2011 at 47,240 units. During the month, the company's domestic sales stood at 38,229 units, up 20.25%. Exports rose by 65.04% to 9,011 units in last month.
Two-wheeler maker India Yamaha Motor said it will expand its production capacity by 4 lakh units next year with an investment of about Rs50 crore.
"We are targeting to increase our production and sales as we are witnessing very good demand for our products. We target to increase the capacity to 10 lakh units per annum from 6 lakh units at present," India Yamaha Motor national business head Roy Kurian said. The company will enhance the capacity of its Surajpur plant in Uttar Pradesh. Asked about the investment for this, Kurian said: "It will take about $10 million. We will only set up a separate line at the plant." India Yamaha Motor has another plant in Faridabad, where it manufacturers engines.
"We are targeting to sell 10 lakh vehicles in the domestic market by 2014. This year we are expecting to sell 3.3 lakh units in the domestic market," Kurian said. He said the company is aiming to sell 4.5 lakh units in 2012 and 7 lakh units in 2013. "On the export front, we are hoping to sell 1.7 lakh units in this year. It will grow in the next few years," Kurian said, adding the company is expecting to sell a total of 10 lakh two-wheelers in 2013.
Last year the company had sold a total of 3.8 lakh units, which included exports.
The company currently has a total sales point of about 1,200 outlets. "We are increasing our reach gradually. Next year, we will be adding 400-500 sales points," he said. The company is aiming to have 2,000-2,500 sales points across the country by 2014, he added.
India Yamaha Motor had reported 26.82% increase in its total sales in October 2011 at 47,240 units. During the month, the company's domestic sales stood at 38,229 units, up 20.25%. Exports rose by 65.04% to 9,011 units in last month.
Bajaj drives Boxer 150 motorcycle
The second largest two-wheeler manufacturer Bajaj Auto has reportedly launched its new Boxer 150 motorcycle, with an engine capacity of 150-cc, in the Egyptian market. It was mentioned that Bajaj stated that the Boxer 150 equipped with ExhausTec technology also has customised design and technology, in accordance with the requirements of the Egyptian market.
It was reported that Bajaj also organised a Bajaj Marathon in front of the pyramids, in which 15 Boxer 150 bikers will tour the governorates of Egypt over 13 days, travelling 2,500 km to showcase the strength and quality of the new motorcycle.
The reports quoted Dharmesh Banerjee, Director of Planning and Marketing for Bajaj Auto, India, as saying "The launch of the new motorcycle, Boxer 150, in the Egyptian market is intended to serve the middle class and low-income people and help them accomplish purposes of trade, professional and small projects that will improve their living conditions." He also said that bikes currently have a lot of problems in Egypt such as vibration, engine overheating and loud engine noise and are hence, very unreliable. "For a whole year, we have been doing some extensive field research only to find out that the people in Egypt are aspiring for a better motorcycle, but having no alternative to the currently sold Chinese bikes. Hence, to fulfill this rising need, we thought of making a 'No Problem' bike: Boxer 150," he said. Bajaj vehicles are assembled and marketed by Ghabbour Auto, the leading company in the automotive industry in Egypt, which has a wide network of branches and dealers across Egypt, according to the reports.
It was reported that Bajaj also organised a Bajaj Marathon in front of the pyramids, in which 15 Boxer 150 bikers will tour the governorates of Egypt over 13 days, travelling 2,500 km to showcase the strength and quality of the new motorcycle.
The reports quoted Dharmesh Banerjee, Director of Planning and Marketing for Bajaj Auto, India, as saying "The launch of the new motorcycle, Boxer 150, in the Egyptian market is intended to serve the middle class and low-income people and help them accomplish purposes of trade, professional and small projects that will improve their living conditions." He also said that bikes currently have a lot of problems in Egypt such as vibration, engine overheating and loud engine noise and are hence, very unreliable. "For a whole year, we have been doing some extensive field research only to find out that the people in Egypt are aspiring for a better motorcycle, but having no alternative to the currently sold Chinese bikes. Hence, to fulfill this rising need, we thought of making a 'No Problem' bike: Boxer 150," he said. Bajaj vehicles are assembled and marketed by Ghabbour Auto, the leading company in the automotive industry in Egypt, which has a wide network of branches and dealers across Egypt, according to the reports.
2-wheeler industry to grow at 13% in FY 12
Following a strong double-digit growth of 17.3% in the second quarter of current financial year, the two-wheeler industry in India is expected to report a volume growth of 13% in the current financial year and a volume CAGR of 10% to 12% over the next five years to reach a size of 21 to 23 million units by 2015-16, said an analysis done by Icra.
The Indian two-wheeler industry reported a strong double-digit volume growth of 17.3% in Q2, FY12, even as several other automobile segments showed signs of a cyclical dip in growth during this period.
While the northward movement in macro-economic variables including inflation, fuel prices and interest rates has been the nemesis of the automobile industry at large, the two-wheeler industry has been relatively less impacted so far. It is believed that the resilience shown by the sector is likely to persist, with the industry looking to record yet another year of double-digit growth, Icra pointed out.
The outlook is built on the strength of the various structural growth drivers such as favourable demographic profile.
The Indian two-wheeler industry reported a strong double-digit volume growth of 17.3% in Q2, FY12, even as several other automobile segments showed signs of a cyclical dip in growth during this period.
While the northward movement in macro-economic variables including inflation, fuel prices and interest rates has been the nemesis of the automobile industry at large, the two-wheeler industry has been relatively less impacted so far. It is believed that the resilience shown by the sector is likely to persist, with the industry looking to record yet another year of double-digit growth, Icra pointed out.
The outlook is built on the strength of the various structural growth drivers such as favourable demographic profile.
Mahabharat Motors repays all dues to WBIDC
Mahabharat Motors has repaid the loan taken from West Bengal Industrial Development Corporation. For setting up the Mahabharat project, Prasoon had taken a loan amounting to Rs.17.45 cr from WBIDC and Mahabharat Motors had returned a small part of the loan earlier. He was quoted as saying, “We had returned a part of the loan earlier and now we have returned Rs.15.6cr. to WBIDC and cleared up all dues including accrued interest as per norms.”
As per the fresh agreement, TVS motorcycles would be produced at Ulberia through a JV between Mahabharat Motors & TVS Motors. During last Saturday’s meeting with the Industry Minister, one of the conditions laid down by the government was for Mr. Prasoon to return the loans he had taken for setting up Mahabharat Motors before requesting for any further clearances related to the JV with TVS Motors.
As per the fresh agreement, TVS motorcycles would be produced at Ulberia through a JV between Mahabharat Motors & TVS Motors. During last Saturday’s meeting with the Industry Minister, one of the conditions laid down by the government was for Mr. Prasoon to return the loans he had taken for setting up Mahabharat Motors before requesting for any further clearances related to the JV with TVS Motors.
Honda Motorcycle likely to set up two more plants
Honda Motorcycle and Scooter India (Pvt.) Ltd (HMSI) plans to set up at least two more plants in the country in pursuit of its ambition to become India’s largest selling two-wheeler company in the next 10 years, according to three people familiar with the development.
The company is already in exploratory talks with the Gujarat and Uttarakhand governments for setting up the plants over the next three-four years.
The proposed plants will add another 2.5 million units to HMSI’s capacity.
“The idea is to become a leader in the Indian market in another 10 years,” said a person familiar with the development. “The two-wheeler industry is expected to double in another four years, and by 2020 it may double again. This expansion plan is keeping such demand in mind. In the longer term, HMSI aims to have a capacity of 10 million units.”
The Indian two-wheeler industry will grow at an average annual growth rate of 14%, according to the Society of Indian Automobile Manufacturers. At this rate, the market is expected to double every four years till 2020. The industry sold 11.8 million units in 2010, registering a growth of 26% over the previous year.
HMSI’s market share in the first seven months of this fiscal to October stands at 13.4%. It trails Hero MotoCorp Ltd, which dominates the two-wheeler market with a 45% share, and Bajaj Auto Ltd, which has a 20% share. While Hero MotoCorp has a total capacity of 6.4 million units, Bajaj has a capacity to produce 5.5 million units a year.
Japan’s Honda Motor Co. Ltd exited its joint venture with the Hero Group—Hero Honda Motors Ltd—in December 2010 and is now focused on HMSI, its two-wheeler subsidiary, for its plans in the Indian two-wheeler market.
HMSI already has two plants in Gurgaon (Haryana) and Tapukara (Rajasthan) with a capacity of 2.8 million units. It is already building a third factory in Narsapuram in Karnataka, which will add another 1.2 million to its capacity in 2013.
HMSI executives have visited Gujarat a couple of times in the past three months and held preliminary-level talks with government officials for setting up a new plant in the state. The company is looking for250 acres of land for its new factory, said a government official on condition of anonymity.
“Honda officials told us that they have been asked by the top management to survey potential sites in the country for setting up a new project. Gujarat has emerged as a new auto destination with companies like Ford and Peugeot deciding to set up their new plants here, and Honda was keen to know about the incentives offered to these auto companies,” he said.
While Honda has not submitted a detailed proposal, the company plans an investment of Rs500 crore in the plant, according to the government official.
The state government offers incentives including soft loans and some tax benefits to companies aiming to invest at least Rs1,000 crore on a project. “If Honda wants to avail these benefits, they have to invest Rs1,000 crore or more,” the official said.
The company is also in talks with the Uttarakhand government for another plant in the country, said the person cited above.
“We have laid the foundation of a third factory at Narsapuram, Karnataka. With the three plants, we shall have a capacity to produce four million units by 2013,” the company said in an emailed response. “Any further expansion is not decided and it depends upon market demand.”
Shinji Aoyama, a former chief executive of HMSI, had told Mint in March that the company wants to emerge as the leader in the country’s two-wheeler market. “Our target is to become the No. 1 company in the next 10 years,” Aoyama had said.
In line with its expansion plan, the company also plans to put in place a cost-effective supply chain for delivering products. “As our dealer sales and service network is expanding rapidly, we have created five regions for sales operations from 2007. The Bangalore, Pune and Kolkata regional offices were already set up between 2007 and 2010. However, the Lucknow office started in 2011 for the central region,” the company said in the email. “This plan is to speedily build network to respond to customer requirement quickly.”
It’s an ambitious step taken by HMSI to take on Hero MotoCorp, said an analyst with a leading brokerage firm, who declined to be named. “They have been very aggressive in the country and with this kind of expansion plan, the intent is very clear,” said the analyst. “But as far as Honda dominating the market is concerned, I have some doubts as the other three (Hero, Bajaj and TVS Motor Co. Ltd) are seasoned players in this market.”
The company is already in exploratory talks with the Gujarat and Uttarakhand governments for setting up the plants over the next three-four years.
The proposed plants will add another 2.5 million units to HMSI’s capacity.
“The idea is to become a leader in the Indian market in another 10 years,” said a person familiar with the development. “The two-wheeler industry is expected to double in another four years, and by 2020 it may double again. This expansion plan is keeping such demand in mind. In the longer term, HMSI aims to have a capacity of 10 million units.”
The Indian two-wheeler industry will grow at an average annual growth rate of 14%, according to the Society of Indian Automobile Manufacturers. At this rate, the market is expected to double every four years till 2020. The industry sold 11.8 million units in 2010, registering a growth of 26% over the previous year.
HMSI’s market share in the first seven months of this fiscal to October stands at 13.4%. It trails Hero MotoCorp Ltd, which dominates the two-wheeler market with a 45% share, and Bajaj Auto Ltd, which has a 20% share. While Hero MotoCorp has a total capacity of 6.4 million units, Bajaj has a capacity to produce 5.5 million units a year.
Japan’s Honda Motor Co. Ltd exited its joint venture with the Hero Group—Hero Honda Motors Ltd—in December 2010 and is now focused on HMSI, its two-wheeler subsidiary, for its plans in the Indian two-wheeler market.
HMSI already has two plants in Gurgaon (Haryana) and Tapukara (Rajasthan) with a capacity of 2.8 million units. It is already building a third factory in Narsapuram in Karnataka, which will add another 1.2 million to its capacity in 2013.
HMSI executives have visited Gujarat a couple of times in the past three months and held preliminary-level talks with government officials for setting up a new plant in the state. The company is looking for250 acres of land for its new factory, said a government official on condition of anonymity.
“Honda officials told us that they have been asked by the top management to survey potential sites in the country for setting up a new project. Gujarat has emerged as a new auto destination with companies like Ford and Peugeot deciding to set up their new plants here, and Honda was keen to know about the incentives offered to these auto companies,” he said.
While Honda has not submitted a detailed proposal, the company plans an investment of Rs500 crore in the plant, according to the government official.
The state government offers incentives including soft loans and some tax benefits to companies aiming to invest at least Rs1,000 crore on a project. “If Honda wants to avail these benefits, they have to invest Rs1,000 crore or more,” the official said.
The company is also in talks with the Uttarakhand government for another plant in the country, said the person cited above.
“We have laid the foundation of a third factory at Narsapuram, Karnataka. With the three plants, we shall have a capacity to produce four million units by 2013,” the company said in an emailed response. “Any further expansion is not decided and it depends upon market demand.”
Shinji Aoyama, a former chief executive of HMSI, had told Mint in March that the company wants to emerge as the leader in the country’s two-wheeler market. “Our target is to become the No. 1 company in the next 10 years,” Aoyama had said.
In line with its expansion plan, the company also plans to put in place a cost-effective supply chain for delivering products. “As our dealer sales and service network is expanding rapidly, we have created five regions for sales operations from 2007. The Bangalore, Pune and Kolkata regional offices were already set up between 2007 and 2010. However, the Lucknow office started in 2011 for the central region,” the company said in the email. “This plan is to speedily build network to respond to customer requirement quickly.”
It’s an ambitious step taken by HMSI to take on Hero MotoCorp, said an analyst with a leading brokerage firm, who declined to be named. “They have been very aggressive in the country and with this kind of expansion plan, the intent is very clear,” said the analyst. “But as far as Honda dominating the market is concerned, I have some doubts as the other three (Hero, Bajaj and TVS Motor Co. Ltd) are seasoned players in this market.”
TVS Motor to enter skill trainig segment
TVS Motor Co. Ltd is tying up with the National Skill Development Corp. (NSDC) to create a labour pool to meet demand for trained personnel, and power the next phase of growth for the Chennai-based two-wheeler firm and the rest of the automobile industry.
“We have been in talks with NSDC for quite sometime,” said TVS chairman Venu Srinivasan. “The idea is to develop a workforce that could play a significant role in the next phase of growth of the company.”
The auto and auto ancillary segment will face a shortage of skilled personnel to the tune of 35 million by 2022, says a study by NSDC. Even now, the industry is facing a shortage of about 300,000 skilled workers, according to a survey by consulting firm KPMG.
“India has become the focus of all major automobile companies,” Srinivasan said. “With this, the demand for motorcycles and cars will increase. We need to be ready to meet such kind of demand.”
The Indian auto industry’s annual sales rose 20% to Rs.3.27 trillion in the 12 months to 31 March from the year before, according to the Society of Indian Automobile Manufacturers (Siam), an industry lobby.
Sales are expected to rise fourfold by 2020, says Siam, although the industry is presently battling a sales downturn as the pace of economic growth slows and increased borrowing costs and fuel prices deter buyers.
Srinivasan is convinced the Indian automobile industry will grow faster.
Last week, TVS Motor reported net profit of Rs.76.5 crore for the quarter ended 30 September, a 40% increase from a year earlier. Its two-wheeler sales rose 16% to 597,000 units.
NSDC is a for-profit entity formed by the finance ministry in association with the Confederation of Indian Industry, the National Association of Software and Services Companies and the Retailers Association of India, among others.
“Our board has approved the TVS proposal and a formal signing will happen soon,” said a spokesperson for NSDC.
TVS Motor has a unit dedicated to training workers with the aim of creating a skilled labour pool for the company and the automobile industry. The company will set up up seven training centres in Tamil Nadu, Karnataka and Uttarakhand states, and intends to train people for other industries such as financial services, retail, construction and electronics appliances.
Corporate involvement in training workers for the auto industry will help create a labour pool that’s customized for meeting specific company needs, says Pooja Gianchandani, director of skill development at industry lobby Federation of Indian Chambers of Commerce and Industry.
“Every company has it own system and machinery and workers need to be trained on that,” she said. “Corporates entering the training market will bridge this gap by creating a customized talent pool.”
“We have been in talks with NSDC for quite sometime,” said TVS chairman Venu Srinivasan. “The idea is to develop a workforce that could play a significant role in the next phase of growth of the company.”
The auto and auto ancillary segment will face a shortage of skilled personnel to the tune of 35 million by 2022, says a study by NSDC. Even now, the industry is facing a shortage of about 300,000 skilled workers, according to a survey by consulting firm KPMG.
“India has become the focus of all major automobile companies,” Srinivasan said. “With this, the demand for motorcycles and cars will increase. We need to be ready to meet such kind of demand.”
The Indian auto industry’s annual sales rose 20% to Rs.3.27 trillion in the 12 months to 31 March from the year before, according to the Society of Indian Automobile Manufacturers (Siam), an industry lobby.
Sales are expected to rise fourfold by 2020, says Siam, although the industry is presently battling a sales downturn as the pace of economic growth slows and increased borrowing costs and fuel prices deter buyers.
Srinivasan is convinced the Indian automobile industry will grow faster.
Last week, TVS Motor reported net profit of Rs.76.5 crore for the quarter ended 30 September, a 40% increase from a year earlier. Its two-wheeler sales rose 16% to 597,000 units.
NSDC is a for-profit entity formed by the finance ministry in association with the Confederation of Indian Industry, the National Association of Software and Services Companies and the Retailers Association of India, among others.
“Our board has approved the TVS proposal and a formal signing will happen soon,” said a spokesperson for NSDC.
TVS Motor has a unit dedicated to training workers with the aim of creating a skilled labour pool for the company and the automobile industry. The company will set up up seven training centres in Tamil Nadu, Karnataka and Uttarakhand states, and intends to train people for other industries such as financial services, retail, construction and electronics appliances.
Corporate involvement in training workers for the auto industry will help create a labour pool that’s customized for meeting specific company needs, says Pooja Gianchandani, director of skill development at industry lobby Federation of Indian Chambers of Commerce and Industry.
“Every company has it own system and machinery and workers need to be trained on that,” she said. “Corporates entering the training market will bridge this gap by creating a customized talent pool.”
Truly 'Impulsive'
Hero Motor Corp, even before their divorce with Honda, was never really a manufacturer to surprise you. Bread-and-butter motorcycles and HMC went hand in hand, with the majority of their product portfolio comprising of two-wheelers with about as much character as a smokeless cigarette. The latest HMC launch comes as a pleasant shift away from the usual breed though.
The all-terrain Hero Impulse is here, retailing at a sum of around 66 big ones. Sold in Brazil as the Honda NXR Bros, this new bike should turn heads quite easily with its rather appealing design. Enduro-styling is the name of the game here; thankfully, the Impulse actually lives up to its looks, offering half-decent off-roading ability. All-terrain knobby tyres, finger protectors, long travel extended forks for the front and a monoshock system for the rear.
Where it might disappoint some are the uninspiring graphics and slightly underpowered motor that produces a rather modest 13.8 bhp. The engine is proven and super-reliable single-cylinder powerplant that does duty in the Hunk and CBZ. Surprisingly, the Impulse is also a breeze to ride in traffic which is a good thing since the vast majority of its buyers will probably never venture off the beaten path. The unique, versatile Impulse is certainly worth considering if it fits your budget. And hats off to HMC for the first motorcycle from their rather large stable that truly has the potential to spark some, ahem, “impulsive” buying.
The all-terrain Hero Impulse is here, retailing at a sum of around 66 big ones. Sold in Brazil as the Honda NXR Bros, this new bike should turn heads quite easily with its rather appealing design. Enduro-styling is the name of the game here; thankfully, the Impulse actually lives up to its looks, offering half-decent off-roading ability. All-terrain knobby tyres, finger protectors, long travel extended forks for the front and a monoshock system for the rear.
Where it might disappoint some are the uninspiring graphics and slightly underpowered motor that produces a rather modest 13.8 bhp. The engine is proven and super-reliable single-cylinder powerplant that does duty in the Hunk and CBZ. Surprisingly, the Impulse is also a breeze to ride in traffic which is a good thing since the vast majority of its buyers will probably never venture off the beaten path. The unique, versatile Impulse is certainly worth considering if it fits your budget. And hats off to HMC for the first motorcycle from their rather large stable that truly has the potential to spark some, ahem, “impulsive” buying.
Will Bajaj become a hero?
If measured by financial as well as operational performance, the action in the automobile market this fiscal has shifted from the four-wheeler to the two-wheeler companies. Sales at Maruti Suzuki had slumped much before the labour trouble erupted. Rival Hyundai did no better or else this was the best time for it to displace Maruti. Much in contrast to the performance of the car manufacturers, the two-wheeler makers are doing brisk business with rising sales and better financial earnings. Naturally, then the question arises whether there's a possibility of a new two-wheeler leader emerging in the country in the near future? To put the question straight and simple: Is there a possibility of the once largest two-wheeler manufacturer Bajaj Auto to displace Hero MotoCorp (until recently Hero Honda) as the largest two-wheeler company by volumes? Or will a dark horse and much later entrant, Honda Motorcycles and Scooters India (HMSI), outpace both? Before we proceed to examine the answer to this question, a little of bit of history is necessary.
Bajaj Auto used to be the country’s largest two-wheeler manufacturer for long and the scooters it made had, once upon a time, such a long queue of buyers that if a father booked the scooter, if all went well, the grandson would be lucky to get its possession! But India’s economy was different then. By late 1990s, not only did the country’s economy change but also the two-wheeler market. Out went scooters and what replaced the consumers’ choice was motorcycles—the new trendy 100-cc ones made in collaboration with foreign manufacturers, chiefly the Japanese. By 2000-01, Hero Honda had overtaken Bajaj Auto in terms of volume sales on the back of motorcycles and Bajaj Auto also decided that it will concentrate on bikes rather than scooters. What started thereafter was a race between the two for the top slot, which continues even today.
A slight digression here would be pertinent. Hero Honda, a newcomer overtaking an established leader like Bajaj Auto was not the first or only case in the country’s auto history. Prior to it, Maruti overtook Hindustan Motors in 1983-84. In other sectors also similar examples are available. What has not happened largely so far though is that once an established leader has been overtaken by an emerging player, the former has not been able to reclaim its original position. So, Hindustan Motors could never ride back to glory. In other sectors as well—for example, in telecom, where BSNL in terms of fixed as well as mobile connections lost out to Bharti Airtel in 2008 and today can’t even dream of reclaiming its old position.
However, Bajaj Auto is no Hindustan Motors or BSNL. It continues to be a more profitable company than Hero MotoCorp and has successfully challenged Hero’s numero uno position. In fact, in the latter part of 2006, it had almost closed the gap with Hero. In August of that year, the gap between Hero and Bajaj had reduced to just around 28,000 units where earlier, on an average, it used to be around a lakh units. It seemed that Bajaj had reached the touching destination and within a few months—in 2007—the original number one would have wrested back its lost position. But it did not happen and Hero slowly widened the gap. According to the sales figure of September this year, the total motorcycle sales of Hero MotoCorp stand at 5,01,028 units as against Bajaj’s 2,55,786 units.
In its fight with Hero, Bajaj did make a couple of mistakes. One, when it decided to focus on bikes rather than scooters it was largely on the assumption that the market then had started preferring them. Data at that point supported that also. However, what was lost was that the scooters Bajaj then made were on the older technology and style. Much later, the Japanese firm HMSI rode in India and made scooters once again trendy and saleable. For instance, in November 2008, HMSI sold around 60,000 scooters while Bajaj could sell only a measly 700. In fact, that month Bajaj was displaced from the second place to third by HMSI on the back of only scooter sales by the latter.
The other mistake Bajaj made was that in 2007 when it was closing ranks with Hero, it decided to exit the 100-cc bike market and instead focused on the premium segment of 125 cc and above. The move was strategic because what Bajaj was trying to do was to bring the fight to its bastion because it was stronger than Hero in the premium segment. Even today, that strength continues. For instance, the 75-cc to 125-cc segment contributes only 28.7% to Bajaj’s overall sales against Hero’s 93.8%. However, when it comes to 125-cc to 250-cc segment, Bajaj’s sales contribute 58.28% whereas Hero’s only 6.19%. The strategy was that if Bajaj could make bikes of 125 cc and beyond and price them at around the 100-cc categories, then it would have decimated Hero. There was merit in this strategy then as Bajaj had around then closed in on Hero Honda following the launch of Pulsar (150 cc and 180 cc), followed by Wind (125 cc), and Discover (125 cc).
However, the strategy did not work as Hero did a couple of launches and re-launches and strode ahead and Bajaj returned to focusing on the 100-cc segment also.
Much later in 2009, Bajaj finally made a total exit from the scooter market because the gap between it and HMSI had so widened that it did not make sense to re-focus on it any further, so today it has only bikes in its arsenal to fight the market share battle.
However, much has changed in the broader landscape once again. Hero has broken off with Honda and is on its own now. It may face some disadvantage on the bike front but is free to make scooters also now. Similarly, unlike yesteryears, Honda is now free through its wholly-owned subsidiary to enter the bike market, which it did not do until the joint venture was intact. This brings a serious challenge for Hero MotoCorp.
The challenge for Bajaj has also got bigger because apart from competition from Hero it will now also have to contest with HMSI, which apart from scooters will now also have bikes in its arsenal. The fight would certainly be interesting and how it would pan out would determine whether the pecking order born almost a decade ago remains intact or undergoes a change. Keep watching this space!
Bajaj Auto used to be the country’s largest two-wheeler manufacturer for long and the scooters it made had, once upon a time, such a long queue of buyers that if a father booked the scooter, if all went well, the grandson would be lucky to get its possession! But India’s economy was different then. By late 1990s, not only did the country’s economy change but also the two-wheeler market. Out went scooters and what replaced the consumers’ choice was motorcycles—the new trendy 100-cc ones made in collaboration with foreign manufacturers, chiefly the Japanese. By 2000-01, Hero Honda had overtaken Bajaj Auto in terms of volume sales on the back of motorcycles and Bajaj Auto also decided that it will concentrate on bikes rather than scooters. What started thereafter was a race between the two for the top slot, which continues even today.
A slight digression here would be pertinent. Hero Honda, a newcomer overtaking an established leader like Bajaj Auto was not the first or only case in the country’s auto history. Prior to it, Maruti overtook Hindustan Motors in 1983-84. In other sectors also similar examples are available. What has not happened largely so far though is that once an established leader has been overtaken by an emerging player, the former has not been able to reclaim its original position. So, Hindustan Motors could never ride back to glory. In other sectors as well—for example, in telecom, where BSNL in terms of fixed as well as mobile connections lost out to Bharti Airtel in 2008 and today can’t even dream of reclaiming its old position.
However, Bajaj Auto is no Hindustan Motors or BSNL. It continues to be a more profitable company than Hero MotoCorp and has successfully challenged Hero’s numero uno position. In fact, in the latter part of 2006, it had almost closed the gap with Hero. In August of that year, the gap between Hero and Bajaj had reduced to just around 28,000 units where earlier, on an average, it used to be around a lakh units. It seemed that Bajaj had reached the touching destination and within a few months—in 2007—the original number one would have wrested back its lost position. But it did not happen and Hero slowly widened the gap. According to the sales figure of September this year, the total motorcycle sales of Hero MotoCorp stand at 5,01,028 units as against Bajaj’s 2,55,786 units.
In its fight with Hero, Bajaj did make a couple of mistakes. One, when it decided to focus on bikes rather than scooters it was largely on the assumption that the market then had started preferring them. Data at that point supported that also. However, what was lost was that the scooters Bajaj then made were on the older technology and style. Much later, the Japanese firm HMSI rode in India and made scooters once again trendy and saleable. For instance, in November 2008, HMSI sold around 60,000 scooters while Bajaj could sell only a measly 700. In fact, that month Bajaj was displaced from the second place to third by HMSI on the back of only scooter sales by the latter.
The other mistake Bajaj made was that in 2007 when it was closing ranks with Hero, it decided to exit the 100-cc bike market and instead focused on the premium segment of 125 cc and above. The move was strategic because what Bajaj was trying to do was to bring the fight to its bastion because it was stronger than Hero in the premium segment. Even today, that strength continues. For instance, the 75-cc to 125-cc segment contributes only 28.7% to Bajaj’s overall sales against Hero’s 93.8%. However, when it comes to 125-cc to 250-cc segment, Bajaj’s sales contribute 58.28% whereas Hero’s only 6.19%. The strategy was that if Bajaj could make bikes of 125 cc and beyond and price them at around the 100-cc categories, then it would have decimated Hero. There was merit in this strategy then as Bajaj had around then closed in on Hero Honda following the launch of Pulsar (150 cc and 180 cc), followed by Wind (125 cc), and Discover (125 cc).
However, the strategy did not work as Hero did a couple of launches and re-launches and strode ahead and Bajaj returned to focusing on the 100-cc segment also.
Much later in 2009, Bajaj finally made a total exit from the scooter market because the gap between it and HMSI had so widened that it did not make sense to re-focus on it any further, so today it has only bikes in its arsenal to fight the market share battle.
However, much has changed in the broader landscape once again. Hero has broken off with Honda and is on its own now. It may face some disadvantage on the bike front but is free to make scooters also now. Similarly, unlike yesteryears, Honda is now free through its wholly-owned subsidiary to enter the bike market, which it did not do until the joint venture was intact. This brings a serious challenge for Hero MotoCorp.
The challenge for Bajaj has also got bigger because apart from competition from Hero it will now also have to contest with HMSI, which apart from scooters will now also have bikes in its arsenal. The fight would certainly be interesting and how it would pan out would determine whether the pecking order born almost a decade ago remains intact or undergoes a change. Keep watching this space!
Made-For-India Monster
Italian superbike manufacturer Ducati has been busy giving final touches to its Asia-specific 795cc Monster, which is all set to ride into the Indian horizon very soon. Ammar Alvi reports.
With the success of the inaugural Formula One Grand Prix under its belt, India is now preparing to bring MotoGP to these parts. In few years time, expect to see the mega biking challenge on the Buddh International Race Circuit. Keeping up with this need for speed, Italian superbike manufacturer Ducati will soon unveil in India its Asia-specific 795cc Monster.
What is even better is that the pricing, which is expected to be a mouthwatering `5-6 lakh. If that’s true, then Monster will surely rule the middleweight bike market. Its rivals, like the Kawasaki Ninja 650R and the Hyosung GT650, will face a serious threat, even though it’s easier said than done.
The Monster has been one of Ducati’s most popular naked bikes, a cult classic since its launch as the M900 in the early 90’s. The design is simple with minimalistic cladding and a lot of style and character. Since then, it has ruled the roads all over the world. Now, with the 795, a perfect combination of the Monster 696 and the Monster 796, expect more fireworks.
Simple yet stylish is what defines the Monster 795. Powered by a 803cc Desmodromic L-Twin 2-valve per cylinder air-cooled motor, it pumps out a whooping 87 PS of power at 8,250 rpm and 78 Nm of torque at 6,250rpm. What does this translate to? The power is transmitted to the rear wheel with the help of a six-speed gearbox, and with only 167 kg weight, the 795 is easy to handle and should be quick on Indian roads.
Ducati has been working hard to make it more accessible in markets like India, and that’s the reason it’s launching the Asian version here. The bike was recently unveiled by none other than Moto GP champion Valentino Rossi in Malaysia, and is expected to be built at Ducati’s Thailand facility. With this decision, many other south Asian countries will benefit, and the Ducati brand will become more accessible. Let’s wait and watch and keep tuned for more on the Monster.
With the success of the inaugural Formula One Grand Prix under its belt, India is now preparing to bring MotoGP to these parts. In few years time, expect to see the mega biking challenge on the Buddh International Race Circuit. Keeping up with this need for speed, Italian superbike manufacturer Ducati will soon unveil in India its Asia-specific 795cc Monster.
What is even better is that the pricing, which is expected to be a mouthwatering `5-6 lakh. If that’s true, then Monster will surely rule the middleweight bike market. Its rivals, like the Kawasaki Ninja 650R and the Hyosung GT650, will face a serious threat, even though it’s easier said than done.
The Monster has been one of Ducati’s most popular naked bikes, a cult classic since its launch as the M900 in the early 90’s. The design is simple with minimalistic cladding and a lot of style and character. Since then, it has ruled the roads all over the world. Now, with the 795, a perfect combination of the Monster 696 and the Monster 796, expect more fireworks.
Simple yet stylish is what defines the Monster 795. Powered by a 803cc Desmodromic L-Twin 2-valve per cylinder air-cooled motor, it pumps out a whooping 87 PS of power at 8,250 rpm and 78 Nm of torque at 6,250rpm. What does this translate to? The power is transmitted to the rear wheel with the help of a six-speed gearbox, and with only 167 kg weight, the 795 is easy to handle and should be quick on Indian roads.
Ducati has been working hard to make it more accessible in markets like India, and that’s the reason it’s launching the Asian version here. The bike was recently unveiled by none other than Moto GP champion Valentino Rossi in Malaysia, and is expected to be built at Ducati’s Thailand facility. With this decision, many other south Asian countries will benefit, and the Ducati brand will become more accessible. Let’s wait and watch and keep tuned for more on the Monster.
Where’s the auto industry headed?
The global auto industry is witnessing a two-speed world. The triad of the US, western Europe and Japan is experiencing volatile growth, with volumes still below 2008 pre-crisis levels. Emerging markets are providing impetus to automotive volumes, with China, Brazil and India recording double-digit growth rates in the previous years.
The importance of the Indian auto market is well established, with almost all leading auto firms across segments now having established a presence. It’s become one of the leading small car markets, with several players having established India as a global hub for small car production. Global centres in sourcing and R&D are also present, though in some cases they have not reached their full potential.
The fundamental trends for the domestic market—income movement, low penetration, rising mobility needs, etc.—remain steady and are expected to continue to drive strong growth in the local market. It is expected, for instance, that the passenger car market from 3 million units in 2011 will reach 9 million units in 2020, continuing to show double-digit growth. This growth envisages a capital expansion of over $10 billion across the value chain.
As we reflect on the future direction of the auto industry, let me describe five probable themes:
Incumbents versus challengers
Over the last decade, market structure and leadership positions across all auto segments—passenger cars, commercial vehicles, two-wheelers—has remained relatively constant. Today, we are at interesting point of time where over the next five years these strongholds will get severely challenged.
Maruti Suzuki, which so far was relatively insulated in the small car segment, is faced with increasing competition from Hyundai (Eon) and the new Toyota and Honda small car launches.
Tata Motors in the commercial vehicle segment is faced with a flood of international firms such as from Daimler, Navistar and Volvo, which aim to create a so-called modern truck segment and shift the market towards a superior TCO (Total Cost of Ownership) proposition. In two-wheelers, Hero MotoCorp will face attack from Honda in its independent avatar through HMSI and a resurgent Bajaj, which would attempt to reclaim its earlier market leadership position. These battles will form the pivot around which some of these segments would see shifts in market structure, creating spaces for new companies and new leaders.
Profits from passenger cars
In the passenger car market, the top three firms constitute 80% of the market and about 12 companies constitute the remaining 20%. While the high intensity of product launches and increasing micro-segmentation of the market had led to high double-digit growth, several companies have not experienced commensurate returns along with this growth cycle.
The stated capacity expansions will add a further 3 million units to the existing capacity, which currently is at 4 million units, creating further pressure on margins.
As market reaches so-called hyper-competition with several of the late entrants attempting to reach 5-10%+ market shares, the profit pool in this industry is expected to further get squeezed and will force several auto makers to question the India business case. We should expect some market structure consolidation and select exits, and equally important, a sharper focus on defining brand identities and target segmentation.
Rise of the modern truck
Taking a drive from Delhi towards Rajasthan, when one is moving up the hills, one often encounters trucks struggling to make the climb. The picture is of an overloaded truck, relatively underpowered for the new infrastructure that has been created over the past decade.
Over the coming years, this image will change. We will increasingly see trucks which have a higher power and top speed and offer a superior TCO proposition to the existing fleet operators. Both new entrants such as Daimler (BharatBenz) as well as the incumbents such Tata Motors (Prima) are launching a slew of products in this category.
This shift as it comes about will bring a change to the logistics landscape and go one further step in reducing the turnaround times, and potentially saving on transactions costs and easing supply-side bottlenecks.
If further initiatives, which have been on the legislative table, such as the commercial fleet renewal programme, were to be implemented, this pace of change would be significantly accelerated.
Two-wheeler champions
The global two-wheeler market represents an interesting landscape. The big markets outside India are Southeast Asia, Latin America, and increasingly, parts of Africa are seeing tremendous growth. Europe is much more typical of a cottage industry, where the primary purpose remains recreation as opposed to commuting in emerging markets.
The market is dominated in most countries with the Japanese, with Indian firms such as Bajaj, TVS, and in the coming years, Hero MotoCorp, experiencing strong growth. China represents a weaker competitor, given lower level of regulations, a ban on petrol products in major cities and the fragmented nature of competition in the local market.
This is one of the few industries where Indian companies are structurally positioned extremely well. They have significant scale, low-cost product development and operations capabilities and products that have absorbed the latest technologies.
In several markets, one will see a clash between Japanese and Indian firms in almost a parallel of what happened over 50 years ago in Europe as the Japanese original equipment makers took over the mass bike product category from European manufacturers.
Urban impact
Over the last 20 years, India has steadily experienced urbanization. However, there is a catch. India’s urbanization rate remains slow (0.9% versus China at 2.8%), and more importantly, the growth continues to be centred on larger economic centres (over the last decade, seven out of the top 10 districts by GDP growth were around large cities), unlike China, where the growth spread from the coast to the hinterland and there are now over 200 cities with over a 1 million population (compared with 40 for India).
The implication of this bipolar urbanization pattern is two-fold. One, the presence of emerging cities with population less than a 1 million people but with high average income levels, which will require firms to spot these opportunities, penetrate deeper with sales and service infrastructure and given the scale rethink the cost structure of the operating model. Two, the mega cities and their suburban districts will still remain strong growth centres, the challenge we will face is of severe congestion, and this may spark regulatory moves around congestion tax, limited registration and increasing taxes. In particular as public transport in the form of metro services get established in our leading cities. The five themes are quite varied in their description and impact, and point to the underlying strength of the automotive business in India and a reminder for more exciting times ahead in the future of the industry.
The importance of the Indian auto market is well established, with almost all leading auto firms across segments now having established a presence. It’s become one of the leading small car markets, with several players having established India as a global hub for small car production. Global centres in sourcing and R&D are also present, though in some cases they have not reached their full potential.
The fundamental trends for the domestic market—income movement, low penetration, rising mobility needs, etc.—remain steady and are expected to continue to drive strong growth in the local market. It is expected, for instance, that the passenger car market from 3 million units in 2011 will reach 9 million units in 2020, continuing to show double-digit growth. This growth envisages a capital expansion of over $10 billion across the value chain.
As we reflect on the future direction of the auto industry, let me describe five probable themes:
Incumbents versus challengers
Over the last decade, market structure and leadership positions across all auto segments—passenger cars, commercial vehicles, two-wheelers—has remained relatively constant. Today, we are at interesting point of time where over the next five years these strongholds will get severely challenged.
Maruti Suzuki, which so far was relatively insulated in the small car segment, is faced with increasing competition from Hyundai (Eon) and the new Toyota and Honda small car launches.
Tata Motors in the commercial vehicle segment is faced with a flood of international firms such as from Daimler, Navistar and Volvo, which aim to create a so-called modern truck segment and shift the market towards a superior TCO (Total Cost of Ownership) proposition. In two-wheelers, Hero MotoCorp will face attack from Honda in its independent avatar through HMSI and a resurgent Bajaj, which would attempt to reclaim its earlier market leadership position. These battles will form the pivot around which some of these segments would see shifts in market structure, creating spaces for new companies and new leaders.
Profits from passenger cars
In the passenger car market, the top three firms constitute 80% of the market and about 12 companies constitute the remaining 20%. While the high intensity of product launches and increasing micro-segmentation of the market had led to high double-digit growth, several companies have not experienced commensurate returns along with this growth cycle.
The stated capacity expansions will add a further 3 million units to the existing capacity, which currently is at 4 million units, creating further pressure on margins.
As market reaches so-called hyper-competition with several of the late entrants attempting to reach 5-10%+ market shares, the profit pool in this industry is expected to further get squeezed and will force several auto makers to question the India business case. We should expect some market structure consolidation and select exits, and equally important, a sharper focus on defining brand identities and target segmentation.
Rise of the modern truck
Taking a drive from Delhi towards Rajasthan, when one is moving up the hills, one often encounters trucks struggling to make the climb. The picture is of an overloaded truck, relatively underpowered for the new infrastructure that has been created over the past decade.
Over the coming years, this image will change. We will increasingly see trucks which have a higher power and top speed and offer a superior TCO proposition to the existing fleet operators. Both new entrants such as Daimler (BharatBenz) as well as the incumbents such Tata Motors (Prima) are launching a slew of products in this category.
This shift as it comes about will bring a change to the logistics landscape and go one further step in reducing the turnaround times, and potentially saving on transactions costs and easing supply-side bottlenecks.
If further initiatives, which have been on the legislative table, such as the commercial fleet renewal programme, were to be implemented, this pace of change would be significantly accelerated.
Two-wheeler champions
The global two-wheeler market represents an interesting landscape. The big markets outside India are Southeast Asia, Latin America, and increasingly, parts of Africa are seeing tremendous growth. Europe is much more typical of a cottage industry, where the primary purpose remains recreation as opposed to commuting in emerging markets.
The market is dominated in most countries with the Japanese, with Indian firms such as Bajaj, TVS, and in the coming years, Hero MotoCorp, experiencing strong growth. China represents a weaker competitor, given lower level of regulations, a ban on petrol products in major cities and the fragmented nature of competition in the local market.
This is one of the few industries where Indian companies are structurally positioned extremely well. They have significant scale, low-cost product development and operations capabilities and products that have absorbed the latest technologies.
In several markets, one will see a clash between Japanese and Indian firms in almost a parallel of what happened over 50 years ago in Europe as the Japanese original equipment makers took over the mass bike product category from European manufacturers.
Urban impact
Over the last 20 years, India has steadily experienced urbanization. However, there is a catch. India’s urbanization rate remains slow (0.9% versus China at 2.8%), and more importantly, the growth continues to be centred on larger economic centres (over the last decade, seven out of the top 10 districts by GDP growth were around large cities), unlike China, where the growth spread from the coast to the hinterland and there are now over 200 cities with over a 1 million population (compared with 40 for India).
The implication of this bipolar urbanization pattern is two-fold. One, the presence of emerging cities with population less than a 1 million people but with high average income levels, which will require firms to spot these opportunities, penetrate deeper with sales and service infrastructure and given the scale rethink the cost structure of the operating model. Two, the mega cities and their suburban districts will still remain strong growth centres, the challenge we will face is of severe congestion, and this may spark regulatory moves around congestion tax, limited registration and increasing taxes. In particular as public transport in the form of metro services get established in our leading cities. The five themes are quite varied in their description and impact, and point to the underlying strength of the automotive business in India and a reminder for more exciting times ahead in the future of the industry.
Car sales down 24% in Oct, sharpest decline in 10 years
In what turned out to be a lacklustre festive season for automobile manufacturers, passenger car sales in the domestic market declined 23.8 per cent last month, the sharpest drop the industry has witnessed in over a decade.
According to data available with the Society of Indian Automobile Manufacturers (SIAM) on Wednesday, domestic passenger car sales stood at 1,38,521 units in October, compared to the 1,81,704 units sold in the same month last year.
For the fourth consecutive time, car sales have declined this financial year on the back of rising interest rates, higher fuel costs and disruption in production schedules at the country’s largest car maker Maruti Suzuki India Ltd.
Vishnu Mathur, director general, SIAM, said, “The industry was expecting to grow in the festive season but consumer sentiment continued to remain weak due to frequent increase in interest rates and fuel prices. This is the steepest decline since December 2000, when car sales in the country had dropped by 39.86 per cent.” The Reserve Bank of India raised lending rates by 25 points last month, which is the 13th rise since last March. Petrol prices, too, shot up by Rs 1.80 to Rs 68.64 per litre (in Delhi).
“Typically sales grow by 30-40 per cent during festive season. But the rate rise have deterred consumers, who have already availed of home loans, to increase their outgo in EMIs by investing in a new car,” said Arvind Saxena, senior director, marketing and sales, Hyundai Motor India Ltd. In India, as much as 70 per cent of vehicles are purchased by availing of financing solutions.
The sporadic labour agitations at Maruti Suzuki added to the woes dragging down industry sales numbers. Maruti Suzuki, which accounts for over 40 per cent of sales in the domestic market, could hawk only half the volumes it had reported in sales last October. The company sold 51,458 units last month as compared to the 107,555 units sold in the same month last year.
With three strikes crippling production at its Manesar unit since June this year, MSIL has recorded production loss to the tune of 74,500 units. Revenue losses have mounted to Rs 2,200 crore.
Last month, SIAM had significantly lowered the passenger car sales growth forecast for the current financial year to two-four per cent for the second time, after pegging it at 10-12 per cent in July, as against 16-18 per cent announced at the beginning of the financial year.
Two-wheeler sales increased by two per cent last month to 1,147,621 units from 1,125,052 units sold in October 2010. While motorcycle sales grew 0.7 per cent during the month to 879,883 units from 874,146 units in the corresponding month last year, the scooter segment witnessed a growth of 12.2 per cent at 211,360 units. Hero MotoCorp’s sales increased by 1.2 per cent to 497,105 units. Bajaj Auto posted an increase of 1.90 per cent at 244,503 units.
Sales of commercial vehicles rose by 18.53 per cent to 61,800 units from 52,138 units in the year-ago period. Light commercial vehicle sales grew by 15.34 per cent to 34,776 units from 30,151 units last year. Medium and heavy commercial vehicle sales stood at 27,024 units as against 21,987 units in October last year, up 22.91 per cent, SIAM said. Total sales of vehicles across categories registered a decline of 1.05 per cent to 14,41,594 units in October from 14,56,901 units in the same month last year.
According to data available with the Society of Indian Automobile Manufacturers (SIAM) on Wednesday, domestic passenger car sales stood at 1,38,521 units in October, compared to the 1,81,704 units sold in the same month last year.
For the fourth consecutive time, car sales have declined this financial year on the back of rising interest rates, higher fuel costs and disruption in production schedules at the country’s largest car maker Maruti Suzuki India Ltd.
Vishnu Mathur, director general, SIAM, said, “The industry was expecting to grow in the festive season but consumer sentiment continued to remain weak due to frequent increase in interest rates and fuel prices. This is the steepest decline since December 2000, when car sales in the country had dropped by 39.86 per cent.” The Reserve Bank of India raised lending rates by 25 points last month, which is the 13th rise since last March. Petrol prices, too, shot up by Rs 1.80 to Rs 68.64 per litre (in Delhi).
“Typically sales grow by 30-40 per cent during festive season. But the rate rise have deterred consumers, who have already availed of home loans, to increase their outgo in EMIs by investing in a new car,” said Arvind Saxena, senior director, marketing and sales, Hyundai Motor India Ltd. In India, as much as 70 per cent of vehicles are purchased by availing of financing solutions.
The sporadic labour agitations at Maruti Suzuki added to the woes dragging down industry sales numbers. Maruti Suzuki, which accounts for over 40 per cent of sales in the domestic market, could hawk only half the volumes it had reported in sales last October. The company sold 51,458 units last month as compared to the 107,555 units sold in the same month last year.
With three strikes crippling production at its Manesar unit since June this year, MSIL has recorded production loss to the tune of 74,500 units. Revenue losses have mounted to Rs 2,200 crore.
Last month, SIAM had significantly lowered the passenger car sales growth forecast for the current financial year to two-four per cent for the second time, after pegging it at 10-12 per cent in July, as against 16-18 per cent announced at the beginning of the financial year.
Two-wheeler sales increased by two per cent last month to 1,147,621 units from 1,125,052 units sold in October 2010. While motorcycle sales grew 0.7 per cent during the month to 879,883 units from 874,146 units in the corresponding month last year, the scooter segment witnessed a growth of 12.2 per cent at 211,360 units. Hero MotoCorp’s sales increased by 1.2 per cent to 497,105 units. Bajaj Auto posted an increase of 1.90 per cent at 244,503 units.
Sales of commercial vehicles rose by 18.53 per cent to 61,800 units from 52,138 units in the year-ago period. Light commercial vehicle sales grew by 15.34 per cent to 34,776 units from 30,151 units last year. Medium and heavy commercial vehicle sales stood at 27,024 units as against 21,987 units in October last year, up 22.91 per cent, SIAM said. Total sales of vehicles across categories registered a decline of 1.05 per cent to 14,41,594 units in October from 14,56,901 units in the same month last year.
HIPL revokes 51.2 lakh shares in Hero MotoCorp
The country's largest two-wheeler maker Hero MotoCorp on Thursday said its promoter firm Hero Investments Pvt Ltd (HIPL) has revoked 2.56 percent shares from IL&FS Trust Company.
In a filing to the BSE, the company said it has revoked a total of 51,20,000 shares in two trances from IL&FS.
Although the company has not specified how much money it paid to IL&FS for revoking the shares, it can be estimated to be around Rs 1,100 crore on the basis of Hero MotoCorp's closing price on BSE on November 1, the date of the exercise.
Post the revoke exercise, 80,000 shares are left pledged with IL&FS, comprising 0.04 percent stake in Hero MotoCorp, it added.
HIPL's stake in the company is now increased to 43.29 percent, the filing said.
In a filing to the BSE, the company said it has revoked a total of 51,20,000 shares in two trances from IL&FS.
Although the company has not specified how much money it paid to IL&FS for revoking the shares, it can be estimated to be around Rs 1,100 crore on the basis of Hero MotoCorp's closing price on BSE on November 1, the date of the exercise.
Post the revoke exercise, 80,000 shares are left pledged with IL&FS, comprising 0.04 percent stake in Hero MotoCorp, it added.
HIPL's stake in the company is now increased to 43.29 percent, the filing said.
Mahindra 2wheelers launches special edition Rodeo scooter
Mahindra 2 Wheelers has launched new variants for the 125cc Rodeo scooter with special edition dual colours. Focussed on young professionals and college students, the Rodeo now gets the sterling black and the scarlet black colour variants. They also sport features such as telescopic suspension, 4-in-1 anti theft lock and digital speedometer. Other 125cc scooters from Mahindra include the Duro, a family scooter and the Flyte which is marketed with the woman customer in mind.
Moped sales crash as rural income dips
After resisting the demand skid that hit the car industry earlier this year for two quarters, two-wheeler demand has now come down sharply in October, down from 1.4 million units in September 2011 to 1.3 million units in October. Auto industry experts say this demand trend is an indication of an across-the-segment slowdown in the auto industry and a pointer towards rural demand losing speed.
Two wheeler demand held up nicely rising month-on-month till March 2011. But between March and August, it remained stuck in first gear, hovering around the 1.2 million units range. September bucked that trend only to see demand come crashing down in October. Says Venu Srinivasan, MD, TVS Motor Company: "There are definite signs of an early indication of a slowdown but the picture will become clearer once the sales numbers for November and December come in." TVS, he says, saw its festival demand curve moving forward to September and had a dull October when the company took a Diwali shutdown. "Although two-wheelers are not as impacted by interest rate hikes as cars because fewer numbers are bought with auto loans, inflation and the repeated hikes in petrol prices has hit demand sentiment," says Srinivasan.
That sentiment slip is also showing up in moped sales, the first indicator of rural disposable income. Moped sales have yo-yoed all year going up and down month-on-month from 53,268 units in January up to 61,403 in February, 64,484 in March then crashing to 59,536 in April, jumping back to 68,104 in May, down again to 64,493 in June, up to 67,169 in July, slipping back to 60,205 in August, back up to 68,963 in September and then skidding to 56,909 in October. Auto industry experts say there are some indications that the government may be cutting back on rural entitlement schemes which along with inflation has also squeezed disposable income.
The auto industry's downward slide is part of a larger picture of general slowdown say industry experts. "With exports and manufacturing slowing down, automobile demand has to be impacted strongly," says Rakesh Batra, head of Ernst & Young's automobile practice in India. "So far the rural economy was doing better as support prices were up but with inflation eating away disposable income could also be affected." However he says, tractor sales are still very buoyant so not all segments of the rural economy have started to stagnate.
India's problem is that it's slowdown comes bang in the middle of a global crisis. "The Euro zone is headed towards a recession and ditto for the US," says Batra. "China's auto figures have shown a slowdown so India cannot but feel the pinch." However, since November and December are traditionally slow months in terms of auto sales, the larger picture will emerge by early next year.
Two wheeler demand held up nicely rising month-on-month till March 2011. But between March and August, it remained stuck in first gear, hovering around the 1.2 million units range. September bucked that trend only to see demand come crashing down in October. Says Venu Srinivasan, MD, TVS Motor Company: "There are definite signs of an early indication of a slowdown but the picture will become clearer once the sales numbers for November and December come in." TVS, he says, saw its festival demand curve moving forward to September and had a dull October when the company took a Diwali shutdown. "Although two-wheelers are not as impacted by interest rate hikes as cars because fewer numbers are bought with auto loans, inflation and the repeated hikes in petrol prices has hit demand sentiment," says Srinivasan.
That sentiment slip is also showing up in moped sales, the first indicator of rural disposable income. Moped sales have yo-yoed all year going up and down month-on-month from 53,268 units in January up to 61,403 in February, 64,484 in March then crashing to 59,536 in April, jumping back to 68,104 in May, down again to 64,493 in June, up to 67,169 in July, slipping back to 60,205 in August, back up to 68,963 in September and then skidding to 56,909 in October. Auto industry experts say there are some indications that the government may be cutting back on rural entitlement schemes which along with inflation has also squeezed disposable income.
The auto industry's downward slide is part of a larger picture of general slowdown say industry experts. "With exports and manufacturing slowing down, automobile demand has to be impacted strongly," says Rakesh Batra, head of Ernst & Young's automobile practice in India. "So far the rural economy was doing better as support prices were up but with inflation eating away disposable income could also be affected." However he says, tractor sales are still very buoyant so not all segments of the rural economy have started to stagnate.
India's problem is that it's slowdown comes bang in the middle of a global crisis. "The Euro zone is headed towards a recession and ditto for the US," says Batra. "China's auto figures have shown a slowdown so India cannot but feel the pinch." However, since November and December are traditionally slow months in terms of auto sales, the larger picture will emerge by early next year.
Announcement on Yamaha Motor’s third plant in two months
Two-wheeler maker India Yamaha Motor will announce location of its third plant in the next couple of months as it plans to corner significant share in the motorcycle market.
“We are discussing possible locations for the third plant and decision on the same is possible in the next couple of months,” said India Yamaha Motor National Business Head (Sales) Roy Kurian while talking to The Pioneer.
“We will go for the State, which gives us maximum benefit on tax count and is strategically located for our operations,” he added.
Currently the company has two plants— Surajpur in Uttar Pradesh and Faridabad in Haryana having a capacity of 6 lakh production per annum, which can be expanded up to a million unit.
Yamaha sold around 250,000 motorcycles last year and is now eyeing a share of 10 per cent in the domestic motorcycle market over a period of four years.
The third plant will not only expand Yamaha’s market share in India but will also facilitate exports to neighbouring markets in Nepal, Bangladesh and Sri Lanka.
When asked about sales target for the year, Kurian said: “We plan to sell 3.3 lakh bikes in domestic market and export 1.7 lakh to other countries,” adding, “we are exporting engines to countries like Indonesia and others.”
Yamaha currently has 400 dealers and over 1200 touchpoints. The company is going very aggressive on this to realise its dream of having a significant share in Indian motorcycle market.
“The company currently has 1,200 touchpoints and we plan to expand that to 2000 ones by 2014. By then we will reach every possible locations,” added Kurian.
The company is also planning to foray into the scooter segment and announcement on the same is also likely in the next couple of months.
“Scooter segment is growing fast and, therefore, there is much potential. We will launch scooter for ladies and girls and announcement on the same will happen in the next couple of months,” added Kurian.
Talking in detail about the scooter Kurian said that it would be a gearless one having unmatched performance most suitable for a family.
Kurian also clarified on media reports that the company is planning any strategic tie up with Mahindra Two-wheelers.
“It could have been possible in the very beginning when Yamaha re-entered India. But after Yamaha products already a great brand name we don’t need any. This a complete rumour devoid of any substance,” said Kurian.
After receiving a terrific response from the recently launched YZF-R15 Version 2.0 coupled with the seasonal festivities, India Yamaha Motor clocked a growth of 26.8 per cent in motorcycle sales during October 2011 as compared to the corresponding period last year.
The company sold 47,240 units in October 2011 as against 37,251 units sold in October 2010. In domestic markets, the company sold 38,229 units in October 2011 as compared to 31,791 units sold in the same month last year, a growth of 20.3 per cent. The export figures stood at 9,011 units in October 2011 while 5,460 motorcycles were exported in October 2010, a growth of 65 per cent.
“We are discussing possible locations for the third plant and decision on the same is possible in the next couple of months,” said India Yamaha Motor National Business Head (Sales) Roy Kurian while talking to The Pioneer.
“We will go for the State, which gives us maximum benefit on tax count and is strategically located for our operations,” he added.
Currently the company has two plants— Surajpur in Uttar Pradesh and Faridabad in Haryana having a capacity of 6 lakh production per annum, which can be expanded up to a million unit.
Yamaha sold around 250,000 motorcycles last year and is now eyeing a share of 10 per cent in the domestic motorcycle market over a period of four years.
The third plant will not only expand Yamaha’s market share in India but will also facilitate exports to neighbouring markets in Nepal, Bangladesh and Sri Lanka.
When asked about sales target for the year, Kurian said: “We plan to sell 3.3 lakh bikes in domestic market and export 1.7 lakh to other countries,” adding, “we are exporting engines to countries like Indonesia and others.”
Yamaha currently has 400 dealers and over 1200 touchpoints. The company is going very aggressive on this to realise its dream of having a significant share in Indian motorcycle market.
“The company currently has 1,200 touchpoints and we plan to expand that to 2000 ones by 2014. By then we will reach every possible locations,” added Kurian.
The company is also planning to foray into the scooter segment and announcement on the same is also likely in the next couple of months.
“Scooter segment is growing fast and, therefore, there is much potential. We will launch scooter for ladies and girls and announcement on the same will happen in the next couple of months,” added Kurian.
Talking in detail about the scooter Kurian said that it would be a gearless one having unmatched performance most suitable for a family.
Kurian also clarified on media reports that the company is planning any strategic tie up with Mahindra Two-wheelers.
“It could have been possible in the very beginning when Yamaha re-entered India. But after Yamaha products already a great brand name we don’t need any. This a complete rumour devoid of any substance,” said Kurian.
After receiving a terrific response from the recently launched YZF-R15 Version 2.0 coupled with the seasonal festivities, India Yamaha Motor clocked a growth of 26.8 per cent in motorcycle sales during October 2011 as compared to the corresponding period last year.
The company sold 47,240 units in October 2011 as against 37,251 units sold in October 2010. In domestic markets, the company sold 38,229 units in October 2011 as compared to 31,791 units sold in the same month last year, a growth of 20.3 per cent. The export figures stood at 9,011 units in October 2011 while 5,460 motorcycles were exported in October 2010, a growth of 65 per cent.
TVS Motor to invest in demerged co of Mahabharat Motors
Permission has been granted by the West Bengal Industrial Development Corporation Ltd for the demerger of the two-wheeler business of Mahabharat Motors Manufacturing Co into a separate company through the court process of demerger.
The Commerce and Industry Minister of the West Bengal Government, Mr Partha Chaterjee, on Saturday handed over to TVS Motor Company and Mahabharat Motors Manufacturing Company the in-principle permission.
After the demerger, TVS Motor Company will invest in this new venture subject to approval that may be required by law and government regulations.
TVS Motor Company, which had entered into a memorandum of understanding with Mahabharat Motors Manufacturing Co, West Bengal in 2008, will now take a larger role in the demerged company and facilitate stronger presence in the eastern region of the Indian market.
As per the MOU signed in 2008, TVS Motor Co was to provide technical support for the manufacturing facility. In addition, the company was to train personnel as per the quality procedures and standards followed at other assembly plants. The manufacturing facility was created in accordance with the MoU and commercial production commenced in September 2010.
TVS Motor will retain the existing staff and workers of Mahabharat Motors Manufacturing Co. It expects to initially manufacture around 1,000 motorcycles per month. TVS Motor will also use this facility as a hub to service West Bengal and North-East markets.
TVS Motor currently has three manufacturing facilities in Tamil Nadu, Karnataka and Himachal Pradesh to manufacture two and three-wheelers.
The Commerce and Industry Minister of the West Bengal Government, Mr Partha Chaterjee, on Saturday handed over to TVS Motor Company and Mahabharat Motors Manufacturing Company the in-principle permission.
After the demerger, TVS Motor Company will invest in this new venture subject to approval that may be required by law and government regulations.
TVS Motor Company, which had entered into a memorandum of understanding with Mahabharat Motors Manufacturing Co, West Bengal in 2008, will now take a larger role in the demerged company and facilitate stronger presence in the eastern region of the Indian market.
As per the MOU signed in 2008, TVS Motor Co was to provide technical support for the manufacturing facility. In addition, the company was to train personnel as per the quality procedures and standards followed at other assembly plants. The manufacturing facility was created in accordance with the MoU and commercial production commenced in September 2010.
TVS Motor will retain the existing staff and workers of Mahabharat Motors Manufacturing Co. It expects to initially manufacture around 1,000 motorcycles per month. TVS Motor will also use this facility as a hub to service West Bengal and North-East markets.
TVS Motor currently has three manufacturing facilities in Tamil Nadu, Karnataka and Himachal Pradesh to manufacture two and three-wheelers.
The New Hero
Hero MotoCorp, the new avatar of Hero Honda, announced that its dealers sold a record 650,000 motorcycles and scooters in October. Farmers had harvested their crops, and salaried people had got Diwali bonuses; the company had no reason to complain. Some days before that, it had declared its financial results for the quarter ended September 2011, the first full quarter without Honda as a shareholder, which showed that sale as well as profit had hit at an all-time high. For several years, the Munjals, the promoters of the company, have been known as sharp businessmen but their success was always credited to technology and innovation from Honda. The ride without Honda was the real test of their skills.
The Munjals and Honda had formed Hero Honda, a 26-26 joint venture, in the late-1980s. The first sign of discord became visible over ten years ago when Honda set up a 100 per cent arm, Honda Motorcycles and Scooters India. Finally, on December 16 last year, Hero Honda informed the stock markets that the partnership was over and Honda would soon exit the company.
In the days that preceded the announcement, the Munjals had formed a core team of three people to assess if life was possible without Honda. The team, which was kept under wraps from the rest of the world, could not go out for consumer research because that would have let the secret out. It had to rely on gut feel. What may have played on this team’s mind was Honda Motorcycles and Scooters India’s performance in the motorcycle market and Hero Honda’s performance in the scooter market. Both had entered these markets in 2006; while Honda had got 7 per cent of the motorcycle market, Hero Honda had grabbed over 17 per cent of the scooter market which was dominated by the Honda Activa. Technology, the team concluded, was equal for all, and what really mattered to Indians was the total cost of ownership — low price tags, high fuel economy, inexpensive spares and high resale value.
On December 16, immediately after it had informed the stock markets that Honda will exit the company and before answering calls from anxious analysts and inquisitive journalists, Hero Honda Managing Director & CEO Pawan Munjal did a live webcast to all employees, vendors and dealers. The dealers were the real strength of the Munjals. Chairman and family patriarch Brijmohan Lall was on first-name terms with each of his 450 dealers, and he had made it a practice to interview all prospective dealers. The next day, the key hundred or so dealers were brought to Delhi, and the father-son duo apprised them of the situation. Within ten days, each one of the 100,000 or so mechanics and salesmen of the dealerships and the 4,000-odd touch points (service centres et cetera) were given dockets on the subject, and their questions were answered by the company's employees. Close to a year later, Hero MotoCorp claims not a single dealer left it, in spite of the doomsday projections. And when the Munjals launched the new company name and brand identity at the O2 arena in London on August 7, the presence of the army of dealers wasn’t missed by observers. Somebody who was there says there were at least 1,000 of them. Obviously, many dealers didn’t travel alone.
* * *
With the dealers reassured, another core team of five was formed under Pawan Munjal to give the company a new name and a new brand identity. Though the Munjals had the option to use the Hero Honda brand till June 2014, they decided to replace it as early as possible. As it involved renewal, the project was codenamed Yajna. The team gathered about ten case studies of companies that had gone through such rebranding. There were some international cases in the lot, though the majority was Indian. Some were success stories, others were not. The job from here was to find the right specialist to rename the company and design a new brand, and then find an advertising agency that could convey the makeover in an effective way.
In the days that followed, the Munjals sent out feelers to brand specialists from across the world. One of the go-betweens contacted Charles Wright of Wolff Ollins, an Omnicom company. Wright perhaps knew that this was no small opportunity: Hero Honda (as it was called then) was the largest Indian maker of two-wheelers. The very next day, he was in the Hero Honda office in a cramped south Delhi market (the Munjals don’t move out of the market apparently because they consider it lucky for them) to meet Munjal and his brother, Sunil. The two explained the situation to Wright - the reasons for the separation with Honda and the roadmap ahead. Many more conversations followed. What seems to have swung the deal in Wolff Ollins’s favour (there were at least three other consultants in the fray) was its work for Tata DoCoMo.
The Munjals wanted the new company name and brand to reflect change with continuity as it would be unwise to let go off Hero Honda’s brand equity. The brief given to Wolff Ollins was that the new name and brand should highlight Indian engineering, and signal that the company now plans to go global (earlier it could sell only in those countries where Honda was absent) and branch into new segments of the automobile market — three-wheelers, for instance. All primary data that the company had collected over the years on brand health and consumer psychographics were put at the disposal of Wright and his team of 20 drawn from the firm’s offices in London, New York and Dubai. This team, which of course included some Indians, flew to India to and interacted with the company’s promoters, employees, dealers, vendors and customers to get a feel of the brand. “The research,” says Wright, “showed the affection the brand has long enjoyed in the hearts of Indians and how this strong bond is born of the way a two-wheeler transforms the economic and social circumstances of the common man.”
* * *
By mid-year, Wolff Ollins gave its output. The name, it said, should be Hero MotoCorp — Hero to signal continuity and MotoCorp to indicate mobility, modernity and technology. It kept the door open for the company to get into segments other than two-wheelers. So far as the brand was concerned, Wolff Ollins stuck to the black and white of Hero Honda for continuity but gave it the shape of an “engineered” H: a red parallelogram with a black triangle and trapezium. The Hero next to it was in red, to signify warmth and friendliness, and all the letters were of the same size. There were no sharp edges in the letters, which, says Hero MotoCorp Senior Vice-president (marketing and sales) Anil Dua, reflects the Indian feel. “Together, the two stand for Indian engineering.”
In March, the Munjals had appointed Law & Kenneth to devise the communication strategy for the new identity. Its people were made to work with the Wolff Ollins team to (1) create ownership and reduce friction, and (2) cut the go-to-market time. The baton was now passed to it. Law & Kenneth came out with the punch line, hum main hai hero (there’s a hero inside us). The Munjals liked it. They knew it had universal appeal. Everybody likes to feel that he has it in him to reach his full potential, and thus there are better times to come.
The line was then passed on to lyricist Irshad Kamil to write an anthem around it. Kamil had made a name for himself with his lyrics in films like Chameli, Love Aaj Kal, Jab We Met and Ajab Prem Ki Gajab Kahani. Once the anthem was ready, A R Rahman was contracted to set it to music and sing it as well. Rahman was in Los Angeles where he composed the tune. An anxious Munjal went over every stanza and line with him on Skype. Once Rahman had done his job, film maker Anurag Kashyap (Dev D, Gulaal, Black Friday, That Girl in Yellow Boots et cetera) was brought on board to make a film around it. The storyboard was the achievements of ordinary people — a girl from Jharkhand who wins a medal at a gymnastics championship, a young boy who wins a dance contest et cetera. The celebrities on the company’s rolls — film stars like Hrithik Roshan and cricketers like Virender Sehwag — were kept out of it, perhaps because the Munjals didn’t want the message to get lost. Kashyap shot the film at various locations in India, except the shots of Rahman which were done in Los Angeles. The Munjals were now ready to roll.
* * *
They chose to unveil the new identity in London on August 7. This was done, of course, to signal that the company would now go global; according to Dua, London was also chosen because it is a good blend of history and modernity — just the thought that the Munjals wanted to convey about their company.
On August 15, Independence Day, 30 television channels were flooded with the new campaign, front page slots were bought on leading newspapers, and leading websites were roadblocked. In the days that followed, the campaign was put on 200 radio stations and 4,000 cinema halls in Tier 2 & 3 cities, and signages were changed in all the 4,500 consumer contact points like dealerships and service centres. Cleverly, the company had gone cold on all marketing and media spend for the last month and a half; this helped it conserve cash when this campaign broke. As a result, says Dua, the advertising expenditure has stayed within the average of 2-2.5 per cent for the July-September quarter.
The results, Dua claims, have been better than expected. “Our market share in motorcycles has improved from 54.5 per cent to 55.5 per cent in the last one year, and our mindshare has gone up by four percentage points after the campaign.” Spontaneous brand awareness, where people are asked to name two or three motorcycle brands, Dua says, has improved from 99 per cent in the Hero Honda era to 100 per cent in the Hero MotoCorp days. These are still early days; the challenge is to sustain it in the future.
The Munjals and Honda had formed Hero Honda, a 26-26 joint venture, in the late-1980s. The first sign of discord became visible over ten years ago when Honda set up a 100 per cent arm, Honda Motorcycles and Scooters India. Finally, on December 16 last year, Hero Honda informed the stock markets that the partnership was over and Honda would soon exit the company.
In the days that preceded the announcement, the Munjals had formed a core team of three people to assess if life was possible without Honda. The team, which was kept under wraps from the rest of the world, could not go out for consumer research because that would have let the secret out. It had to rely on gut feel. What may have played on this team’s mind was Honda Motorcycles and Scooters India’s performance in the motorcycle market and Hero Honda’s performance in the scooter market. Both had entered these markets in 2006; while Honda had got 7 per cent of the motorcycle market, Hero Honda had grabbed over 17 per cent of the scooter market which was dominated by the Honda Activa. Technology, the team concluded, was equal for all, and what really mattered to Indians was the total cost of ownership — low price tags, high fuel economy, inexpensive spares and high resale value.
On December 16, immediately after it had informed the stock markets that Honda will exit the company and before answering calls from anxious analysts and inquisitive journalists, Hero Honda Managing Director & CEO Pawan Munjal did a live webcast to all employees, vendors and dealers. The dealers were the real strength of the Munjals. Chairman and family patriarch Brijmohan Lall was on first-name terms with each of his 450 dealers, and he had made it a practice to interview all prospective dealers. The next day, the key hundred or so dealers were brought to Delhi, and the father-son duo apprised them of the situation. Within ten days, each one of the 100,000 or so mechanics and salesmen of the dealerships and the 4,000-odd touch points (service centres et cetera) were given dockets on the subject, and their questions were answered by the company's employees. Close to a year later, Hero MotoCorp claims not a single dealer left it, in spite of the doomsday projections. And when the Munjals launched the new company name and brand identity at the O2 arena in London on August 7, the presence of the army of dealers wasn’t missed by observers. Somebody who was there says there were at least 1,000 of them. Obviously, many dealers didn’t travel alone.
* * *
With the dealers reassured, another core team of five was formed under Pawan Munjal to give the company a new name and a new brand identity. Though the Munjals had the option to use the Hero Honda brand till June 2014, they decided to replace it as early as possible. As it involved renewal, the project was codenamed Yajna. The team gathered about ten case studies of companies that had gone through such rebranding. There were some international cases in the lot, though the majority was Indian. Some were success stories, others were not. The job from here was to find the right specialist to rename the company and design a new brand, and then find an advertising agency that could convey the makeover in an effective way.
In the days that followed, the Munjals sent out feelers to brand specialists from across the world. One of the go-betweens contacted Charles Wright of Wolff Ollins, an Omnicom company. Wright perhaps knew that this was no small opportunity: Hero Honda (as it was called then) was the largest Indian maker of two-wheelers. The very next day, he was in the Hero Honda office in a cramped south Delhi market (the Munjals don’t move out of the market apparently because they consider it lucky for them) to meet Munjal and his brother, Sunil. The two explained the situation to Wright - the reasons for the separation with Honda and the roadmap ahead. Many more conversations followed. What seems to have swung the deal in Wolff Ollins’s favour (there were at least three other consultants in the fray) was its work for Tata DoCoMo.
The Munjals wanted the new company name and brand to reflect change with continuity as it would be unwise to let go off Hero Honda’s brand equity. The brief given to Wolff Ollins was that the new name and brand should highlight Indian engineering, and signal that the company now plans to go global (earlier it could sell only in those countries where Honda was absent) and branch into new segments of the automobile market — three-wheelers, for instance. All primary data that the company had collected over the years on brand health and consumer psychographics were put at the disposal of Wright and his team of 20 drawn from the firm’s offices in London, New York and Dubai. This team, which of course included some Indians, flew to India to and interacted with the company’s promoters, employees, dealers, vendors and customers to get a feel of the brand. “The research,” says Wright, “showed the affection the brand has long enjoyed in the hearts of Indians and how this strong bond is born of the way a two-wheeler transforms the economic and social circumstances of the common man.”
* * *
By mid-year, Wolff Ollins gave its output. The name, it said, should be Hero MotoCorp — Hero to signal continuity and MotoCorp to indicate mobility, modernity and technology. It kept the door open for the company to get into segments other than two-wheelers. So far as the brand was concerned, Wolff Ollins stuck to the black and white of Hero Honda for continuity but gave it the shape of an “engineered” H: a red parallelogram with a black triangle and trapezium. The Hero next to it was in red, to signify warmth and friendliness, and all the letters were of the same size. There were no sharp edges in the letters, which, says Hero MotoCorp Senior Vice-president (marketing and sales) Anil Dua, reflects the Indian feel. “Together, the two stand for Indian engineering.”
In March, the Munjals had appointed Law & Kenneth to devise the communication strategy for the new identity. Its people were made to work with the Wolff Ollins team to (1) create ownership and reduce friction, and (2) cut the go-to-market time. The baton was now passed to it. Law & Kenneth came out with the punch line, hum main hai hero (there’s a hero inside us). The Munjals liked it. They knew it had universal appeal. Everybody likes to feel that he has it in him to reach his full potential, and thus there are better times to come.
The line was then passed on to lyricist Irshad Kamil to write an anthem around it. Kamil had made a name for himself with his lyrics in films like Chameli, Love Aaj Kal, Jab We Met and Ajab Prem Ki Gajab Kahani. Once the anthem was ready, A R Rahman was contracted to set it to music and sing it as well. Rahman was in Los Angeles where he composed the tune. An anxious Munjal went over every stanza and line with him on Skype. Once Rahman had done his job, film maker Anurag Kashyap (Dev D, Gulaal, Black Friday, That Girl in Yellow Boots et cetera) was brought on board to make a film around it. The storyboard was the achievements of ordinary people — a girl from Jharkhand who wins a medal at a gymnastics championship, a young boy who wins a dance contest et cetera. The celebrities on the company’s rolls — film stars like Hrithik Roshan and cricketers like Virender Sehwag — were kept out of it, perhaps because the Munjals didn’t want the message to get lost. Kashyap shot the film at various locations in India, except the shots of Rahman which were done in Los Angeles. The Munjals were now ready to roll.
* * *
They chose to unveil the new identity in London on August 7. This was done, of course, to signal that the company would now go global; according to Dua, London was also chosen because it is a good blend of history and modernity — just the thought that the Munjals wanted to convey about their company.
On August 15, Independence Day, 30 television channels were flooded with the new campaign, front page slots were bought on leading newspapers, and leading websites were roadblocked. In the days that followed, the campaign was put on 200 radio stations and 4,000 cinema halls in Tier 2 & 3 cities, and signages were changed in all the 4,500 consumer contact points like dealerships and service centres. Cleverly, the company had gone cold on all marketing and media spend for the last month and a half; this helped it conserve cash when this campaign broke. As a result, says Dua, the advertising expenditure has stayed within the average of 2-2.5 per cent for the July-September quarter.
The results, Dua claims, have been better than expected. “Our market share in motorcycles has improved from 54.5 per cent to 55.5 per cent in the last one year, and our mindshare has gone up by four percentage points after the campaign.” Spontaneous brand awareness, where people are asked to name two or three motorcycle brands, Dua says, has improved from 99 per cent in the Hero Honda era to 100 per cent in the Hero MotoCorp days. These are still early days; the challenge is to sustain it in the future.