Harley Davidson rides on the fast lane with India-built bike.

Iconic cult bike maker Harley-Davidson has hit the sweet spot with its model 'Street 750', that is built in India, accounting for nearly 60 per cent of its April sales in the country within the first month of starting deliveries.

The company, which is present in India through a wholly-owned subsidiary Harley-Davidson India, had launched the Street 750 priced at Rs 4.1 lakh in February and opened for bookings in March.

According to the Society of Indian Automobile Manufacturers (SIAM) data, the model clocked sales of 210 units in April this year out of total 361 bikes sold by the company last month.

Harley-Davidson India had sold 146 units in the same month last year. At present the company sells 13 models, including the Street 750, which is its most affordable model in India and is built at Bawal plant in Haryana, with price ranging from Rs 4.1 lakh to Rs 29 lakh. The company produced a total of 506 units of the Street 750 last month.
As per SIAM data, the company sold a total of 126 bikes in the country in March, which is without the Street 750 model.
Last year the company had announced that it would start full-scale 'building' of motorcycles in India from where it will also start exporting to Europe and South East Asian market.

Harley-Davidson Motor Co President and COO Matthew Levatich, however, had stressed that the local 'building' of bikes in India would be restricted only to the Street 750 and Street 500 models. He had also stated that local fabrication of fuel tanks and fenders would also commence in India with the two models, scaling up the company's production operations to almost full scale manufacturing from the earlier assemble operations.

Since early 2011, Harley-Davidson has been assembling motorcycles in India at its completely-knocked-down assembly unit at Bawal catering only to the market here.

Now, scooters rule sales & roads.

They are light, stylish, unisex, multiple usage, and they bucked the slowdown. The ever-so-convenient scooters are now the darling of the two-wheeler industry. And, increasingly, they are replacing motorcycles on urban roads.

The scooter success story in India has seen some hairpin bends going from nearly 50% of the market in 1996 to just 12% around 10 years later. Now, less than a decade on, scooters comprise 28% of the two-wheeler market and every manufacturer in the fray is looking for niches to plug with their scooter launches. Auto industry experts say the city-hinterland divide between scooters and motorcycles is one of the reasons for their growth difference. The motorcycle's dominance over all roads, urban and rural, is clearly over.

TVS Motor chairman Venu Srinivasan said: "We have already started to see big cities favouring the scooter. While motorcycles will continue to grow, it will become a bigger semi-urban mode of transport." The scooter's popularity in bigger cities and in states like Maharashtra, Gujarat and Karnataka has to do with product USP and appeal. A multiple usage product, it is favoured by both men and women and it is in states that have a larger percentage of working women, better roads and higher social indices that scooters ers typically do well.

Y S Guleria, V-P-sales and marketing, Honda Motorcycle & Scooter India (HMSI), said, "Scooters depend on markets with better literacy, awareness and infrastructure. That's why it's a predominantly urban product but in the future, the contribution of rural markets will improve and we are looking at the scooter's urban skew as potential to improve rural contribution."

Guleria should know. HMSI, with nearly 2 million units in sales in FY14, is the clear leader in the scooter market. Its Activa is the second largest selling product in the two-wheeler mart, higher than Hero's long-standing best-seller Passion and second to its stablemate Splendor. Currently, 53% of HMSI's sales are scooters while 47% comes from motorcycles. Part of the urban skew in scooter has to do with the way its demand curve revived when HMSI introduced the Activa.

"We began with just 50-60 dealers and they were naturally focused on urban markets," said Guleria. "But now we have 800 dealers we are pushing forward into tier-2, tier-3 cities as well as rural markets. As accessibility improves, so will brand visibility and demand from rural markets."

Of course, it will take some time for rural India to come up with the kind of numbers that scooters now tot up in cities. "At present, scooters are 75-80% urban and 25-20% rural sales," said Atul Gupta, V-P-sales and marketing, Suzuki Motorcycle India. "The success of scooters is now a 10-year-old phenomenon so the penetration levels are slowly moving into semi urban and rural markets as well." Suzuki launched its 110 cc scooter Let's earlier this week - among a clutch of launches planned by nearly every two-wheeler manufacturer in the segment. "The scooter market saw 12-13% growth last fiscal but this year it will slow down a bit to around 7-8%. "We are looking to sell around 10,000 units of the Let's per month to start with," said Gupta. "Currently 70% of our total sales are scooters and 30% motorcycles."

Part of the allure of the scooter, say industry experts, is that it is a multiple or co-usage product. Both women and men in the family can share the vehicle and it is lightweight, fuel efficient and easy enough to drive around. "Scooter sales took off when the new range of scooters offered features, technology and mileage like the 110 cc commuter bikes," said Gupta. "But penetration levels in major urban markets are gradually going up so it's just a matter of time before marketers look to rural India for incremental growth."

Honda plans another bike in volume segment.

 Honda, the biggest Japanese two-wheeler brand in India, is keen on expanding its portfolio of entry motorcycles with a planned addition in the coming weeks even as former partner turned rival Hero MotoCorp moves to fortify its market.

Honda Motorcycle and Scooter India (HMSI), the country's third biggest two-wheeler producer, will add a new bike under the Dream series brand shortly which will be its third such product in that segment, sources said.

Sales under the Dream series (comprising Yuga and Neo) more than doubled last financial year helping HMSI to grow 36% to 3.6 million units. Honda's Dream series grew 116% to 5.65 lakh units compared to 2.61 lakh units sold in 2012-13.

The entry bike segment (upto 110cc) is a 6.8 million units a year market commanding a share of 65%. Though the segment grew just four% last year no manufacturer is ignoring it considering its size.

When asked if Honda would expand its product portfolio in the economy segment Y S Guleria, vice president (sale and marketing), HMSI said, "Keep your expectations high, we will explore more".

Entry bikes have a huge following in the rural markets where fuel efficiency influences purchasing decisions. These bikes are capable of delivering mileage of more than 60 kilometers per litre (kmpl) on an average going upto 85 kmpl.

Delhi-based Honda is thus increasing its focus on the entry level segment so much so that it has put the potential launch of a big engine premium concept bike on the back burner. The CX-01, a off and on road performance bike, which was unveiled at the Auto Expo was scheduled to go for 'fine tuning' before readying it for launch in 2015 or 2016.

The CX-01 is the first bike developed entirely by HMSI's own engineering division also based in India. However, HMSI has instead opted to put more focus on the Dream series for coming period and expand its reach in the rural areas which will host two-thirds of Honda's 1,000 new sales outlets planned this year.

Sensing trouble market leader Hero MotoCorp launched last month yet another variant of its top selling bike Splendor. Called the Splendor iSmart the bike gives more mileage with an 'intelligent' engine which switches off automatically during idling.

Hero presently commands a market share of 66% in the entry level segment with ten models under its fold. Bajaj Auto is the second biggest player with a share of 17% followed by HMSI with a share of 9% and TVS Motors with a share of 5%.

In March Honda's scooter Activa became India's biggest selling model in dethroning the Hero Splendor in the upto 110cc engine category.

One of the other reasons for the shift could be the tepid response HMSI has received for the CBR250, a 250cc performance bike. Last year it sold an average of 640 bikes a month compared to its earlier sales of more than 1,200 units a month

Cruising, not so smoothly - Suzuki Motorcycle India

Just a day after its erstwhile joint venture partner, TVS Motor launched a new motorcycle in Chennai and said its immediate focus will be on the motorcycle segment, Suzuki Motorcycle India (SMIL), a subsidiary of Suzuki Motor Corporation, Japan, chose the same city to unveil its new scooter.

The new product, Let’s, a 110 cc scooter, is targeted at the urban youth. The company hopes to sell around 10,000 Let’s scooters a month and is confident the new model will strengthen its presence together with its existing models, Swish and Access, in the Indian market.

“Suzuki is keen on providing value products for all Indian customers, where Swish and Access have been long-term favourites. Now Let’s will further strengthen our product presence in the category,” Atul Gupta, executive vice -president, SMIL said on Tuesday.

According to him, Let’s is a stylish scooter for the urban Indian youth, who are seeking trendy products that offer unmatched value. “Let’s is powered by SEP (Suzuki Eco Performance) engine technology that offers top class fuel efficiency without compromising power and performance,” he observed.

The company, which has priced Let’s at Rs 46,925 (ex-showroom Chennai), is hoping to sell around 10,000 units and will focus its attention on the urban people. Overall, the company plans to sell about five lakh units this financial year. This will include 3.7 lakh scooters and close to 1.5 lakh motorcycles. It had sold, 3.7 lakh units in the year 2013-14, comprising 2.7 lakh scooters and about one lakh motorcycles.

Mahindra puts veteran in charge of two wheelers

 His company may have lost market share in its India motorcycle business last fiscal, but Rajiv Bajaj is unfazed. “While it’s true that we have lost four percentage points in the domestic bike market, fiscal 2013-14 has been the best ever in terms of profit in the history of Bajaj Auto,” its Managing Director told Business Line. The company is scheduled to declare its results on May 15.

Foreign markets

“It’s perhaps important to bear in mind that we are a company which goes beyond just domestic market numbers. Ours is a global company whose motorcycles and three-wheelers are doing well in a host of countries,” Bajaj says.

For instance, Bajaj Auto’s market share for motorcycles in Nigeria (where the Boxer is the prime brand) has gone up in the last year from 34 to 44 per cent, while in Bangladesh it is up to 53 per cent (from 46 per cent). Likewise, in Sri Lanka, its market share has moved up from 74 to 82 per cent and in Uganda, from 81 to 88 per cent.

Similarly, the alliance with Kawasaki Motors has seen Bajaj Auto enhance its bike presence in Indonesia and the Philippines. Going forward, the duo will identify more opportunities in the ASEAN region, which includes Thailand, Vietnam, Taiwan and Malaysia. Kawasaki has been Bajaj Auto’s ally for over three decades now.

Likewise, the company will look at growing its global presence with KTM, the Austrian company in which it has a 48 per cent stake. Europe, the US, Japan and Australia are part of the road map for the future and it will be interesting to see if Latin America and Brazil, in particular, will be added to the list.

“While India is our largest market, it’s only one of our many global markets given that 40 per cent of our bikes and 60 per cent of our three-wheelers are now exported. So, we measure our performance on the basis of a global scorecard and not just India,” Bajaj says. During 2013-14, the company’s two and three-wheeler sales fell by nine per cent to 3.87 million units (4.23 million), while exports were up at 1.58 million units.

Holistic strategy

From Bajaj’s point of view, the global strategy will only work with the mindset of a specialist. This is perhaps why he constantly insists that there is no way his company will revisit the scooter space even if this product segment is growing the fastest in India.

By the end of the day, motorcycles not only form a larger chunk of the global two-wheeler pie but are a far more profitable business, too. And, finally, the spare parts business is yet another ‘immensely profitable’ stream. 

Outlook for FY15

Automobile volumes might not grow in double digits in FY15 even if a stable government comes to power after May 16. The sector typically grows at 1.5 times of the gross domestic product (GDP), which means vehicle sales will remain muted till economic growth picks up from the sub-five per cent levels. Two-wheeler sales are also expected to slow from June onwards, as the wedding season ends.

Two-wheeler makers reported double-digit volume growth for April, both on year-on-year (y-o-y) and month-on-month (m-o-m) basis. Hero MotoCorp’s volumes grew 14.4 per cent y-o-y and nine per cent m-o-m to 571,054 units. While Bajaj Auto reported a 3.7 per cent y-o-y decline in volumes to 331,529 units, on m-o-m basis, volumes were up nine per cent. TVS Motor’s volumes rose 15 per cent y-o-y but declined three per cent m-o-m at 190,683 units. Surjit Arora of Prabhudas Lilladher says two-wheeler volumes have spiked thanks to an extended marriage season and volumes might fall after the season ends. Arora expects a seven to eight per cent growth in FY15.

The passenger vehicle segment continues to be on a sticky wicket. The cut in excise duty and increased enquiries are not converting into sales. According to Karvy Stock Broking, in the four-wheeler segment, Mahindra & Mahindra’s auto volume declined for an eighth consecutive month, with a fall of 12.4 per cent y-o-y and 29.8 per cent m-o-m to 36,274 units. Tractor volumes fell 10.6 per cent y-o-y but grew 17.3 per cent m-o-m to 20,731 units in April 2014. Maruti Suzuki’s volumes dropped 11.4 per cent y-o-y and 24 per cent m-o-m to 86,232 units. Sales of commercial vehicles also continued fall sharply in April, both on m-o-m and y-o-y basis. Ashok Leyland’s volume fell 21 per cent y-o-y and 43 per cent m-o-m to 5,897 units in April, while Tata Motors saw a decline of 34 per cent y-o-y and 34 per cent m-o-m to 33,892 units.

The outlook would remain tepid for commercial vehicles in FY15. Any uptick in commercial vehicle sales can only happen in FY16. Analysts expect passenger car vehicles in FY15 to pick up in the second half, if excise duty cuts are extended beyond June. Also, companies looking at launching new models might see better volume growth than others. Prabhudas Lilladher’s Arora expects passenger vehicles to grow six-seven per cent in FY15, but most of the growth will be back-ended. Frost & Sullivan expects domestic automobile sales to grow 9.5 per cent in FY15, even though domestic sales of the passenger vehicle segment declined by six per cent, CV segment by 25.3 per cent, three-wheelers by 10.9 per cent in FY14

Honda launches Activa 125

 Honda, the biggest Japanese two-wheeler brand in India, is keen on expanding its portfolio of entry motorcycles with a planned addition in the coming weeks even as former partner turned rival Hero MotoCorp moves to fortify its market.

Honda Motorcycle and Scooter India (HMSI), the country's third biggest two-wheeler producer, will add a new bike under the Dream series brand shortly which will be its third such product in that segment, sources said.

Sales under the Dream series (comprising Yuga and Neo) more than doubled last financial year helping HMSI to grow 36% to 3.6 million units. Honda's Dream series grew 116% to 5.65 lakh units compared to 2.61 lakh units sold in 2012-13.

The entry bike segment (upto 110cc) is a 6.8 million units a year market commanding a share of 65%. Though the segment grew just four% last year no manufacturer is ignoring it considering its size.

When asked if Honda would expand its product portfolio in the economy segment Y S Guleria, vice president (sale and marketing), HMSI said, "Keep your expectations high, we will explore more".

Entry bikes have a huge following in the rural markets where fuel efficiency influences purchasing decisions. These bikes are capable of delivering mileage of more than 60 kilometers per litre (kmpl) on an average going upto 85 kmpl.

Delhi-based Honda is thus increasing its focus on the entry level segment so much so that it has put the potential launch of a big engine premium concept bike on the back burner. The CX-01, a off and on road performance bike, which was unveiled at the Auto Expo was scheduled to go for 'fine tuning' before readying it for launch in 2015 or 2016.

The CX-01 is the first bike developed entirely by HMSI's own engineering division also based in India. However, HMSI has instead opted to put more focus on the Dream series for coming period and expand its reach in the rural areas which will host two-thirds of Honda's 1,000 new sales outlets planned this year.

Sensing trouble market leader Hero MotoCorp launched last month yet another variant of its top selling bike Splendor. Called the Splendor iSmart the bike gives more mileage with an 'intelligent' engine which switches off automatically during idling.

Hero presently commands a market share of 66% in the entry level segment with ten models under its fold. Bajaj Auto is the second biggest player with a share of 17% followed by HMSI with a share of 9% and TVS Motors with a share of 5%.

In March Honda's scooter Activa became India's biggest selling model in dethroning the Hero Splendor in the upto 110cc engine category.

One of the other reasons for the shift could be the tepid response HMSI has received for the CBR250, a 250cc performance bike. Last year it sold an average of 640 bikes a month compared to its earlier sales of more than 1,200 units a month

TVS motor ups ante with Star City+

TVS Motor Company, on Monday, launched its all-new motorcycle StaR City+ at an aggressive price of Rs.44,000 (ex-showroom, New Delhi) with a promise of very high mileage. The new launch is aimed at beefing up its presence in the mileage-conscious commuter segment.

StaR City+, which will sport a new 110cc Eco Thrust engine and incorporate many first-time features, promises a fuel economy of 86 kmpl (kilo metre per litre), among the highest for commuter segment bikes.

The new bike intends to attract people in the age group of 25-35 years in urban and semi-urban locations, where motorcycles with on-road mileage of over 60 kmpl are preferred.

“We have been largely absent in the commuter segment except in the low-end of the category. We need to be a big player. StaR City+ is the first of the two launches we have planned. In the next four months, our all-new Victor will be launched, and that will complete our offerings in the commuter segment,” Venu Srinivasan, Chairman & Managing Director, TVS Motor Company, said at the launch.

With StaR City+, the company intends to increase the sales from 25,000-30,000 units to about 50,000 units a month in six month’s time. Total industry volume in commuter segment is estimated at about 595,000 units a month.

Mr. Srinivasan also said the company would have regular and consistent launch of new models. There would be at least one new launch every quarter going forward. Its upcoming new launches for the current fiscal will be Zest (110cc scooter), Victor (110cc bike) and Apache.

Updating on its tie-up with BMW for sub-500cc bikes, he said the first bike from the joint venture would be ready by the second-half of 2015-16. “It's a brand new platform, designed from the scratch. BMW has been working on to ensure highest quality in the bikes,” he added.

About Rs.150 crore is expected to be invested in the venture, which was announced jointly by the two companies in April 2013 to design and sell bikes in 200-500cc category.