Local 2-wheeler firms hope to ride on new launches

After overtaking TVS Motor, Honda has its eyes on No 2 player Bajaj FACING intense competition and pressures on market share from Japanese two-wheeler firms, Indian two-wheeler makers are banking on new product launches in a bid to retain their position and boost sales in the current financial year. With Honda, Suzuki and Yamaha aggressively expanding their presence and increasing their sales with glamorous products across segments, Bajaj, TVS Motor and Hero are hoping their upcoming product launches will help their sales gain momentum. An interesting development in the Indian two-wheeler market in FY12 was the Japanese firm Honda scripting a new era by becoming the third-largest two-wheeler firm in India, pushing TVS Motor to the fourth position. Honda Motorcycle sold over 100,000 units more than TVS Motor in 2011-12. Honda’s domestic sales stood at 1,996,320 units against TVS Motor’s sales of 1,895,500 units (including moped sales of 776,866 units). TVS Motor’s sales were higher by 213,000 units in previous financial year. Aided by a host of new products and commissioning of its second plant, Honda boosted its sales and market share during FY12. And now, Honda is threatening to remove Bajaj from its No 2 position as the gap in domestic sales between the two companies narrows. In April this year, Bajaj sold just over 6,700 two-wheelers more than Honda in the Indian market. With Honda claiming strong response for its products, the battle between Honda and Bajaj will intensify in the coming months. Suzuki, which has just entered the mass segment, will be fuelling further competition in the 110cc segment with its Hayate motorcycle. “The 110cc bike segment accounts for about 50 per cent of total motorcycle market with an estimated sales volume of 4.5-5 lakh units a month. We hope to garner five per cent share in the near term,” Anand Thakur, national head-sales, Suzuki Motor India said. Yamaha, which operates in the above 150cc segment in India, is now betting on scooter segment as well. It will be foraying into the segment with the proposed launch of its first scooter for the Indian market around this year’s festive season. It aims to fetch 40 per cent of total sales from scooters in two years. To protect their position from the onslaught of Japanese competition, Bajaj, TVS and Hero are lining up new launches to keep up the sales momentum this year. “Regaining its No 2 position in the two-wheeler segment, Bajaj will now bank on newer variants of Discovers and Pulsars to keep up the pace,” said Sneha Venkatraman, analyst of HDFC Securities. “It has just launched the new Discover 125 Sports Tourer to build on its executive segment market share. While the management expects the new Discover 125 ST, with all new DTSI-i twin spark technology, to help the company maintain its leadership in the 125cc-plus commuter segment, Bajaj also expects to lure more 100cc commuters to the 125cc-plus space. The much awaited, next generation Pulsar 200 NS will hit the roads shortly, beginning with Maharashtra, and followed by other states in July this year,” Venkatraman added.

Land delays hit Hero MotoCorp's plans for Gujarat facility.

Hero MotoCorp's much awaited announcement of its fourth two-wheeler facility in Gujarat may be facing a delay of a few months on land acquisition hurdles. According to certain State Government officials, though most of the land parcel has already been acquired, there is a delay in the purchase of a last, small plot from private parties. The new plant is expected to come up on a 300-acre plot close to General Motors' car plant in Halol, in central Gujarat. “We expect an announcement on the plant within a month as it is in the advanced stages. They have said that they are coming here and we think the issues will be cleared soon,” a top Gujarat Government official said. When asked about an update, a company official said Hero MotoCorp would not comment on the development. In March, Mr Pawan Munjal, Managing Director at Hero MotoCorp had told Business Line that an announcement would be made in the same month. However, this formal company declaration is still awaited. Export-focussed More recently, in the investor call after the FY12 financial results in April, company CFO, Mr Ravi Sud, had said that an announcement on the new plant would be made “very, very soon”. With an expected investment of Rs 1,200 crore and a two-million-unit initial annual capacity, the export-focussed Gujarat plant would join its two existing manufacturing facilities in the Gurgaon-Manesar belt and a third in Haridwar. Additionally, a fifth plant is also expected to be announced in the near future, with Karnataka expected to be the likely destination. In the same State, erstwhile partner Honda Motor recently announced its own two-wheeler plant (near Bangalore). At present, the annual production capacity across three plants is at 6.6 million units. This is expected to go up to 7 million units by July-August. With plants to actively expand exports to Africa and South America from the current quarter, the two wheeler maker expects to grow above 10 per cent in FY13 (sales rose 15 per cent in FY12). Hero MotoCorp shares at the BSE were down 1.86 per cent to Rs 1,826.20 on Wednesday.

Another car price on cards, two wheelers safe

With automakers reeling under input cost pressures due to the falling rupee, car prices are set to go up in June. While Toyota Kirloskar Motor and General Motors India are working on the quantum of price hikes, others such as Maruti Suzuki and Hyundai Motor are expected to follow suit. The move is expected to further dampen car demand as the industry is already suffering from high interest rates and record fuel prices. However, two-wheeler makers such as Hero MotoCorp and TVS Motor said they have not taken any decision on raising prices due to the rupee’s fall as virtually every component is sourced locally. Car prices have risen by up to nine per cent in two years. This would be the seventh hike by automakers in two years; and third in 2012 after prices were revised upwards in January on the back of high commodity prices and in March after the two per cent hike in excise duty. Between January and April, 805,632 cars were sold, a growth of 11 per cent over 724,660 cars sold in year ago period. Car sales were not impacted by price hikes in January and grew 7 per cent at 196,013 cars compared with the year-ago period. This followed December 2011’s sale of 159,325 units and November 2011’s figure of 171,131 cars. India recorded its best ever car sales in February at 211,402 cars and beat the record at 229,866 cars in March with customers rushing to showrooms to avoid anticipated price hike in the Union budget. Entry-level segment comprising Nano, Alto and Eon along with diesel cars such as Swift, Dzire and i20 spruced up sales of the industry while sedans and SUVs continued decent growth. Due to a 2 per cent excise duty hike in small cars and 2 to 5 per cent excise duty hike in bigger cars, the industry was severely impacted with overall sales falling to 168,351 cars in April, growing just 3 per cent over the year-ago period. This followed a 20 per cent growth in March. The Rs 2-4 lakh small car segment was hit the most while diesel sedans such as Verna and Dzire spruced up sales. Sales of high-end sedans such as Superb, Cruze, Kizashi and Passat also bore the brunt of the price hike. “We are looking at a price hike next month as rupee depreciation has impacted us heavily. We will be taking a decision on it soon,” said Sandeep Singh, deputy MD (marketing), Toyota Kirloskar Motor. “The rupee fall is impacting our bottom line as up to 30 per cent of components are imported,” said P Balendran, VP, General Motors India. Both companies are expected to take a decision later this month on the quantum of price hikes. While Maruti Suzuki had raised car prices by 1.5 to 3 per cent in January, Toyota had increased prices of its vehicles, including that of its largest selling SUV Fortuner, by up to Rs 50,000. GM India had increased prices of popular cars such as Beat (diesel) by Rs 15,000 citing higher input costs. Over and above the across-the-board hike, Maruti had raised prices of Dzire sedan once again by up to Rs 15,000 earlier this month and the company may bite the bullet again next month. “Rupee depreciation is creating pressure on margins and input costs. However, market situation is really tough and price hike looks like a difficult thing at the moment,” a senior Maruti Suzuki official said. The carmaker imports roughly 10 per cent of its raw materials from countries such as Japan and South Korea. R Sethuraman, VP (finance) at Hyundai Motor India said, “There is pressure on input costs. Definitely, the pressure is a reason for concern.” Honda Siel Cars India has not yet planned any price hike, Jnaneswar Sen, senior vice president for marketing and sales at the company said. Most of the carmakers apart from Honda and Tata Motors had raised vehicle prices by two to three per cent across the entire portfolio in January 2012. “Costs to automakers would have gone up due to the rupee fall. The petrol price hike by a significant amount has already dampened the sentiment and vehicle price hike will further be a negative for the industry on demand front,” said Yaresh Kothari, auto analyst, Angel Broking. Car sales grew just three per cent in April at 168,351 units compared with 162,813 units in the year-ago period on account of hike in vehicle prices following the Union budget on March 16. The industry body had earlier forecasted 10 to 12 per cent growth in car sales for the current financial year after a flat 2011-12. Though carmakers and analysts said it would be difficult to quantify the impact of price rise on car sales, going forward, Kothari of Angel Broking feels that it is unlikely that auto industry would meet the growth forecast of 10 to 12 per cent in 2012-13.

Triumph Motorcycles to set up Rs 215 - cr plant at Kolar

Triumph Motorcycles-India plans to set up a manufacturing unit near Bangalore at a cost of Rs 215 crore. The company's proposal got approved by the Karnataka State High Level Clearance Committee (SHLCC). The committee has approved allotment of 30 acres of land at Narsapura Industrial Area in Kolar district. Triumph Motorcycles is an iconic British motorcycle brand which has entered Indian market with distinctive motorcycles. The company at the 11th Auto Expo in Delhi showcased model range for the Indian market which include the parallel-twin, Bonneville, the iconic naked roadsters Speed Triple and Street Triple, the off-roader Tiger 800XC, class-leading supersport bike Daytona 675, and cruisers Storm and Rocket III. ASSEMBLY AND MANUFACTURE According to the Karnataka Industries Department officials, the company is expected to both assemble and manufacture few models to suit the Indian market. The SHLCC meet chaired by Chief Minister, Mr D. V. Sadananda Gowda, which cleared the proposal, has offered incentives and concessions as applicable in the industrial policy of the State, and has instructed to give employment to family members of the land losers. KIADB has been instructed to supply 1.92 lakh litres a day (LPD) water and BESCOM to service power requirement of 4000 kva. The company also has been told adhere to provide local employment in the project according to the Dr Sarojini Mahishi report.

Auto Pilot - Driving on all fours, and some on two, auto makers storm the Top 25 Best Marketing Companies list

Auto Pilot Driving on all fours, and some on two, auto makers storm the Top 25 Best Marketing Companies list It seems roti, kapda, makaan, mobile, gaadi, in no particular order, is the new mantra for the upwardly mobile in the country. Indians are buying small cars, smart cars, medium-size cars, family cars, SUVs, XUVs, sedans and scooters, bad roads and worse traffic notwithstanding. And guess who is not complaining. There are six major automobile companies in the list of the Top 25 Best Marketing Companies in the country. They are a mix of Indian-born, Korean, German and Japanese thrown in for good measure —Tata Motors, Maruti Udyog, Hero MotoCorp, Mahindra & Mahindra, Hyundai and Volkswagen. In 2011 auto sales figures in the country recorded a fair growth, not bad at a time when most markets have slowed down or practically stalled. As sales accelerate, so do marketing plans. Mahindra enjoys an enviable position in the SUV / UV category in India. When asked what the key reason for its success is, the answer is rather simple: basing marketing strategies on “real consumer insights”. But the bottom line, according to Vivek Nayer, senior VP, marketing, automotive division, M&M, is “to ensure a strong portfolio of products based on consumer needs and product innovation and strong marketing strategies based on relevant consumer insights” Real consumer insights is what helped the company and its agencies create the product and campaign for its latest offering the XUV 500, an SUV that’s designed to look good both in boggy Amazonian forests and Ahmedabad. The 360 degree marketing approach included an intriguing TVC with sexy cannibal ladies in a tropical jungle and multitude of beauty shots, of the car too, besides digital and social media programs, before and after the launch phase. The company claims it was so successful, it had to close booking within just 10 days of launch in five cities according to Nayer. From four wheel drives to two, Hero Honda transformed itself into Hero MotoCorp and with that change came the campaign with Oscar winning composer AR Rahman and thousands of Indians singing ‘Hum Mein Hai Hero’ online and offline. But the auto sector’s growth story is not restricted to Indian metropolises. Indeed they keep a close eye on the masses itching to buy cars, small and big, and two wheelers to fit families of three and often more, in Indian cities. However a lot of Indian carmakers are placing their stack of chips in rural areas. Hyundai for instance already has 32% of its sales coming from nonurban markets. And Maruti, India’s largest car manufacturer, took its non-urban sales from 3.5% five years ago to 26% of total sales in 2012 as reported in Brand Equity (issue dated 18 April 2012). Mayank Pareek, executive officer (marketing & sales), Maruti Suzuki India, told BE, “You have to invest in gaining their trust and never betray it.” To help them do just that, Maruti came up with an innovative marketing push. All they needed to jumpstart it was a truck that doubled up as a mobile cinema. One of its primary competitors, Hyundai has often disrupted the pecking order by injecting new cars in its product line-up. On the communication front the carmaker is less clinical. There’s been a deliberate effort to use the emotional card. According to Vivek Srivastava, joint managing director, Innocean Worldwide India, Hyundai’s ad agency; “The portrayal of its brands is being kept in line with the aspirations of emerging India. The intent is to move beyond the obvious category triggers and motivators to more intrinsic and discerning aspects that build long-term brand stickiness for Hyundai.” With one of largest and fastest growing auto sectors in the world at their wheels, Indian auto makers are revving up not only production but also their marketing plans and perhaps more importantly spends to capture the Indian consumer with everything from cinema on the road in various outposts to talking ads in the biggest daily newspaper. AUTO BRANDS IN THE TOP 25 1 Tata Motors (rank 9) 2 Maruti Udyog (rank 14) 3 Hero MotoCorp (rank 17) 4 Mahindra & Mahindra (rank 20) 5 Hyundai (rank 22) 6 Volkswagen (rank 24)

Underperform rating on TVS Motors, target Rs 45

TVS Motors faces stronger than anticipated headwinds of slowdown and competitive pressures. We, therefore, sharply cut our standalone EPS forecast by 35-38%, which mainly reflects downward revision to volumes. Consequently, we lower our price objective to R45 (earlier R53) based on the same 10x FY13E standalone P/E. We also expect interim results to disappoint, especially on its Indonesian subsidiary, implying potential downside to our consolidated forecasts. We maintain our underperform rating on TVS Motors. TVS Motors' two-wheelers grew just 7.3% last fiscal and, we believe, the outlook has worsened. We, therefore, cut volumes by 9-12% over FY13E-14E, pulling down growth estimates to 3-4% driven by increased competition in scooters post expansion of Honda and new launch of Hero; and delay in launch of Victor commuter bike. This is despite reasonable prospects in mopeds, which is likely to benefit due to downtrading by customers in an inflationary environment. TVS Motors' three-wheeler sale to the domestic regulated centre declined 37% last year to ~14,000 units, well below our expectations of 20,000. We expect volumes to remain muted, mainly due to lack of new permit issuances. Our revised assumptions suggest flattish sale, compared to 20-40% growth earlier. TVS Motors’ derives ~12% of sale from exports, which grew 30% CAGR over the past two years. We, however, expect this segment to reverse trends due to import curbs in key destinations like Sri Lanka; and new competition, mainly in the African markets. We slash our volume assumptions to reflect this. Our price objective of R45 is based on a sum of stand-alone business valued at 10x FY13E P/E (same as earlier) and at 30% discount to imputed multiple of peers, on lower margins and return ratios; and Nil value for the Indonesian subsidiary, which is currently operating at losses. At our PO, the stock would trade at 11.2x consolidated FY13E P/E, still slightly ahead of historic averages.

B M Munjal makes 3 sons' stake equal in Hero promoter firms

The Brij Mohan Lall Munjal-led Hero Group has initiated a process to restructure family shareholding in two promoter firms of the country’s largest two-wheeler maker, Hero MotoCorp Ltd. After the restructuring, B M Munjals’ three sons will have equal holding in the promoter firms, Hero Investment Pvt Ltd (HIPL) and Bahadur Chand Investments Pvt Ltd (BCIPL). HIPL and BCIPL hold 43.33 and 8.67 per cent, respectively, in Hero MotoCorp. In a filing with the BSE, the company said B M Munjal’s wife, Santosh, and his second son, Suman Kant, will transfer some of their shares in the promoter firms to Pawan Kant Munjal and Sunil Kant Munjal. According to the statement, Suman Munjal, who holds 21,610 shares representing 71.63 per cent stake in HIPL, will transfer 14,407 shares to his brothers. While Pawan Munjal will get 7,203 shares representing 23.88 stake in HIPL, Sunil Munjal with 7,204 shares will also gain a holding of 23.88 per cent. After this transaction, all the three brothers will have 23.88 per cent stake each in HIPL. Private equity firms BC India Pvt Investors II and Lathe Investments Ltd will continue to own 19.81 and 8.56 per cent stake, respectively, in the investment firm. Similarly, BCIPL will also witness shares changing hands. Suman Munjal, who owns 12,800 shares (98.46 per cent stake) in BCIPL, will transfer 8,484 shares (65.26 per cent stake) to his brothers, while Santosh will transfer her entire holding of 150 shares, representing 1.15 per cent stake. After this transfer, Pawan Munjal and Sunil Munjal will hold 33.21 per cent stake each, while Suman will own 33.20 per cent on behalf of a family partnership firm, Brij Mohan Lall Om Prakash (BMOP), in BCIPL. Besides, Suman holds 0.38 per cent in his personal capacity. Both these transactions would take place by June 5, the filing said. There will be no change in the shareholding in the main company, Hero MotoCorp, it added. The share transfer exercise comes two years after the Munjal family had announced a family settlement agreement, following which their 26 per cent stake in erstwhile Hero Honda was consolidated in the name of Suman Munjal. He had acquired the stake held by his cousin Vijay Kumar Munjal and uncle Satyanand Munjal in HIPL and BCIPL under a family-settlement agreement.

Honda plans aggressive network expansionHonda plans aggressive network expansion HMSI wants to set up a network comprising 2,000 dealerships, branches and authorized service centres by the end of this fiscal year Amrit Raj Share on facebook Share on twitter New Delhi: After introducing a mass segment motorcycle, the Indian two-wheeler unit of Japan’s Honda Motor Co. is setting off on a fiercely competitive network expansion drive as it bids to catch up with—and eventually overtake —former partner Hero MotoCorp Ltd and Bajaj Auto Ltd in the world’s second largest market for two-wheel vehicles. For starters, Honda Motorcycles and Scooters India Pvt. Ltd (HMSI) will allot dealerships to only those who have property near a Hero or a Bajaj showroom, according to five people familiar with the plan. It has also started receiving applications from Hero dealers willing to desert that company to join the Honda network—a move that may go against the “gentleman’s agreement” in place between the former partners. HMSI wants to set up a network comprising 2,000 dealerships, branches and authorized service centres by the end of this fiscal year, most of them in strategic locations identified by the company. It now has a network of 1,000 so-called touch points for customers. “There is no such requirement put on paper by HMSI, but it is verbally communicating to prospective dealers that one of the main eligibility criteria to get a Honda dealership is to have land available within 500m of a Hero showroom,” said a top dealer for a two-wheeler maker. The dealer requested anonymity. Honda and Hero ended their 26-year partnership, called Hero Honda Motors Ltd, last year. The Indian company changed its name to Hero MotoCorp after the parting of ways. Having recently overtaken TVS Motor Co. Ltd as India’s third largest motorcycle maker, HMSI is taking aim at No. 2 Bajaj before joining the race with Hero in earnest. With sales of 1.7 million units last year, HMSI has a market share of 15% in India’s 13-million-a-year two-wheeler market. Hero dominates the market with a 45% share, selling 6.4 million units last year, and Bajaj Auto has a 20% share with sales of 2.56 million in the domestic market. While Hero MotoCorp has the capacity to produce 6.8 million units a year, Bajaj’s capacity is 5.5 million units. The cumulative production capacity at HMSI’s three plants in India will reach four million units by the first half of next year from 2.8 million now. HMSI has also started publishing advertisements in regional newspapers mentioning locations where it wants a Honda dealership to come up. These locations already have showrooms of its competition. For example, in a recent advertisement in regional newspapers in Andhra Pradesh, HMSI said it wants a dealership to come up at a location between Bajaj and Hero dealerships in the Gajuwaka area of Visakhapatnam. Such advertisements have been published in the media in states such as Uttar Pradesh and Rajasthan as well. “The company has hired marketing agencies to identify such locations and other growth areas in the country,” said another person familiar with the development on condition of anonymity. “The idea is that if a customer is visiting a Bajaj or a Hero showroom, and if a Honda showroom is next to them, the customer by the virtue of showroom being closer will take a look at Honda products.” In a response to a detailed questionnaire sent to HMSI on Friday, the company said it was entering the mass segment motorcycle market to increase its brand presence in India. Last week, it introduced a 110cc bike in that segment called the Dream Yuga. “To support the availability of our product and services close to the customers, Honda is rapidly expanding its network through new dealerships, branches and authorized service centres,” the company said. “We invite applications for network appointment through newspaper advertisement mentioning the preferred stretch...such locations are further identified by our regional teams based on local surveys and business potential. In some cases, it may so happen the preferred location is in vicinity of the competition, but location is not the only criteria for becoming a Honda dealer.” A senior member of the Federation of Automobile Dealers Associations of India (Fada), requesting anonymity, called it a fight for market share. “Honda is clear that whatever it was selling in the country till date was because of their association with the Hero Group,” he said. “Now they want to prove that even without Hero, they can increase their market share. But it appears to be a very competitive technique.” In another move that may clash with Hero’s business interests, HMSI has also started receiving applications from Hero dealers willing to join the Honda network. In a report prepared for investors, CLSA wrote that its analysts were on a road show with Honda in Asia recently on which the Japanese company shared its growth strategy. “Honda has plans to expand its dealer network (1,000-strong currently) in coming years to bridge the gap with Hero (4,000 dealers),” wrote Abhijit Naik, Nitij Mangal and Christopher Richter of CLSA in their report. “As per Honda, they have been observing a ‘gentleman’s agreement’ with Hero and are not pursuing Hero’s dealers, but also said that this does not stop dealers from approaching them. Honda said that some Hero dealers have sent them applications for the same.” Naik and Mangal declined to comment on the report because they aren’t authorized to talk to the media. Mint couldn’t contact Richter. However, a Hero dealer joining Honda may affect the principle of “healthy competition”, which both the companies had agreed to pursue when they announced their separation on 16 December 2010. In the email response, HMSI said that “as per Honda’s mutual understanding with Hero, we do not approach or entertain any applications from their dealers”. A Hero MotoCorp spokesperson said that as a matter of policy, the company does not comment on the competition. “It has been more than a year now since we began our solo journey and we have only added more dealers to our network during this time—which is a clear testimony to the level of motivation and dedication of our dealer family,” the spokesperson said in an email. “With close to 5,000 touch points across the country, we have the largest distribution network in the industry, and we will be adding 400 more touch points by the end of this year.” In its report, CLSA cited the Honda management as saying it had thus far avoided introducing bikes in direct competition to Hero’s offerings, but that will change now. “Honda intends to be very aggressive in the executive bike segment with multiple bike launches over the next two-three years,” the report said. The company’s aggressive network expansion plan comes after last week’s rollout of a new brand campaign. HMSI has hired Bollywood actor Akshay Kumar as its brand ambassador. The company has reiterated that it needs to penetrate deeper into the Indian market to power the next phase of growth. “A capacity of four million at full utilization would imply 2W (two-wheeler) market share of 22% by FY15 (15% in FY12) assuming 10% industry CAGR (compounded annual growth rate) over FY12-15,” the CLSA report to investors said. 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Honda plans aggressive network expansion

HMSI wants to set up a network comprising 2,000 dealerships, branches and authorized service centres by the end of this fiscal year New Delhi: After introducing a mass segment motorcycle, the Indian two-wheeler unit of Japan’s Honda Motor Co. is setting off on a fiercely competitive network expansion drive as it bids to catch up with—and eventually overtake —former partner Hero MotoCorp Ltd and Bajaj Auto Ltd in the world’s second largest market for two-wheel vehicles. For starters, Honda Motorcycles and Scooters India Pvt. Ltd (HMSI) will allot dealerships to only those who have property near a Hero or a Bajaj showroom, according to five people familiar with the plan. It has also started receiving applications from Hero dealers willing to desert that company to join the Honda network—a move that may go against the “gentleman’s agreement” in place between the former partners. HMSI wants to set up a network comprising 2,000 dealerships, branches and authorized service centres by the end of this fiscal year, most of them in strategic locations identified by the company. It now has a network of 1,000 so-called touch points for customers. “There is no such requirement put on paper by HMSI, but it is verbally communicating to prospective dealers that one of the main eligibility criteria to get a Honda dealership is to have land available within 500m of a Hero showroom,” said a top dealer for a two-wheeler maker. The dealer requested anonymity. Honda and Hero ended their 26-year partnership, called Hero Honda Motors Ltd, last year. The Indian company changed its name to Hero MotoCorp after the parting of ways. Having recently overtaken TVS Motor Co. Ltd as India’s third largest motorcycle maker, HMSI is taking aim at No. 2 Bajaj before joining the race with Hero in earnest. With sales of 1.7 million units last year, HMSI has a market share of 15% in India’s 13-million-a-year two-wheeler market. Hero dominates the market with a 45% share, selling 6.4 million units last year, and Bajaj Auto has a 20% share with sales of 2.56 million in the domestic market. While Hero MotoCorp has the capacity to produce 6.8 million units a year, Bajaj’s capacity is 5.5 million units. The cumulative production capacity at HMSI’s three plants in India will reach four million units by the first half of next year from 2.8 million now. HMSI has also started publishing advertisements in regional newspapers mentioning locations where it wants a Honda dealership to come up. These locations already have showrooms of its competition. For example, in a recent advertisement in regional newspapers in Andhra Pradesh, HMSI said it wants a dealership to come up at a location between Bajaj and Hero dealerships in the Gajuwaka area of Visakhapatnam. Such advertisements have been published in the media in states such as Uttar Pradesh and Rajasthan as well. “The company has hired marketing agencies to identify such locations and other growth areas in the country,” said another person familiar with the development on condition of anonymity. “The idea is that if a customer is visiting a Bajaj or a Hero showroom, and if a Honda showroom is next to them, the customer by the virtue of showroom being closer will take a look at Honda products.” In a response to a detailed questionnaire sent to HMSI on Friday, the company said it was entering the mass segment motorcycle market to increase its brand presence in India. Last week, it introduced a 110cc bike in that segment called the Dream Yuga. “To support the availability of our product and services close to the customers, Honda is rapidly expanding its network through new dealerships, branches and authorized service centres,” the company said. “We invite applications for network appointment through newspaper advertisement mentioning the preferred stretch...such locations are further identified by our regional teams based on local surveys and business potential. In some cases, it may so happen the preferred location is in vicinity of the competition, but location is not the only criteria for becoming a Honda dealer.” A senior member of the Federation of Automobile Dealers Associations of India (Fada), requesting anonymity, called it a fight for market share. “Honda is clear that whatever it was selling in the country till date was because of their association with the Hero Group,” he said. “Now they want to prove that even without Hero, they can increase their market share. But it appears to be a very competitive technique.” In another move that may clash with Hero’s business interests, HMSI has also started receiving applications from Hero dealers willing to join the Honda network. In a report prepared for investors, CLSA wrote that its analysts were on a road show with Honda in Asia recently on which the Japanese company shared its growth strategy. “Honda has plans to expand its dealer network (1,000-strong currently) in coming years to bridge the gap with Hero (4,000 dealers),” wrote Abhijit Naik, Nitij Mangal and Christopher Richter of CLSA in their report. “As per Honda, they have been observing a ‘gentleman’s agreement’ with Hero and are not pursuing Hero’s dealers, but also said that this does not stop dealers from approaching them. Honda said that some Hero dealers have sent them applications for the same.” Naik and Mangal declined to comment on the report because they aren’t authorized to talk to the media. Mint couldn’t contact Richter. However, a Hero dealer joining Honda may affect the principle of “healthy competition”, which both the companies had agreed to pursue when they announced their separation on 16 December 2010. In the email response, HMSI said that “as per Honda’s mutual understanding with Hero, we do not approach or entertain any applications from their dealers”. A Hero MotoCorp spokesperson said that as a matter of policy, the company does not comment on the competition. “It has been more than a year now since we began our solo journey and we have only added more dealers to our network during this time—which is a clear testimony to the level of motivation and dedication of our dealer family,” the spokesperson said in an email. “With close to 5,000 touch points across the country, we have the largest distribution network in the industry, and we will be adding 400 more touch points by the end of this year.” In its report, CLSA cited the Honda management as saying it had thus far avoided introducing bikes in direct competition to Hero’s offerings, but that will change now. “Honda intends to be very aggressive in the executive bike segment with multiple bike launches over the next two-three years,” the report said. The company’s aggressive network expansion plan comes after last week’s rollout of a new brand campaign. HMSI has hired Bollywood actor Akshay Kumar as its brand ambassador. The company has reiterated that it needs to penetrate deeper into the Indian market to power the next phase of growth. “A capacity of four million at full utilization would imply 2W (two-wheeler) market share of 22% by FY15 (15% in FY12) assuming 10% industry CAGR (compounded annual growth rate) over FY12-15,” the CLSA report to investors said. 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TVS aiming to increase market share in Goa

TVS Motor Company has launched its new 2012 Apache Series RTR in Goa. Designed in an aerodynamic styling, the latest Apache is activated on ignition. “In volume the state of Goa may be small, but on per bike ownership it is growing at 1,800 to 2000 bikes a month,” General Manager –Sales Mr P Suresh Babu told media persons at the launch. “We are aiming for a 15 per cent market share,” he told the Navhind Times. The Goa market is roughly 5000 two-wheelers monthly, with scooter absorbing 3000 and the balance by motor bikes. The latest themed styling is incorporates in all TVS Apache models namely TVS Apache RTR 160, TVS Apache RTR 180 and TVS Apache RTR 180 ABS. The TVS Apache RTR series has best power-to-weight ratio in its class. Sheathed in edgy grunge-style graphics in dual colour scheme, the TVS Apache RTR 160 dishes out 15.2 ps of raw power and can be pushed to speeds up to 118 kmph. The TVS Apache RTR 180 churns out 17.03 ps of bone-crunching power that can reach speeds of up to 124 kmph. The new TVS Apache RTR 160 comes in four dual tone colours, namely green, red, yellow and grey with black being the base. The new TVS Apache RTR 180 also comes in four colours of white, yellow, grey and black while the ABS version will be available in white and black. The new TVS Apache Series RTR is available in TVS dealerships across the country. While the TVS Apache RTR 160 will cost `67,505 (Ex showroom Delhi), TVS Apache RTR 180 cost `72,090 (Ex showroom Delhi) and TVS Apache RTR 180 ABS will cost `82,780 (Ex showroom Delhi).

Yamaha to develop sub-$500 motorcycle for India, Africa

One may not be wrong to call it the Nano among motorcycles. Japanese two-wheeler major Yamaha is planning to develop the world’s cheapest motorcycle, to be priced at under Rs. 28,000 ($ 500) for markets such as India and Africa. The bike would be produced in India, which is being exploited by the company as a base for exports. “Our product benchmark right now (on cost) is the YBR 110 and Crux, but we would like to develop a bike in the low-cost segment for markets like Africa,” Hiroyuki Suzuki, chief executive officer and managing director, India Yamaha Motor told Hindustan Times. “The target is to make a bike that will cost $500 (about Rs. 27,500). I think such a bike will have a lot of demand in Africa as well as in India.” The move comes barely a week after its arch rival Honda launched its cheapest bike yet in India, the Yuga, with a price tag of Rs. 44,642. Honda had at the time said it would look to launch even cheaper products, though it had steered clear of the sub-Rs 30,000 segment. At present, Yamaha’s cheapest bike is the 110cc Crux at Rs. 38,365. This bike is sold in India and China. The bike that it is now planning would be priced substantially lower than some of the other entry-level bikes like market-leader Hero MotoCorp’s ageold bestsellers Splendor and Passion, the Bajaj Platina and TVS Star City. The absolutely cheapest motorcycle available in India right now is Hero MotoCorp’s CD Dawn at Rs. 36,300.

TVS Motor to invest Rs.100 cr. in R & D

TVS Motor Company plans to invest Rs 100-125 crore this year on product development and R&D. The company expects to launch three two-wheelers, two in the executive segment, one of them in August, and a scooter in the last quarter. Last financial year, the company invested Rs 200 crore on capacity expansion and on product development. “We now have adequate capacity of 3 million units across our facilities in Hosur, Mysore and Himachal; so this year's capex will be on product development and research,” said Mr S.G. Murali, CFO, TVS Motor. TVS Motor has an overall market share of 14 per cent in the two-wheeler segment, behind Hero Honda and Bajaj. The company aims to gain share with the new launches this year. TVS Motor also hopes to benefit from the petrol price hike which could see car-buyers opting for two-wheelers. Last year, the company's revenues grew 13 per cent to Rs 7,126 crore. This year, while the industry is expected to grow at around 10 per cent, TVS expects to grow ahead of the industry. Indonesian subsidiary On rupee depreciation, Mr Murali said while imports can have an impact, since TVS is a net-exporter, the benefits are more. TVS also expects its Indonesian subsidiary to break even towards the end of the year. PT TVS Motor Company, Indonesia, set up in 2007, has been growing each year, said Mr Murali. While the first year saw sales of 12,000 units, last year it nearly doubled to 23,066 units. Its losses last year were $9 million. “We hope to bring it down in the first half and achieve break-even in the second half.” Last year, the Indonesian arm started exporting to Philippines, Brazil, Turkey and Latin America.

Honda’s ‘go rural’ campaign to take on Hero, Bajaj Auto

For Honda, the battle in the two-wheeler segment has now shifted to rural India. After entering the bike market with 110cc Dream Yuga, Honda Motorcycles and Scooters India (HMSI) has flagged off a fiercely competitive ‘rural’ network expansion drive. The project, internally codenamed as ‘Go Rural’, attempts to catch up with, and eventually, overtake former partner Hero MotoCorp and Bajaj Auto in India. With an eye on rural India, HMSI has set up a core team to identify villages and remote areas where Hero has an enormous presence. The company wants to cater to all the villages in next five years with dedicated teams for North, South, East and West India, sources said. With sales of 1.7 million units last year, HMSI has a market share of 15% in India’s 13-million-a-year two-wheeler market. Hero dominates with 45% market share, selling 6.4 million units last year, and Bajaj Auto has a 20% share, selling 2.56 million units in the domestic market last year. Overall, India is world’s second largest market for bikes. However, experts said HMSI has a long and difficult road ahead considering that rival Hero MotoCorp generates 45% of its revenue from the rural areas where Honda’s share may be under 10%. In a bid to reach out to rural customers, HMSI has launched a new brand campaign with new brand ambassador Akshay Kumar. Targeted at the rural market, Honda’s campaign would be in all the regional Indian languages with the company adopting its global tagline — Power of Dreams — for the first time in the Indian market. Currently, it uses this tagline for its car business in India. According to a top industry executive, the spendings on the brand repositioning is estimated to the tune of at least R100 crore. This includes the payment to be made to the brand ambassadors, advertising and media buying firms. This campaign is extremely crucial for Honda as it is a first after their split with Hero, so it’s going to be a gamechanger for them in a sense that it will establish their individual identity. Having recently overtaken TVS Motor as India’s third largest motorcycle maker, HMSI is taking aim at Number 2 Bajaj before joining the race with Hero in earnest. Hero Motocorp spokesperson said the compay always had strong rural initiatives, which was consolidated under the Har Gaon Har Aangan umbrella platform in 2007. “We have already covered over 1,00,000 villages across the country under this programme. With the innovative Service Har Jagah initiative under this platform, we are providing service to bikes in their respective villages,” the spokesperson said without commenting on the competition and its future strategy.

M & M two-wheeler arm get ready for a fresh start

Preparing for the long haul, India’s largest utility vehicle major, Mahindra and Mahindra (M&M) is taking a fresh guard by rejigging its entire two-wheeler business — from the shop floor to R&D, from distribution to launching a slew of new products — in a bid to capture a slice of one of the world’s fastest growing two-wheeler markets. Anoop Mathur, president, twowheeler division, M&M told ET: “We have been in the two-wheeler industry and will continue to invest in it. Over the last couple of years we have significantly strengthened our fundamentals like a cutting edge R&D facility and upgraded manufacturing capacity.” A year-and-a-half after withdrawing its first motorcycle Stallio from the domestic market due to engineering glitches, ET learns, the company has restructured its entire business right from its R&D, manufacturing, marketing setup and its product portfolio for the future. M&M is infusing over 500 crore of fresh funds into the twowheeler business, which will go into setting up of a strong domestic R&D centre led by PS Ashok, the key man behind the LML twowheeler business. It has already set up all new assembly lines for scooters and motorcycles at its Pithampur plant with a capacity of 1 million units. Under PS Ashok the company has already set up a strong team of 160 engineers, which it claims is the third largest R&D setup in the country in the domestic twowheeler industry. Viren Popli, senior VP, strategy & market development, two-wheelers, M&M, in an interaction with ET said, the company has already got approval from the board on the future investment and they have a product portfolio plan in place of 10-12 vehicles which will be across categories, as part of its mission statement till 2015-16. And this is just the first of the several moves the company is planning. The company plans to relaunch Stallio in the next few months and has 3 more products including another motorcycle and scooter in the offing in FY13, which will help it build its falling volumes. Mojo, the premium motorcycle too should be launched in 12-18 months time. The company inherited a dated R&D setup from the Kinetic acquisition and over the years it put together an Ecosystem of international R&D companies, which it now admits, didn’t work. “We were quiet for more than a year as we were busy putting in place the infrastructure required for future growth. Having an international R&D capability alone was not enough, we needed the strong in-house capability which has now been put in place. Translating international design for Indian use needed a lot of work, which was one of the challenges we had with the Stallio. We are now designing in India for India,” said Popli M&M acquired Kinetic Motors in 2008 for an acquisition price of approximately 100 crore, but since then it has infused over 500-800 crore in the business, yet it is incurring losses. Mahindra Two Wheelers posted a loss of 169.21 crore in 2010-11 and it has been piling. In FY12, M&M sold about 1,34,750 units of Rodeo, Duro, Flyte, which was a decline of 17.8% versus an industry growth of 15.27%.

TVS Q4 net profit jumps 31% to Rs 57.23 cr

The company had posted a net profit of Rs 43.68 crore in the corresponding period last year, TVS Motor Company said in a filing to the BSE. The standalone total income from operations in the fourth quarter, however, decreased marginally to Rs 1,627.17 crore from Rs 1,635.29 crore in the year-ago period, it added. During the quarter, the company's tax expenses went down 68.85 per cent to Rs 4.95 crore from Rs 15.89 crore. The company's Board of Directors has declared a second interim dividend of Re 0.70 per share for 2011-12. For the entire 2011-12 financial year, TVS Motor Company posted 3.18 per cent rise in its consolidated net profit at Rs 131.64 crore from Rs 127.58 crore in the previous fiscal. The consolidated total income from operations in FY'12 also went up by 13.40 per cent to Rs 7,419.84 crore from Rs 6,542.98 crore in FY'11. In the last fiscal, TVS Motor Company sold a total of 21.89 lakh vehicles compared to 20.43 lakh units in the previous fiscal, up 7.15 per cent. Exports increased 23.33 per cent to 2.96 lakh units for 2011-12 from 2.40 lakh units in 2010-11. Commenting on new product development, TVS Motor Company said it will roll out two new motorcycles in August and in the last quarter of this fiscal. "One new scooter will also be introduced during the last quarter of the current financial year," it added. Shares of the company today closed 1.52 per cent up at Rs 33.40 apiece on the BSE.

Bajaj upbeat on domestic market prospects

Bajaj Auto is upbeat on its prospects in the domestic market this fiscal though growth had remained flat at 6.16 lakh units in the last quarter of 2011-12. The new Discover 100 launched last month and its more recently unveiled sibling, the 125 ST, along with the Pulsar 200 NS are expected to be the key drivers in the coming months. Commuter segment “These are three strategically important motorcycles which should do the trick in boosting numbers in the domestic market,” Mr Rajiv Bajaj, Managing Director, told Business Line. The Discover has helped the company increase its presence in the commuter segment where Hero is the clear leader with its Splendor and Passion models. Realising that it would be near impossible to replicate these numbers in the 100-110cc category, Bajaj Auto has been focusing on the 125cc segment instead. It is here that the all-new Discover ST is expected to play a pivotal role. This has been the company's thinking for sometime now when it first launched the XCD 125 five years ago. However, things began to fall in place only in 2009 when it honed its motorcycle brand strategy. The Discover was identified as the mascot for the commuter segment and became the best option for those buyers seeking an affordable Pulsar. In the process, it spawned the sporty commuter option which could grow once the Discover ST makes the right connect with its buyer base. Vehicle volumes The ‘less is more' mantra has clicked for Bajaj Auto whose focus is now largely confined to these two bike brands along with ‘RE' in the commercial vehicle space. The Boxer is a key component of this strategy for the African market while the more recent KTM Duke 200 will enhance its brand image. “Over the last three years, our vehicle volumes have doubled to 4.4 million units while profits and revenues have also grown strongly. It is my belief that with a stronger tailwind in place now, we can work at the same pace over the next three years,” Mr Bajaj said. The commuter segment will see a fierce tug-of-war this fiscal with Honda launching the 110cc Dream Yuga to take on both Hero MotoCorp and Bajaj Auto. The Japanese automaker plans to pull out stops in the coming years to make its presence felt in motorcycles where its 125cc Shine is presently clocking the largest volumes.

Stiff competition leads Bajaj Auto to boost capacity by 25%

In a bid to keep pace with competitors such as Hero MotoCorp and Honda Motorcycle and Scooter India (HMSI), the country’s second-largest two-wheeler manufacturer, Bajaj Auto Ltd (BAL), is ramping up capacity by a fourth across its three plants, to 6.3 million units. “For the current year, we have the capacity to produce and sell five million units. Investments have already been made at our plants. We are looking at increasing productivity to manufacture 6.3 million which will come on-stream next year,” said Rajiv Bajaj, managing director of BAL. While Hero MotoCorp is considering setting up a fourth plant to take its annual capacity over seven million units, HMSI is in the process of establishing a third facility in Karnataka, which would take its production capacity to four million units by 2013. Once the capacity enhancement programmes are in place, BAL would be able to produce 5.7 million two-wheelers and 600,000 three-wheelers/four-wheelers annually across the company’s three plants in Waluj, Chakan and Pantnagar. BAL will commence sales of four-wheeler ‘RE60’ by year-end in Sri Lanka and later in India in 2013. Interestingly, the company would utilise the available capacity to roll out new variants of its mainline brands--’Pulsar’ and ‘Discover’. “We want to make bigger, sportier bikes. We are in the volume game but not at any cost. We are a publicly listed company and we have a performance to show. We cannot but focus on the bottom line. We are focused on two brands – Pulsar and Discover,” Bajaj added. HMSI had earlier last week introduced its second motorcycle, the 110 cc ‘Dream Yuga’, to challenge its former partner Hero MotoCorp’s dominance in the mass commuter segment. The entry-level segment accounts for over 70-per cent of the 10-million-strong motorcycle market in the country. BAL with the ‘Platina’ model has a share of 16 per cent in the category. “We sell about 50,000 units of the Platina every month. As long as there is demand, we will make it. But we are not going to make any investments or marketing efforts on the brand,” said Bajaj. Instead the company would focus on developing new variants of the Pulsar and the Discover every year. To begin with, the Discover 125 ST (Sports Tourer) will go on sale from June this year, while the Pulsar 200 NS (Naked Sports) will burn rubber on Indian roads in July. “Our goal is only one. We have to become a bigger, better and stronger motorcycle manufacturer on a global basis. Our every move is aimed at going up the value chain. We want to increase our global market share while maintaining good profitability,” Bajaj said. To realise this, he said the company would first look at exporting as many units as it sells in the domestic market. Thereafter, BAL would aim at stepping up volumes overseas. The company is adding on new geographies every year, particularly in Latin America and West Africa. With sales of around 3.8 million units, Bajaj has a share of over 10 per cent in the 35-million-strong global motorcycle market. The company is expecting over half of its volumes to come from exports over the next two-three years. Exports accounted for 36 per cent of BAL’s total production in 2011-12. The company sold more than 1.5 million two-wheelers and commercial vehicles overseas last year. Its exports revenues grew 45 per cent to Rs 6,604 crore (33 per cent of turnover) in FY12, compared with Rs 933 crore (12.5 per cent of total net sales in 2005-06), the company said. The company records as much as 47 per cent of its overseas sales from Africa. As many as 60,000 units of the ‘Boxer’ alone are exported to the continent every month. Some of the company’s other key export markets are Sri Lanka, the Philippines and the Latin America. BAL has appointed a new distributor in Mexico and will start exports to Argentina over the next six months.

Munjals to rejig family shareholding in Hero MotoCorp promoter firms

Hero MotoCorp|Hero Investments Pvt Ltd|Brij Mohan Lall Munjal|BCIPL|Bahadur Chand Investments Pvt LtdNEW DELHI: Brij Mohan Lall Munjal-led Hero Group is undertaking a restructuring of family shareholding in two promoter firms of the country's largest two-wheeler maker Hero MotoCorp. In a filing to the BSE, Hero MotoCorp said BML Munjal's wife Santosh and his second son Suman will transfer their shares in the two investment companies -- Hero Investments Pvt Ltd (HIPL) and Bahadur Chand Investments Pvt Ltd (BCIPL) -- to other sons Pawan and Sunil. a

TVS Motor launches new Apache RTR 2012 bike series

CHENNAI: Two-wheeler manufacturer TVS Motor Company today launched the new Apache RTR 2012 series incorporating cosmetic changes. The Apache RTR series, a successful motorcycle for the Chennai-based automajor, had been launched with "new beast themed styling", a company statement here said. "The new design, all lines pulled back, excesses eliminated and curves chiseled to perfection, synergises with a high performance powertrain to look dynamic," it said. The new design and styling has been incorporated in all Apache models -- RTR 160, RTR 180 and RTR 180ABS. Besides, the new range would have new pilot lamps incorporated with LED light and a new aerodynamic styling reducing the engine heat, it said. "We have taken the Apache RTR to the next level with obsessive engineering and menacing design. The priority in every step of the Apache brand's development has been race bred performance. Every system, detail and component has been tuned to maximise performance." TVS Motor Company President (Marketing) H S Goindi said. The new TVS Apache RTR 160 is available in four dual tone colours -- green, red. Yellow and grey with black being the base colour. The 180 RTR series also comes in four colours of white, yellow, grey and black while the ABS version in white and black. The new TVS Apache RTR Series is available in all its dealerships across the country. The TVS Apache RTR 160 is priced at Rs 67,505 (ex showroom Delhi) and the RTR 180 at Rs 72,090 (ex showroom Delhi. The RTR 180 ABS version would cost Rs 82,780 (ex showroom Delhi), the statement added.

HMSI gets into the mass motorcycle segment with the launch of the Dream yuga

Now as the only Honda in India, Honda Motorcycle & Scooter India Pvt Ltd (HMSI) has been on the heels of its erstwhile partner Hero MotoCorp as far as two-wheeler sales are concerned, and it even beat Bajaj in terms of volume sales in March. HMSI has now entered the mass motorcycle segment with the launch of its smallest motorcycle in India yet, the Dream Yuga. The company has roped in actor Akshay Kumar as the bike’s brand ambassador. Powered by a 109cc engine that delivers a decent 8.5bhp@7500rpm, the Dream Yuga will compete with Hero MotoCorp’s Splendor series, TVS Motor’s Star City and Bajaj Auto’s Platina. The bike, which comes in three variants, is priced at R44,642, R46,134 and R48,125 (all ex-showroom, Delhi), respectively. Let’s have a look at the models it will have to compete with.

Most of our customers are upgrading from Royal Enfield

After the famous Indo-US “Harley for Indian mango” deal in 2007, the American icon Harley-Davidson announced its entry through a wholly owned subsidiary — Harley-Davidson Motor Company India. Following an extensive study of the market, the iconic brand finally hit the Indian roads in July 2010. Anoop Prakash, who is spearheading the Indian operation of the company, tells Probal Basak the 18-month journey has been “more than satisfying”. Clocking in sales of more than 1,000 units so far, the company is keen on assembling more (motorbike) models at its India factory at Bawal to drive volumes. Edited excerpts: When Harley-Davidson made its entry to India, you said it was not a part of the brand-building exercise. You want to be a serious player in the market. How do you evaluate the company’s journey in India so far? We are more than satisfied with our journey. We could not ask for more.When we thought about opening this market, we knew we are going to build and serve a whole new market segment. This is actually the first market where we entered with a wholly owned subsidiary. We have set up an assembly plant at Bawal in Haryana. All these are strong indicators of how serious and ambitious we are about the Indian market. Although we entered the market in 2009, we opened the first showroom in 2010. From July 2010 to end of December 2011 — in the 18-month period — there are over 1,000 bikes on Indian roads. Where do you see the numbers in the coming years? This year also, we will hopefully cross 1,000. We are looking at a 25-30 per cent yearly growth for the next five-seven years. We will be extending our footprint by the time. We have opened our eighth dealership in Kolkata.We will open in Kochi and Goa this year, as well. We also have our eyes on Nagpur. We are finding out where we can find our customer. I have a feeling some of North-Eastern cities can be our destinations, as people in this part of the country have a great passion for biking. We have a target of having a 17 to 20 dealership by the end of 2015. How important was it to have an assembling plant to drive volumes? As of now, we have five assembling models and 11 CBUs (completely-built units). Moving the price down through CKD (complete knock-down) was important for us. The price of an 800cc bike model that sold at nearly Rs 7 lakh when it was imported, came down to Rs 5.6 lakh after it was assembled locally. In fact, our CKD line-up is driving 70 per cent of our volumes. So, are you looking at assembling more models at the Bawal plant? We will start assembling another Dyna model this year, taking the total number of CKDs to six. We have ample capacity for assembling more units at our plant. We are trying to get customer feedback and find out which models are in demand. Right now, we are focused on assembling Sportster and Dyna models. Of the five CKDs, three are from the Dyna range and two from Sportster. There are three-four more bikes in Dyna and Sportster family itself, which are not on offer in India yet. So, there is obviously scope for assembling more units. Is the increased tariff or negative market sentiment affecting your growth? There was a lot of uncertainty whether or not the tariff would make the investment worth it, as the motorcycles are effectively going to cost twice as much as in the US. Harley-Davidson’s bikes in India are priced between Rs 5.6 lakh and Rs 35 lakh. Moving down the price point through CKD has helped us to some extent. And, despite an increased tax in the recent Budget and not that great a market sentiment, the demand of Harley remains unaffected. At the end of the day, we are able to reach out to our customer that Harley is not a product, it is a lifestyle. Do you have any intention to go below 800cc for India-specific products? Are not Indian players like Royal Enfield that offer 500cc bikes with a much affordable price range better positioned for the Indian super bike segment? We can not go below 800cc. We cannot have an India-specific product. All our products are for global markets. And, regarding Royal Enfield, I think it is a great compliment for us, rather than a competition. Most of our customers are upgrading from Royal Enfield. For me, competition is if somebody is doing something else on a Sunday morning because I want him to experience Harley Davidson during that time.

Women who go va-va-vroom

Urvashi Patole, 23, rode her first motorbike, a Bajaj Pulsar 180 Classic belonging to her cousin, when she was 14. The first motorcycle she owned was a Bajaj XCD. Today, Patole lives in Bangalore, works for Bosch, a global supplier of technology and services, and has founded Bikerni, a Facebook site and portal that connects women motorcyclists across India. Their first expedition together was to Khardung La, part of every biker’s bucket list. Eleven women aged 21-53 (the eldest was from Rajkot, Gujarat) made it to what is believed (incorrectly by some estimates) to be the highest motorable pass in the world. I contacted Patole to answer a question: Why don’t women ride motorbikes? Some do. Just a year old, Bikerni has already racked up 80 members. But relative to the thousands of male riders, the number of female riders is “disappointingly low—less than 1-2%”, according to Sunil Gupta, 31, content manager at xBhp, India’s biggest motorcycling portal. Bangalore and Pune have the greatest number of bike enthusiasts, followed by Mumbai, Delhi, Hyderabad and Chennai, says Gupta. Delhi has several motorcycle clubs, including the Sikh Motorcycle Club, in which members wearing Hermès orange turbans pose in front of their bikes. Not many women though. “Women, at least in India, are not that adventure-loving and there is hardly any incentive for them to break that image,” says Gupta. One of a kind: Biking is not popular among women in India, yet. As an adventure-loving, adrenalin-junkie skydiver, I disagree with that portrait. But here’s the thing. I may drive my stick shift as if I were on Formula One. I may seek speed and thrills, however elusive, on our national highways. But so far, I haven’t been drawn to buying a motorbike when in fact I would be a perfect target for a motorcycle ad campaign. Why? I called Siddhartha Lal, managing director and CEO of Eicher Motors, Royal Enfield’s parent company, to explore this chicken and egg question. Why don’t motorcycle companies market to women, I asked. Is it because women don’t ride bikes? Or do women not ride bikes because motorcycle companies don’t market to them? “It’s a self-perpetuating stereotype,” said the Delhi-based Lal. “Motorcycle companies don’t market to women because they form such a small percentage of our customer base; less than 1%. And those women are going to buy our bikes anyway, even if we don’t market to them. But if that 1% rises to 10% women riders, maybe all of us will sit up and take notice, although, frankly, I don’t think the number of women riders is going to go up significantly.” Patole and her cohorts are trying to break that image. They get inquiries from rural women who want to ride a bike; they are pushing for gender-based customization—shorter bikes for women—although they don’t think that is about to happen. And most of all, they are combating gender stereotypes and the perceived social stigma associated with women riding bikes. It has to do with male ego, says Patole; but also social conditioning that prevents women from thinking of the motorcycle as a viable vehicle option. It isn’t just women. My metrosexual male friends rue ad campaigns for conditioner and body lotion that are marketed just towards women when, in fact, they buy just as many, if not more, skin products than their female friends. Slowly spas, beauty parlours and cosmetics companies are waking up to the male market with ads customized for men who want to look good. Will the same thing happen to motorcycles, admittedly a very different and more expensive product, but one that could follow the same marketing trajectory? Why not, says Patole. After all, riding a bike is about body coordination, and when to shift gears. “A lot of our women riders are very ladylike, very pretty. But once they put on their helmets and get on the bike, they ride like demons. But that’s the other thing,” she continues hastily. “People think that we bikers are rash when in fact we are the ones who follow safety disciplines the most.” So I got on her matt black, 350cc Royal Enfield. It was 6.30pm when we headed out of Trinity Circle; peak traffic all around. Once I got over the initial exhilaration of riding pillion with a woman on a motorbike—a first for me, once we got over the stop-and-go traffic and on the gurudwara side of Ulsoor Lake, we began cruising. I exhaled and shut my eyes, enjoying the strength and speed of these magnificent machines, for exactly 2 minutes till we came to a traffic light. You know what? With your eyes closed, a woman rider didn’t feel any different from a male rider, at least from the vantage point of the pillion. Was it inventor Ben Franklin who said that all cats are grey in the dark? Similarly, good riders are the same. Sex doesn’t matter (and I mean gender here). Patole is a fabulous biker; no different from a Sunil Gupta, Malvinder Singh or any of those bikers who are part of India’s male motorcycle clubs. When I asked for her price-no-object bike, Patole gave me a bike junkie’s answer. “I would buy lots of vintage bikes and work on them,” said this stuntwoman who can do all the Dhoom riding-on-one-wheel tricks. She likes Triumph, Norton and Honda Karizma. Bikers can talk about their Bullet’s torque and suspension; about the Harley-Davidson Roadster’s performance and attitude. But in the end, and I can say this as a non-rider, it is only a friggin’ bike. Doesn’t matter if a man or woman rides it. Visionary bike companies should market motorcycles to women. Not only would it be a distinctive, memorable, brand-building exercise; it would also increase the number of female riders in this country. In us, you bike companies have a captive market. What are you going to do about it? Shoba Narayan would like to buy a Suzuki Hayabusa but “gentlemen”, she will probably start her engine with a TVS Apache because she likes the name and its Indian pedigree. Write to her at thegoodlife@livemint.com

Heady times for two-wheeler makers

These are exciting times for the Indian two-wheeler industry with new launches set to redefine leadership stakes in the coming years. First, it was Piaggio which announced the comeback of the Vespa in India. The 125cc gearless scooter has been deliberately priced at a premium (nearly Rs 70,000 on-road) to give the brand a distinct positioning in the market. Will the move pay off? Opinions are divided within industry but nobody doubts the fact that here is a sleek scooter that manages to stand out in a segment where the Honda Activa reigns supreme. The numbers will be slow in coming but that is not Piaggio's priority for the moment. Yamaha, likewise, has decided to focus on gearless scooters as part of its growth plan for India and will set up a new plant near Chennai. Old-timers will recall that Yamaha was the ‘hottest' brand in the mid-1980s but lost its way for a host of reasons, ranging from a wobbly partnership with the Escorts group to poor product planning. Yamaha is a company that does not deserve to fail in a market like India. It has now decided to play to its core strengths in powerful motorcycles, which will showcase its brand while scooters will deliver the bigger numbers. There is no reason why Yamaha will go wrong this time around. The gearless scooter market has been growing rapidly, thanks to crowded traffic conditions and poor public transport in many parts of the country. Young working women find the gearless scooter the best bet to handle in these trying conditions and this explains why manufacturers are so gung-ho on its prospects. Yamaha's plans for India go beyond products; it will use the ancillary supplier base here to source parts for its global operations to keep the overall cost structure in check. Vying for slice of pie On the subject of scooters, the fact that Bajaj Auto has chosen to exit this space completely and focus on motorcycles instead continues to intrigue experts. After all, Hamara Bajaj was all about the trusty geared scooter which was once the monarch of all it surveyed till the motorcycle revolution happened and consigned it to the archives. Bajaj Auto has since shifted its attention completely to bikes and is wedded to its strategy of ‘less is more' where the Pulsar and Discover have been the key growth drivers, both here and in international markets. Bajaj also believes it makes more sense at this point to aim for the skies in the global motorcycle arena where it has the opportunity to build numbers. Scooters will mean competing for a smaller share of the pie which will contribute precious little from the viewpoint of profitability or brand building. The company is upbeat on its new Pulsar and Discover range which are expected to take its motorcycle story to the next level. Ever since it parted ways with the Hero group, all eyes have been on Honda to try and figure out what the company has up its sleeve. After all, the recent divorce with the Munjals translated into a loss of over five million units annually for the Japanese automaker. More importantly, it realised it needed the right product line-up to take on the super successful Splendor and Passion brands. The 110cc Dream Yuga is the first part of this script but it is still too early to say if it will take the market by storm. There is absolutely no question that Honda is a brand to be reckoned with but its India success story has been more about scooters than bikes. It is only the 125cc Shine that has been notching up impressive numbers and whether the Dream Yuga will do better remains to be seen in the coming months. Honda has also indicated that its next offering will be a less expensive motorcycle and this is when it will really start stepping on the gas in India. The company has already made it known that it will be looking at a capacity of ten million units by 2020 which will translate into a market share of 30 per cent. This could involve setting up at least six plants which will roll out scooters and motorcycles. spoilt for choice Honda's erstwhile ally, now rechristened Hero MotoCorp, will be in no mood to relinquish its leadership crown in a hurry. It wrapped up 2012 with over six million units and will be looking at 15 per cent growth this fiscal. Hero still commands loyalty among its large customer base who continue to swear by the Splendor and Passion motorcycles. The younger generation will, of course, be open to new options but these will have to be distinctly different and offer greater value for money than the Splendor and Passion. TVS Motor Company has been the quiet player in this charged arena. It only seems like yesterday when it called it quits with Suzuki and caught the fancy of the market with the Victor. However, it just has not been able to capitalise on that dream momentum and the big numbers in motorcycles continue to be elusive. Scooters, though, have been doing well along with the trusty moped. What TVS needs at this point is a big break in the commuter bike segment which will do the trick in building volumes and market share. Like Yamaha, Suzuki has also decided to focus on scooters as its growth driver for India. It makes sense given that this is a rapidly growing product segment which offers room to more players. Motorcycles still account for a lion's share of two-wheeler sales but gearless scooters could just tilt the balance a tad in the coming years. So, who will eventually triumph in the leadership stakes? Experts believe that there would be no ‘drastic changes' over the next three-five years where Hero MotoCorp, Bajaj Auto and Honda will be the key players in the script. The global market will increasingly become the bigger priority for Bajaj as it sets about building its share in motorcycles. Honda and Hero, on the other hand, are expected to focus more on India. A keen tug-of-war is imminent where the customer will be spoilt for choice in scooters and bikes!

Bajaj to export less vehicles to Sri Lanka as import duty rises

Bajaj Auto Ltd, the country’s largest exporter of two- and three-wheelers, will ship fewer vehicles to Sri Lanka this year after the island state’s government sharply increased import duties. The Pune-based company will pare its overall exports to Sri Lanka by about 60,000 units this fiscal year, chief financial officer Kevin D’sa told analysts in a conference call on Friday. The company’s average annual sales to Sri Lanka are 264,000 units. Bajaj exports 10,000 motorcycles and 12,000 three-wheelers to Sri Lanka every month. The country accounts for 17-18% of its total exports. “Sri Lanka is going to be a pressure point for two to three months,” said D’sa, adding that over a period of time buyers will get used to the new price. The sales will only get deferred and not lost, he said, as the buyers in that market do not have much choice but to cope with the increased price. Prices of Bajaj’s motorcycles and three-wheelers have shot up by 29% and 32%, respectively, in Sri Lanka after the import duty hike. To contain its rising fiscal deficit, the Sri Lankan government increased the import duties on cars from 120-291% to 200-350%, on three-wheelers from 51-61% to 100%, and on two-wheelers from 61% to 100%, Mint reported on 3 April. Duties on buses, trucks and tractors remain unchanged. Sri Lanka is an important export market for several Indian auto makers, including Maruti Suzuki India Ltd, the country’s biggest car maker. Exports account for 36% of Bajaj’s total production. In the fiscal year ended 31 March, Bajaj sold more than 1.5 million two-wheelers and commercial vehicles. Some of the company’s other key export markets are Africa, the Philippines and Latin America. D’sa said he expects Africa, the company’s biggest market, to contribute 45-47% of the total volumes. Bajaj also plans to commence exports to Argentina in six months. Analysts are not worried about the volume contraction in Sri Lanka. “The price increase will get absorbed and sales will bounce back in a year or so,” said Mahantesh Sabarad, senior vice-president (equity) at Fortune Equity Brokers Ltd. Bajaj’s fourth-quarter profit dropped 45% to Rs.772 crore because a one-time gain had boosted year-earlier earnings, it said on Thursday. Excluding such items, profit after tax rose 12% to Rs.759 crore. The company had reported a one-time gain of Rs.826 crore in the three months ended 31 March 2011 because of a benefit it received from the Maharashtra government for paying sales tax in advance. Bajaj’s shares ended 2.63% lower at Rs.1,532.95 on BSE on Friday, while the Sensex fell 0.5% to 16,152.75 points.

Bajaj Auto's overseas sales help push Q4 net up 12%

Pune, May 17: Riding on its success in overseas markets, Bajaj Auto Limited (BAL) has posted a net profit of Rs 759 crore during the fourth quarter of the last fiscal, registering an actual rise of 12 per cent year on year. It may be mentioned that the total profit of Rs 1,400 crore during Q4-11 included surplus on pre-payment of sales tax deferral liability loan amounting to Rs 826 crore, and Rs 102 crore provision for diminution in value of investment in PT Bajaj Auto Indonesia. While BAL's turnover in the quarter ended March 31, 2012 stood at Rs 4,791 crore, against Rs 4,301 crore, indicating a rise of 11 per cent, exports gave the two-wheeler major's top-line a clear leg-up, with revenue from overseas sales growing by 40 per cent YoY to touch Rs 1,477 crore. The operating EBIDTA margin in Q4-12 was 20.7 per cent. In terms of total sales numbers, BAL grew 7 per cent with 10,17,167 units sold (including around 1,20,000 CVs) during Q4-12 against 9,48,198 units in Q4-11. Sales of both bikes and CVs in the domestic market were slightly lower this year. Annual performance However, exports of motorcycles were up by 28 per cent while CVs recorded 18 per cent growth over the corresponding quarter of the previous fiscal, to reflect 26 per cent overall growth on overseas sales. During FY-12, BAL's net profit stood at Rs 3,095 crore against Rs 2,615 crore (without exceptional items indicated above), translating into a rise of 18 per cent. This year, the company has protected its future export realisations by entering into range forward contracts. The time value of option contracts, amounting to Rs 134 crore and charged to the P&L account, will reverse over the tenure of the contract. On its turnover, the company grew 19 per cent year on year, with total turnover in FY-12 standing at Rs 20,137 crore (Rs 16,975 crore). Exports, again, played a stellar role, with revenue from sales abroad growing by 45 per cent to stand at Rs 6,604 crore. Sales numbers Total sales in numbers for the company stood at 4,349,560 units — an overall growth of 14 per cent. However, while in the domestic market total sales grew in single digits, from 2.6 million units to a little below 2.8 million units, the company's exports rose by a little over 30 per cent to notch up nearly 1.6 million units. At its meeting today, the Board of Directors recommended a dividend of Rs 45 per share. The total outgo, in terms of dividend and tax thereon, amounts to Rs 1,513 crore.

Rural India holds the key for growth for us : Suzuki Motorcycle MD

Suzuki Motorcycle India is moving into overdrive with new models appealing to different segments. It plans to replicate the Suzuki brand's success in car sales with its scooters and motorcycles, launching a couple of models every year from here on. It has bikes in the 110cc, 125cc and 150cc segments. Within no time, it has figured out how to succeed in India, and realises the rural market holds the key. To achieve this, the company has launched a mass market motorcycle Hayate, at an aggressive price of about Rs 40,000. The company is doubling its manufacturing capacity by setting up another plant at Rohtak. The Managing Director of Suzuki Motorcycle India, Mr Ichiro Kondo, is optimistic about the company's growth plans. From sales volumes of about 3,60,000, we are looking at about 4,50,000 this year, and possibly 5,40,000 a year later, he said. During his meeting here after the launch of the company's new bike, he told Business Line how they plan to expand their presence in the country. Excerpts from the interview: What are your plans for India? From a Suzuki corporation perspective, India is a crucial market. We want to do with motorcycles what Suzuki Motor has managed to achieve with cars in the country. The brand has a powerful presence here and we connect well with end-users. The first few years in this run-up shows growing acceptance. Therefore, we plan to replicate the success achieved by Suzuki. When do you see yourself clocking the one-million-bike sales mark? We have already sold more than a million bikes in India but not in a single year. We hope to hit the half-million mark soon in a year. We are in the process of setting up a new plant at Rohtak. In all, our investment will be about Rs 500 crore. Once this plant is ready by 2014, we will have the capacity to produce one million bikes a year. We started with scooters and have gradually moved on to motorcycles. Eighty per cent of the sales achieved last year was from scooters. We plan to gradually change this mix as the motorcycle sales business goes up. Are you looking at higher capacity bikes? We have launched a mass market bike in the 110 cc category at an attractive price point. This squeezes our margins. Yet it is an important offering. Of the million bikes sold in the country per month, 45 per cent come from this segment. Of this, 65-70 per cent sales are in the rural market. Therefore, this market is vital to garnering volumes. What is the basis for your confidence on the rural market? I have travelled extensively and assessed the rural market and its potential. The economy is growing, people's aspirations are up and purchasing power has gone up. Therefore, I believe rural India holds the key for growth of the motorcycle business for us. There is a need for affordable bikes in the rural areas. People use them for business and to travel along with family

TVS Motor, Sundaram Clayton to invest Rs. 770 crore in Hosur

TVS Motor and Sundaram Clayton Limited (SCL), part of the $5-billion TVS Group, together are planning to invest around Rs 770 crore in their facilities at Hosur in Tamil Nadu. A memorandum of understanding (MoU) to this effect is expected to be signed with the Tamil Nadu government shortly, according to sources. Meanwhile, TVS Motor has pumped an additional $5 million into its Indonesian subsidiary – PT TVS Motor Company, according to the Reserve Bank of India (RBI)'s data. When contacted, a TVS Motor Company spokesperson declined to comment saying that “the company is currently in a silent period.” Officials of Sundaram Clayton were unavailable for comment. SCL is one of the largest auto components manufacturing and distribution group in India. It is a leading supplier of aluminium die castings to the automotive and non-automotive sector. Recently, the company has said that it had received new orders from companies like Daimler and that the new orders accounted for 10-12 per cent of its total business. The company has witnessed good volume growth – from 32,000 tonne last year to 36,000 tonne this year. SCL has one plant at Hosur and two in Chennai. The proposed investment by the company will be for brown-field expansion, sources said. Investments by TVS Motor, the third-largest two-wheeler manufacturer in the country, will be for a brown-field expansion at Hosur, which will support its growth target of eight to 10 per cent for the whole year. The investment comes at a time when the company has lined up some new launches, including a 125-cc motorcycle during the July-August time frame. The company has reported a seven per cent growth in domestic sales during the month of April at 151,181 units, as against 141,619 units in April 2011. Total sales of the company grew four per cent in April 2012 with sales of 174,455 units, as against 167,744 units registered in April 2011

Suzuki may use Indian 2 wheeler unit as global export hub

Suzuki Motor Corporation may use India as an export hub for its mass segment two-wheelers, which has been launched by its Indian subsidiary Suzuki Motorcycle India Private Ltd (SMIPL). SMIPL National Head-Marketing Anu Anamika said here on Tuesday that “Yes, this is possible, but I cannot tell you which part of the country this would be located.” Ms. Anamika, who was here on the occasion of the launch of SMIPL's first mass segment motorcycle (in the 100-110cc category), The Hayate, said this in response to a question on this issue. Exports to neighbouring countries have already commenced from the Gurgaon plant and this is proposed to be stepped up in future with exports to Southeast Asian countries, too. The Gurgaon unit, on which a Rs.400-crore investment has been made since the company commenced operations at this unit in 2006, has an annual capacity of 3.6 lakh units (of scooters and motorcycles). This will be ramped up to 5.4 lakh units by 2013-14 when investment would increase to Rs.500 crore, according to Ms. Anamika. Indications were that by 2014-15, the capacity would be raised to 10 lakh units per annum. This may be through the setting up of a new unit at Rohtak where SMIPL shares space with Maruti Suzuki. SMIPL has a 22 per cent share in the Indian scooter market and 2 per cent in the motorcycle segment. Atul Gupta, Vice-President (Sales and Marketing), said that the 100-110 cc motorcycle market was a promising one and the launch of Hayate was an opportunity for addressing emerging markets in small-town clusters and in rural and semi-urban markets. Ms. Anamika said that a monthly sales target of 10,000 units had been fixed for Hayate and the dealership network would be doubled by 2014 to help fulfil this target.

Honda challenges Bajaj with low-cost, 110 cc motorcycle

New Delhi: Japan’s Honda Motor Co. Ltd, which ended a 26-year partnership with India’s Hero Group last year, has introduced the low-cost Dream Yuga in India to overtake local sales of the nation’s second-largest two-wheeler maker Bajaj Auto Ltd. Honda Motorcycles and Scooters India (HMSI), which introduced the 110cc Dream Yuga on Tuesday, expects its two-wheeler sales to rise 30% to 2.75 million units in the current fiscal, said Yadvinder Singh Guleria, operating head of sales and marketing at HMSI. “This kind of growth will be achieved by our new offering in the mass segment and other successful models.” In India, Bajaj Auto sold 2.56 million motorcycles in the year ended 31 March, registering a growth of 6.3% from a year earlier. Including exports, it sold 3.8 million units. The Indian two-wheeler industry is expected to grow at 11% in the current fiscal, according to Society of Indian Automobile Manufacturers’ forecast. At this rate, the Pune-based company will increase local sales to 2.85 million units. Bajaj Auto only sells motorcycles while more than 60% of HMSI sales come from scooters. “With Dream Yuga, the ratio of motorcycles versus scooters will be 50:50,” said Keita Muramatsu, president and chief executive of HMSI. “Honda is developing a low-cost motorcycle for the African market. But the product is not suited for introduction in India as customers here look for added features in motorcycles. We are working on introducing another product in the mass segment.” This would be the third motorcycle in the 100-110 cc segment in addition to the newly launched Dream Yuga and the existing CB Twister. The showroom price of the new motorcycle is Rs.44,642. “We don’t want to be in the rat race. That’s the reason why we stopped making some successful models. We don’t make cheap 100cc bike. We are in the volume game but not at any cost,” said Rajiv Bajaj, managing director, Bajaj Auto, on Honda Motorcycle’s new mass-segment bike. HMSI has a 13% market share in India. It trails behind Hero MotoCorp, which dominates the two-wheeler market with a 45% share, and Bajaj Auto Ltd, which has a 20% share. While Hero MotoCorp has the capacity to produce 6.4 million units a year, Bajaj’s capacity is 5.5 million units. The cumulative production capacity at HMSI’s three plants in India will reach four million units by the first half of next year. HMSI’s ambitious plans come at a time when inventory has piled up at its dealers and the company is offering discounts on it highest-selling model Activa, said an industry expert familiar with company’s plans. The expert did not want to be identified. Two HMSI dealers, present at the conference, also confirmed the inventory build-up and added that the dealers are offering a discount of as much as Rs.1,500. None of the dealers wanted to be identified. Guleria of HMSI agreed there is inventory at company’s dealerships. “But that is lower than the industry average,” he said. “As far as discounts are concerned, that might be happening at the dealer end. The company has nothing to do with that.” Guleria said that the company’s long-term target is to be the No.1 in India by 2020. HMSI aims to increase its contribution to its parent’s revenue from two-wheeler sales to 30% by 2020 from 13% in the last fiscal. “We have our capacity in place and have a wide range of products to offer,” Guleria said. “What we need to do is to increase our reach in the Indian market and connect with customers. That’s why we are launching a new brand campaign with a brand ambassador.” Mint reported this on 26 March. The company on Tuesday hired Bollywood actor Akshay Kumar as the brand ambassador for the company for the first time in the country. Targeted at the rural market, Honda’s campaign will be aired in all regional Indian languages with the company adopting its global tagline—Power of Dreams—for the first time in the Indian market. Currently, it uses this tagline for its car business in India. “We will be very aggressive in print and digital media,” said Guleria. “Besides, we will be taking the number of total dealerships to 2,000 in the future.” HMSI’s chief executive Muramatsu said that there is a systematic expansion plan in place, which will ultimately make India an export hub for Honda. “India will be the most important market and will continue to be in the focus for the next 10 years. We plan to manufacture most of the Honda products in India, not only for India but for the world,” Muramatsu said.

New Delhi: Japan’s Honda Motor Co. Ltd, which ended a 26-year partnership with India’s Hero Group last year, has introduced the low-cost Dream Yuga in India to overtake local sales of the nation’s second-largest two-wheeler maker Bajaj Auto Ltd. Honda Motorcycles and Scooters India (HMSI), which introduced the 110cc Dream Yuga on Tuesday, expects its two-wheeler sales to rise 30% to 2.75 million units in the current fiscal, said Yadvinder Singh Guleria, operating head of sales and marketing at HMSI. “This kind of growth will be achieved by our new offering in the mass segment and other successful models.” In India, Bajaj Auto sold 2.56 million motorcycles in the year ended 31 March, registering a growth of 6.3% from a year earlier. Including exports, it sold 3.8 million units. The Indian two-wheeler industry is expected to grow at 11% in the current fiscal, according to Society of Indian Automobile Manufacturers’ forecast. At this rate, the Pune-based company will increase local sales to 2.85 million units. Bajaj Auto only sells motorcycles while more than 60% of HMSI sales come from scooters. New Offering: Keita Muramatsu, president and chief executive of HMSI with Bollywood actor Akshay Kumar at the launch of a bike on Tuesday “With Dream Yuga, the ratio of motorcycles versus scooters will be 50:50,” said Keita Muramatsu, president and chief executive of HMSI. “Honda is developing a low-cost motorcycle for the African market. But the product is not suited for introduction in India as customers here look for added features in motorcycles. We are working on introducing another product in the mass segment.” This would be the third motorcycle in the 100-110 cc segment in addition to the newly launched Dream Yuga and the existing CB Twister. The showroom price of the new motorcycle is Rs.44,642. “We don’t want to be in the rat race. That’s the reason why we stopped making some successful models. We don’t make cheap 100cc bike. We are in the volume game but not at any cost,” said Rajiv Bajaj, managing director, Bajaj Auto, on Honda Motorcycle’s new mass-segment bike. HMSI has a 13% market share in India. It trails behind Hero MotoCorp, which dominates the two-wheeler market with a 45% share, and Bajaj Auto Ltd, which has a 20% share. While Hero MotoCorp has the capacity to produce 6.4 million units a year, Bajaj’s capacity is 5.5 million units. The cumulative production capacity at HMSI’s three plants in India will reach four million units by the first half of next year. HMSI’s ambitious plans come at a time when inventory has piled up at its dealers and the company is offering discounts on it highest-selling model Activa, said an industry expert familiar with company’s plans. The expert did not want to be identified. Two HMSI dealers, present at the conference, also confirmed the inventory build-up and added that the dealers are offering a discount of as much as Rs.1,500. None of the dealers wanted to be identified. Guleria of HMSI agreed there is inventory at company’s dealerships. “But that is lower than the industry average,” he said. “As far as discounts are concerned, that might be happening at the dealer end. The company has nothing to do with that.” Guleria said that the company’s long-term target is to be the No.1 in India by 2020. HMSI aims to increase its contribution to its parent’s revenue from two-wheeler sales to 30% by 2020 from 13% in the last fiscal. “We have our capacity in place and have a wide range of products to offer,” Guleria said. “What we need to do is to increase our reach in the Indian market and connect with customers. That’s why we are launching a new brand campaign with a brand ambassador.” Mint reported this on 26 March. The company on Tuesday hired Bollywood actor Akshay Kumar as the brand ambassador for the company for the first time in the country. Targeted at the rural market, Honda’s campaign will be aired in all regional Indian languages with the company adopting its global tagline—Power of Dreams—for the first time in the Indian market. Currently, it uses this tagline for its car business in India. “We will be very aggressive in print and digital media,” said Guleria. “Besides, we will be taking the number of total dealerships to 2,000 in the future.” HMSI’s chief executive Muramatsu said that there is a systematic expansion plan in place, which will ultimately make India an export hub for Honda. “India will be the most important market and will continue to be in the focus for the next 10 years. We plan to manufacture most of the Honda products in India, not only for India but for the world,” Muramatsu said.

Bajaj Auto plans Discover, Pulsar variants every year

Second largest two-wheeler maker Bajaj Auto plans to introduce a new variant of both its mainline brands Discover and Pulsar each year to boost sales and further add to the manufacturer’s sporty image. The Pune-based automaker continues to focus singularly on earning a fifth as profit on every motorcycle sold. It ruled out any further launches in the 100 cc to 110 cc mass segment claiming that the segment won’t allow the company to make such profits. New variants such as the Discover 125 ST (sports tourer) will go on sale from June, while the Pulsar 200 NS (naked sports) will go on sale in July, Rajiv Bajaj, managing director at Bajaj Auto, said on Monday. “Whether it is Pulsar, Discover or KTM, our aim is to move up the value chain while we keep on increasing our global market share. Its most important to ensure very good profitability,” Bajaj added. The two new products will be the first models derived from fresh platforms for both Discover and Pulsar and the upcoming variants will be rolled out using these platforms. The firm has ruled out any future products in the mass motorcycle segment except the Platina that it already sells currently, even as players such as Honda is slated to launch the 110-cc Dream Yuga on Tuesday, and Suzuki to launche the 110-cc Hayate later this month. The strategy also allows Bajaj Auto to distance itself from the market leader Hero MotoCorp that accounts for more than 80 per cent of models sold in the mass motorcycle segment. Bajaj Auto currently sells an average of 56,000 units Discover (110 cc to 135 cc) range every month and 85,000 units Pulsar (135 cc to 220 cc) apart from 50,000 units of 110 cc Platina. It also sells the 150 cc Boxer and KTM Duke 200 in comparatively smaller numbers. Bajaj, the third largest motorcycle maker globally by volumes behind Honda and Hero, plans to sell five million units including three wheelers and exports this financial compared with 4.35 million during 2011-12. With sales of 3.8 million motorcycles last financial year, Bajaj Auto’s market share stood at over 10 per cent of the 35 million plus global motorcycle market, he said.

Auto cos change gear to cut costs

Tamil Nadu’s newfound popularity among twowheeler investors may be the result of a new production strategy currently ruling the auto industry. Automobile companies are taking a leaf out of developed markets such as the US to look for a wider geographical spread while planning their plant locations. With transportation costs running as high as Rs 1,400 per motorcycle in some cases, producing from multiple locations not only saves cost but also ensures just-in-time and bottleneck-free movement of goods. “The southern markets command 30% share in twowheelers, the same as the north, while the west commands 35%,” said TVS MD Venu Srinivasan. “Having plants in multiple locations helps cut transportation costs and reduces chances of supply bottlenecks. It’s the same in America – once a state reaches critical mass, companies set up a new plant elsewhere to ensure wider spread.” In Chennai’s case, he said, a port facility for exports, skilled manpower and good industrial environment have all helped attract fresh investments, he added. Apart from the Rs 1,500-crore Yamaha announcement on Monday, Chennai has also attracted investments from the likes of Royal Enfield. Meanwhile two-wheeler market leader Hero Moto Corp is reportedly looking at a southern location – either Tamil Nadu or Karnataka – for its fourth plant though there’s no official confirmation yet. Company CFO Ravi Sud said at an analyst meet last week that the final announcement on the new plant could come in a couple of weeks. The attraction of the southern markets has also tied in with labour problems in the Gurgaon-Daruhera belt, the nerve centre of the two-wheeler industry. Labour has become prohibitively expensive in Gurgaon-Daruhera and it is also getting restive, said a top auto executive. Unsurprisingly, Hero Moto’s Haridwar plant now supplies the lion’s share of its soon-tohit 7 million units per annum total production, significantly higher than both Gurgaon and Daruhera. DERISK STRATEGY Auto companies set up more hubs to tap regional markets Spreading out factories means lowering of transport costs It also means fewer supply-chain bottlenecks Labour troubles get derisked Closer to a new market will better sales and marketshare

India Yamaha Motor to invest Rs 1,500 crore in new two-wheeler plant in Chennai

MUMBAI: India Yamaha Motor Pvt Ltd. plans to invest Rs 1,500 crore in a new two wheeler plant in Chennai over the next five years. The company on Monday signed an MoU with with the government of Tamil Nadu approving the construction and operation of a new two-wheeler factory in the state. The plant will kickstart operation in the beginning of 2014 and have an initial capacity of 4,00,000 units employing 1,800 people. The company can eventually scale up the production to 1.8 million units in phases by 2018. This expansion is part of the company's plans to achieve 2 million vehicle sales by 2016. Hiroyuki Suzuki, CEO & MD, India Yamaha Motor said, "We are very pleased with this development as this is in line with YMC's medium-term management plans of enhancing local production levels to meet the demand growth in emerging markets such as India and their export markets. The Indian two-wheeler industry has witnessed much growth in the last few years, attributable to increased disposable income levels among a rapidly expanding middle class. We expect the industry to attain 20 million units level by 2016 when we are targeting to sell 2 million units and achieve 10% market share." The company says, the aggressive introduction of new models in the 150cc+ deluxe & premium motorcycle segments have contributed to a strong growth in domestic sales and exports for India Yamaha Motor. Yamaha posted a 36% growth in 2011 by selling 5,20,000 units and for this year it is aiming at 23% growth and sell 6,40,000 units with an eventual goal of touching 1 million by 2013 and 2 million by 2016. To keep pace with this current growth in demand, plans have been implemented to boost the existing factory's annual production capacity of 600,000 units to One million units on an investment of approx. Rs 750 crore in 2012. With this new Chennai factory, India Yamaha Motor will have a combined two-wheeler production capacity of 2.8 million units by 2018. The new factory is to be constructed in Vallam Vadagal on the outskirts of the city of Chennai, Tamil Nadu with a total floor space of approx. 114,000 m2 and is scheduled to begin in September 2012.The new facility will join the currently operating factories of India Yamaha Motor Pvt. Ltd. (IYM) at Surajpur (UP) and Faridabad (Haryana) to meet the rising demand for two-wheelers in India. The new Chennai Factory will be the first in the Yamaha Motor group to have a "vendor park" in its nearby vicinity that will bring together the production operations of main external parts suppliers, thus enabling complete synchronization of external supplier parts production as well. This system will reduce losses in the areas of production management and distribution to extremely low levels in the overall engineering, manufacturing and marketing process, and make the new production base a highly efficient and profitable plant.