KTM readies next-gen bikes with Bajaj

After the initial success of the mini street motorcycle produced at Pune but sold in Europe, KTM Power Sports AG, one of Europe's largest bike producers, has charted a series of new product developments with its India partner, Bajaj Auto. The Austria-based two-wheeler major is developing a high-capacity motorcycle in partnership with Bajaj Auto, India's second-biggest two-wheeler producer, in addition to more platforms for newer models for the future. Engineers of KTM and Bajaj are developing a motorcycle powered by a 375cc engine at Bajaj's research and development center at Akurdi, Pune. This model could have one of the biggest engine capacities fully produced in India after the Royal Enfield models. A small capacity motorcycle, the 125 Duke, produced by Bajaj Auto and sold by KTM in Europe, has been a runaway success, pushing unit sales and revenue of the European company higher than last year. Pune-based Bajaj Auto, which holds a little more than 47 per cent in the foreign company, manufactures the 125 Duke at its plant in Chakan, Pune. Besides, KTM is working with Bajaj on two vehicle platforms for the future. The work on these started last year. It is, however, not clear what models would be developed on these platforms. Both companies had jointly developed the platform for the 125 Duke more than a year before. Bajaj progressively replaced the 125cc engine on it with a 200cc engine and launched the same in India in January, pricing it at Rs 1.17 lakh (ex-showroom, Delhi). KTM expects to sell 20,000 units of it in India. In what could be a first for the Indian market in recent times, KTM and Bajaj are working on a twin-cylinder engine platform that could subsequently make it to actual production at a later date. Such motorcycles are priced at a substantial premium to other commuter bikes. While all motorcycles fully produced in India are powered by single-engine technology, twin-cylinder engines would give the motorcycle additional power and greater performance. Though, mileage figures would be an issue with such high capacity premium bikes. About two decades earlier, twin-cylinder bikes were sold in the country on a bigger scale. But with subsequent invasion of cheap and fuel-efficient bikes from the Japanese giants, these bikes made a quiet exit. India has been witnessing a marked shift in preference to performance-driven bikes from economy-driven bikes. In addition to Bajaj-KTM, other manufacturers such as Honda, Hero MotoCorp, Royal Enfield and Suzuki are also studying the possibility of introducing twin-cylinder bikes in India. Apart from launching products under the KTM brand, which are sold in India through Bajaj Auto dealerships, Bajaj will utilise the jointly developed technology in its own brands, such as the Pulsar and Discover. Bajaj's newest product (yet to go on sale), the Pulsar 200NS, uses the same platform and engine as the Duke 200. Newer and bigger Pulsars from Bajaj, due to be launched next year, will share technologies with KTM models. In its annual report, KTM states, "Together with Bajaj, KTM is consistently working on implementing a global product strategy. We have already developed new small-engine street motorcycles in response to the rising demand for small, agile bikes for the urban area." Bajaj Auto managing director Rajiv Bajaj is on the supervisory board of KTM Power Sports AG. Both companies are actively looking at Asian countries, such as Malaysia and Indonesia, for joint expansion and common distribution. "In future, we would in particular like to attract customers in the emerging markets with this new product, since they will represent one of the most important growth drivers of KTM in the next few years,” the report added.

Turf war begins as Honda looks to roll over Bajaj with 100cc

At stake is the number 2 slot in the world’s second-largest two-wheeler market. And locking horns are domestic giant Bajaj Auto Ltd and Japanese automotive major Honda Motorcycle India Ltd (HMSI). On Tuesday, Honda will launch its most ambitious mobike yet, the 110-cc Yuga, which delves into the heart of the Indian motorcycle lover. This would be Honda’s first offering in the price-sensitive commuter segment, an area it was constrained to participate in when in a partnership with the Hero Group. A day before, Bajaj will unveil its new Discover, expected to hit directly at Honda's products in the 125-cc segment — Shine and Stunner. Last month, Honda sold more bikes in the segment than Bajaj. The gap between the two companies in India has narrowed over the last 6 months (see table). In 2011-12, while Bajaj sold 6.3% more two-wheelers in the domestic market at 25.7 lakh units than the previous year, Honda saw its sales grow by almost 29% to a little under 20 lakh units. http://www.hindustantimes.com/Images/Popup/2012/5/14_05_biz-03.jpg Ironically, it is the scooter segment, once a stronghold of Bajaj, that has given Honda the edge. The Japanese company is by far the largest-selling scooter brand in India (with a 48% marketshare). Scooter sales grew by 24.5% last year, more than double than that of motorcycles at 12%. Bajaj does not make scooters anymore. “We are indifferent to the sale of scooters and mopeds of other manufacturers... for the month of April we continue to be the second largest 2-wheeler maker in India,” said K Srinivas, president, motorcycle business, Bajaj Auto Ltd. “With a number of new launches in the coming months, we are confident of outpacing industry in 2012-13.” “We want to be the number one motorcycle manufacturing company in India, there is no doubt about it,” Keita Muramatsu, president and CEO, HMSI, had said during the New Delhi Auto Expo in January.

Discerning Indians want more than just a ride

As in the passenger vehicle industry, motorcycle enthusiasts seem to have notched up a scale, with more buyers ready to pay for sportier, more powerful and more premium products. Taking a cue from such shifts in consumer behaviour, two-wheeler makers have readied an array of products to meet the growing demand for mobikes in the executive category (engine capacity of 125cc and above but less than 250 cc). While Honda recently introduced the CBR150R, rivals Bajaj Auto and Hero MotoCorp have lined for launch the Pulsar 200 NS and Ignitor, respectively. Though the mass commuter segment (engine capacity of 57cc and above but less than 125cc) continues to account for a little over 70 per cent of sales, the share of the executive category has grown 16 per cent over the past three years. The category today contributes nearly 29 per cent to overall motorcycle sales. K Srinivas, who heads the motorcycle divison at Bajaj Auto Ltd (BAL) says, “Till 2001, the executive segment hardly existed in the country. Almost 100 per cent of the sales happened in the mass commuter market, which changed with the introduction of the Pulsar twins.” Today, the Bajaj Pulsar (135-220cc) with average monthly sales of 85,000 units, has a lion’s share of 43 per cent in its category. Additional, volumes come in from the Discover, which comes in 125cc and 150cc engine configurations. Bajaj accounts for half the volumes in the executive category, with sales of 1.44 million units. “We believe these segments will continue to grow faster than the commuter segment, thanks to product interventions being planned by almost all manufacturers and the latent need of the customer for a much more exciting ride,” informs Srinivas. Bajaj Auto intends to invest in both the Pulsar and the Discover Brands. The commercial launch of the Pulsar 200 NS is slated shortly. Demand pull Industry estimates show while sales in the commuter segment increased a modest nine per cent in 2011-12, sales of 125cc motorcycles grew 38 per cent. Yadvinder S Guleria, vice-president (sales & marketing), Honda Motocycle and Scooter India (HMSI), explains, “Demand in the 125-250cc motorcycle market grew around 20 per cent in FY11-12. This was mainly due to increased penetration in semi-urban & rural areas, luring new customers across categories and creation of new demand with respect to new model launches.” Abdul Majeed, partner and leader (automotive practice), PricewaterhouseCoopers, says, “Indian consumers today have more disposable income at hand. With better infrastructure in rural as well as urban areas, buyers are opting for sportier and powerful products which offer enhanced riding experience.” The trend is perhaps reflected best in the sales of HMSI, which with the CBF Stunner, CB Shine and CB Unicorn clocked growth of nearly 25 per cent at 614,440 units in the category. Interestingly, Hero MotoCorp, which rules the mass commuter segment with sales of 5.32 million units in the last financial year, introduced a 150cc product, the Impulse, as the first offering under its own brand in October last year. The company has entered into a strategic alliance with US-based Erik Buell Racing for high-end technology and is reportedly developing a 250cc motorcycle, which would burn rubber on Indian roads by 2014. Pawan Munjal, managing director and chief executive, Hero MotoCorp, had told Business Standard, “Our market was at the 100cc category but we are not restricting ourselves to that end. We are not switching segments. We will continue to work on those areas and upgrade technology there. But we were completely missing from the premium end of the market. We will focus there.” Hero’s sales in the category had declined two per cent to 330,726 units in 2011-12. To consolidate its footprint in the fast-growing category, it has scheduled for launch the Ignitor (125cc) in the course of the current financial year. Hero MotoCorp, at present, has nine of the 15 products in its portfolio in the 125-250cc segment, such as the Karizma (223cc). Achiever, CBZ Xtreme, Hunk (150cc), Glamour and Super Splendor (125cc).

TVS Motor stock slumps to 52-week low

Low volumes growth, competition drive down scrip New Delhi, May 11: The share price of Chennai-based TVS Motor touched its 52-week low of Rs 35.10 during intra-day trade on Friday at the BSE. However, the stock ended marginally higher at Rs 35.40 at close. Market analysts attributed the poor performance of the stock to poor volume growth in 2011-12, apart from a slowdown in demand in the two- and particularly three-wheeler segments. Competition also sharply increased last year, with Japan's Honda Motorcycle rapidly adding fresh two-wheeler capacity. “Hero is doing well, while Honda is very aggressive. With fresh scooter capacity coming from Honda in the second half of 2011-12, TVS has seen a dip in demand for models such as the Scooty Pep and Wego from this January,” Mr Yaresh Kothari, analyst at Angel Broking said. Loses No 2 spot In 2011-12, TVS Motor lost the number three spot in the two-wheeler market to Honda — a company which is expected to claim the number two spot from Bajaj this Auto fiscal. Three-wheeler sales have also performed badly. While the segment fell two per cent (5,13,251 units) in 2011-12, TVS' three-wheeler sales were down 37 per cent (14,172 units). “The stock is cheap right now, trading at 8-9 times of FY-14 volumes. Earlier, it was trading 11-12 times,” another sector analyst said. Mr Kothari added that share prices could improve on new model launches — such as a new bike that is planned, apart from the recently launched new version of the premium bike, Apache. On Friday, TVS Motor stock was down 1.67 per cent (Rs 35.40), though on a year-on-year basis it has slid 34 per cent. While LML has also slipped 22 per cent this year, market leader Hero MotoCorp and Bajaj Auto gained about 18 and three per cent, respectively.

Apr car sales growth at 3.4%, slowest in 10 yrs

Post-Budget price hikes and high interest rates saw car sales recording the lowest ever growth in a decade during April with a mere 3.4% rise compared with the corresponding month of the previous year. According to the figures released by the Society of Indian Automobile Manufacturers (SIAM) on Thursday, domestic car sales stood at 168,351 units in April against 162,813 units in the same month last year. “The growth last month was sober, it is the slowest for April in the last 10 years. The price hike that was done after excise duty was raised in the Budget and high interest rates have affected consumers’ sentiment,” SIAM director general Vishnu Mathur said. In April 2002, the auto industry had seen car sales falling by 22%, he added. “The volume-driven small car segment was the worst hit in April with just a 0.68% rise in sales. This segment is very price sensitive and the slightest alterations impact it,” Mathur said, adding the market would take some time to absorb this price hike that has affected other sectors also. In Budget 2012-13, the government hiked excise duty by 2 percentage points to 12%, which has been passed on to customers by every automobile manufacturer by now. Total sales of vehicles across categories registered an increase of 10.01% to 1,472,385 units in April against 1,338,430 units in the same month last year. “Overall, growth in the industry was subdued. The first six months are going to be tough because if we expect any industry-friendly monetary policy, then it will happen in the second half only,” Mathur said. In the passenger car segment, Maruti Suzuki’s sales dipped by 1.31% to 72,939 units. However, Hyundai Motor India’s sales increased by 10.75% to 35,000 units. Even Tata Motors’ passenger car sales were down by 4.78% at 18,610 units. In the two-wheeler segment, sales last month increased by 10.94% to 1,157,108 units from 1,043,010 units in April 2011. According to the SIAM data, motorcycle sales in the country grew 6.54% during the month to 861,602 units from 808,728 units in the same month last year. In this segment, market leader Hero MotoCorp posted a 5.53% jump in sales to 494,473 units in April and Bajaj Auto’s sales went up by 2.17% to 200,228 units. Honda Motorcycle & Scooter India (HMSI) posted a 35.69% increase in sales to 77,665 units, while TVS Motor moved 50,863 units, 2.13% more than the corresponding month of the previous year. In the scooter segment, overall sales grew by 30.29% to 227,924 units from 174,931 units last April. HMSI’s scooter sales grew by 55.64% to 115,846 units, while Hero MotoCorp sold 40,354 units, up 15.44%. TVS Motor’s sales saw marginal growth during the month to 32,736 units. According to the SIAM report, commercial vehicle sales grew by 4.37% to 56,257 units in the reported month from 53,903 units in the year-ago period. Medium and heavy commercial vehicle sales declined 11.60% to 19,914 units during the month compared with 22,528 units in April last year, SIAM data showed. Light commercial vehicle sales grew 15.83% to 36,343 units in April 2012 from 31,375 units in April 2011.

Suzuki launches mass segment bike

Suzuki Motorcycle India Pvt Ltd (SMIPL) has made its first foray into the mass motorcycles segment with the launch of Hayate, a 110-cc bike. This is company's fifth product specially designed and made for India, and Mr Anand Singh Thakur, National Head, Sales, SMIPL, said that the company plans to be present in all segments of the two-wheeler market by 2014. Hayate is a 4-stroke bike with a 112-cc engine and comes in two versions — kick start and automatic start — at an introductory price of Rs 40,162 and Rs 42,162, respectively. SMIPL also announced that actor Salman Khan will be its brand ambassador .

Honda hopes to vroom its way up in bottom segment

Plans to consolidate its place in the motorcycle market by pitting the Dream Yuga, to be launched next month, against Hero MotoCorp’s Splendor Honda Motorcycle and Scooter India (HMSI), the Indian subsidiary of Honda Motor Company, last year grew the fastest among two-wheeler companies in the country — at double the rate logged by the industry. The company’s overall growth has come in spite of its minuscule presence in the entry-level (100cc-125cc) segment, in which market leader Hero MotoCorp (formerly Hero Honda) commands two-thirds of the market. The entry-level segment accounts for a lion’s share — 70 per cent — of the domestic motorcycle market. It had seen sales of nearly 7.1 million units last financial year (2011-12), a year in which Indians bought 10.09 million motorcycles — more than any market in the world except China. The Delhi-based Hero MotoCorp has thrived in the entry segment due to the success of its Splendor, Passion and CD Dawn/Deluxe brands — Splendor being the world’s largest selling two-wheeler brand. Hero has a total of nine models in this segment, the most by any manufacturer. Though Honda has three models on sale in the entry-level segment — Stunner, Shine and Twister (all below 125cc) — it commands only two per cent market share with sales of 142,000 units, compared with Hero’s 5.32 million units. Propelled by new products and a stronger brand recall, Hero managed to clock a growth of 16 per cent in the entry segment, even as sales of all other peers dwindled. Bajaj Auto, the second-largest in the segment posted a drop of 2.65 per cent, while TVS Motors saw a drop of 7.5 per cent. Honda’s growth in the segment dropped 14.33 per cent. One of the reasons behind HMSI’s sales drop in this segment was the absence of products from its stable in the price Rs 41,000-44,000 bracket, where Hero’s Splendor and CD Dawn/Deluxe sell. HMSI’s entry motorcycle Twister is priced at Rs 45,140 (ex-showroom, New Delhi). Yuga price for a mid-range model, according to sources Honda’s limited presence through its dealer network has also led to a fall in sales. On the other hand, Hero’s consumer touchpoint is across 5,000 outlets — comprising a mix of authorised dealerships, service and spare part outlets and dealer-appointed outlets. Its distribution strength is more than three times Honda’s 1,500 outlets at present. To become a force to reckon with in the price-sensitive bread-and-butter entry-level motorcycle segment, Honda is gearing up to launch its cheapest motorcycle, the Dream Yuga, positioned directly against the Splendor. The launch would happen sometime next month. The Dream Yuga, showcased at the biennial Auto Expo in New Delhi this year, will also be Honda’s cheapest motorbike in the world. The Dream Yuga lacks the stylish punch Honda is famous for. The company has chosen to keep the styling simple, much like the Splendor. For the Yuga, Honda is banking on its twin strategy — of offering more and charging less. According to sources, the company is keen to price position the bike below the Splendor (Rs 41,350, ex-showroom New Delhi), but a final call will be taken closer to the launch. In addition, the company aims to market its offering a better powered product than the Splendor as its selling point. The Yuga will have a 109-cc powerplant, while the Splendor is powered by a 97-cc engine. Though Honda has not provided indicative fuel efficiency figures for the Yuga, the bike will compete with the Splendor’s 65-70 km per litre. The fuel efficiency is expected to be attractive, as the new bike borrows its engine from the Twister, which, HMSI claims, gives a mileage of 70 km per litre. An HMSI spokesperson says: “The 100-110-cc motorcycle segment has continued to show a pattern of 16 per cent compound annual growth rate in the last three years, on a very high base volume. It is an attractive business proposition for any manufacturer. With the upcoming Dream Yuga, we plan to enter and expand our customer base in the entry-level motorcycle segment.” Besides, the company is also ramping up its dealer presence, with a focus on the hinterland, where Hero enjoys almost a monopoly. Honda is adding over 300 outlets this year “to reach closer to our customers in both urban and rural areas”. Also, HMSI’s upcoming third plant at Narasapuram in Karnataka, which is expected to be operational in the first half of 2013, will expand its production capacity by another 1.2 million units from the existing 2.8 million units, taking its total production capacity to 4 million units a year. But, since others such as Bajaj Auto and TVS Motors have tried and fallen short of unseating Hero from the top spot in the past, will Yuga change the dynamics of the segment? Not everybody seems to be convinced. The head of research at a leading brokerage house says: “Unlike the scooter segment, (where Honda had a first-mover advantage in the gearless segment), the motorcycle segment is a well-penetrated one. Second, there is no differentiation as far as the Dream Yuga is concerned.” The history has it that features rarely do the trick. In the past, Bajaj Auto tried to exceed Hero’s edge by projecting bikes with higher power, but failed to make an impression, he adds. Since early 2000s, Bajaj Auto, now displaced to the third spot by HMSI in domestic ranking, has tried to penetrate the entry segment with at least half a dozen launches. Its Discover has been the only model that has stood out. Anil Dua, senior vice-president (marketing & sales), Hero MotoCorp, says: “Each of Splendor and Passion clocked sales of more than a million units in 2011-12. With the planned launch of two more bikes – the 125-cc Ignitor and the 110-cc Passion XPro – later in the year, we are confident of further strengthening our presence in this segment.” In order to meet the growing demand for Hero products, the company has also been ramping up capacity at its three manufacturing plants and has taken up the current installed capacity to close to seven million units. Even as most analysts admit that Hero will lose some market share, given the competition, they are sceptical about Honda’s ability to make a dent in in the overall market dynamics of the segment. Ajay Shethiya of Centrum Broking says: “Given capacity constraints and distribution challenges, the launch of the Dream Yuga will not significantly change industry dynamics.” Across segments, Honda last year sold two million units in the country, taking its market share to 15 per cent. Moreover, single/dual-brand dominance pervades all segments of the two-wheeler sector. While Hero dominates the executive segment, with a 74 per cent share, Bajaj has a close grip on the premium segment with a 49 per cent share. In the scooter segment, Honda, which launched the gearless scooter, is sitting pretty with a share of 47 per cent. Since two-wheeler sales in the country are largely a function of the brand name, it could be difficult for Honda to immediately challenge Hero in the entry-level segment. However, once it establishes the Dream Yuga as a brand in a couple of years, and sorts out its capacity issues, it could pose a threat. To unseat Hero from its perch will be a daunting task. The Yuga can make an impact if it is positioned as a value-for-money product, says Abdul Majeed, leader (automotive practice), PricewaterhouseCoopers India. “If customers perceive it as a value-for-money product and it fits their scheme of things in terms of pricing and fuel efficiency, the product could have an impact in the short-term itself, with Honda’s share in the segment rising,” he adds.