The electric two-wheeler industry in the country is struggling for survival, as manufacturers are making huge losses. “Everybody is bleeding very heavily. Many have even shut shop,” a top industry official told Business Line.
Major manufacturers are not revealing the size of their loss in sales. Nevertheless, the fledgling e-scooter segment has failed to join the bandwagon of the Indian automobile industry, which is on a high growth trajectory. From 60 players in the electric two-wheeler business, including small time assemblers, only 10 remain in contention now.
Industry volume
The total industry volume fell 15 per cent to 85,000 units last fiscal, and even the most optimistic forecast pegs the number at the same level this fiscal, that is, if does not go further down.
This is despite the two-wheeler industry showing 62 per cent growth, for the first half of the fiscal, at 5.28 lakh units. “ Government help is not coming through the way it should be. Everywhere in the world, the electric industry has grown with Government subsidy. The industry needs firm Government support, at least in the initial years,” said Mr Sohinder Gill, Chief Executive Officer, Hero Electric.
Government support
Taking into account the huge environmental benefits of these ‘zero emission vehicles,' Japan offers 50 per cent subsidy on the purchase of electric bikes while Singapore offers 40 per cent subsidy. Countries such as the US, the UK and France offer 30 per cent subsidy.
“In India, Delhi is the only State offering subsidy for electric two-wheelers. No wonder, Delhi is the only promising market for electric vehicles,” he said. Delhi, including the subsidy on the base price and a waiver on VAT, offers 24 per cent subsidy. According to the manufacturers, the operating cost of battery-run two-wheelers is one tenth of the gasoline-powered variants. The price of electric two-wheelers in India ranges from Rs 25,000-Rs 40,000, depending on the brand and performance.
However, customer concerns on maintenance, performance and sturdiness remain a huge challenge for the industry. For instance, hundreds of complaints on electric two-wheelers are cited on the Web site of the Indian Consumer Complaints Forum, mostly about batteries and controlling systems. “Quality is still an issue,” admits Mr Gill. “Most of the key components including batteries are imported and there are customer complaints about them. Since Government incentives are not there, manufacturers are not investing in product development and quality control,” he said.
The combined investment of all electric two-wheeler players is roughly estimated to be around Rs 600 crore.
The dependence on imports for key components such as battery, motor and charger also pose a challenge for the industry. Major players such as Hero Electric and Electrotherm are looking at developing local battery manufacturing capabilities
Automakers set to meet demand
Automakers intend to boost capacities to meet robust demand in the domestic market. The sentiment came aloud at the 50th annual convention of the Society of Indian Automobile Manufacturers here on Thursday.
India’s largest carmaker Maruti Suzuki is preparing a project report to build a new factory in Haryana to produce an additional 250,000 cars alongside its two existing factories in the state.
“We are preparing a project report which is yet to be completed. We are yet to decide on the cost and timeline, although the standardized capacity is 250,000 cars,” chairman Maruti Suzuki India RC Bhargava said.
Maruti has been staring at production constraints this financial year and has already announced that it will invest Rs 1,700 crore in building a second manufacturing line at its existing plant in Manesar. However, the second line will be operational only by early 2012. On completion of the project, the total manufacturing capacity of the company will stand at 1.5 million units annually.
Maruti is facing intense competition from rivals as customers have to wait for 8-12 weeks to get their hands on its popular Swift, Ritz hatchbacks and Swift Dzire. Its market share dipped below 50 per cent in the passenger car market during the April-June quarter as the company itself said that it was losing 15-20,000 additional car sales per month due to capacity shortages.
Continued availability of cheap car loans, expanding economy and a flurry of new hatchbacks have boosted car sales, which grew by 35 per cent to 592,405 cars, between April and July this year.
Maruti Suzuki sold 384,181 cars in the April-July period, up 26 per cent from a year earlier. In 2009-10, sales of the carmaker rose 29 per cent to 1.02 million cars.
Toyota Kiroloskar too has expressed the desire to add capacity to meet demand. “We have a total production capacity of 73,000 units in a year at our Bangalore plant. Along with the commencement of production at our second factory next year, we would have a total production capacity of around 150,000 cars in India,” managing officer Toyota Motor Mitsuhiro Sonada said. Fortunner consumers who booked the vehicle at Toyota here in August would get their delivery by November-December this year.
Toyota Kirloskar Motor aims to sell 140,000 cars in 2011.
Two-wheelers
Iconic bike maker Royal Enfield too plans to build a new plant in Chennai that would be able to produce an additional 50-55,000 units by 2012. Touted as its best motorcycle, the 'Classic' has a waiting period of up to nine months. “We were producing 1,200 Classic motorcycles a month, but have increased that to 1,700 a month to bring down the waiting periods to 2-3 months as soon as possible,” chief operating officer Royal Enfield Venki Padmanabhan said. The company’s Chennai factory can produce 60-70,000 units per year.
Hero Honda Motors, the world’s largest two-wheeler maker, said it would decide a location for its fourth factory in one month. The new plant is meant for the company’s requirement in 2011. We aim to sell more than five million two-wheelers in 2010-11,” senior vice-president (marketing and sales) Hero Honda Motors Anil Dua said.
TVS Motor will pump in Rs 200 crore by April next year to increase its manufacturing capacity from 2.1 lakh units to 2.8 lakh units. The company expects to sell 1.8 million two-wheelers in the domestic market and 250,000 units in the overseas markets this financial year. It also expects to sell 50,000 three-wheelers. Two-wheeler sales at TVS Motor company rose 15 per cent to 1.52 million units in 2009-10.
Ford India also announced at the conference that it will launch eight new vehicles between now and 2015, a good part of which would be hatchbacks at its Chennai plant which has been upgraded to produce about 2 lakh units annually
India’s largest carmaker Maruti Suzuki is preparing a project report to build a new factory in Haryana to produce an additional 250,000 cars alongside its two existing factories in the state.
“We are preparing a project report which is yet to be completed. We are yet to decide on the cost and timeline, although the standardized capacity is 250,000 cars,” chairman Maruti Suzuki India RC Bhargava said.
Maruti has been staring at production constraints this financial year and has already announced that it will invest Rs 1,700 crore in building a second manufacturing line at its existing plant in Manesar. However, the second line will be operational only by early 2012. On completion of the project, the total manufacturing capacity of the company will stand at 1.5 million units annually.
Maruti is facing intense competition from rivals as customers have to wait for 8-12 weeks to get their hands on its popular Swift, Ritz hatchbacks and Swift Dzire. Its market share dipped below 50 per cent in the passenger car market during the April-June quarter as the company itself said that it was losing 15-20,000 additional car sales per month due to capacity shortages.
Continued availability of cheap car loans, expanding economy and a flurry of new hatchbacks have boosted car sales, which grew by 35 per cent to 592,405 cars, between April and July this year.
Maruti Suzuki sold 384,181 cars in the April-July period, up 26 per cent from a year earlier. In 2009-10, sales of the carmaker rose 29 per cent to 1.02 million cars.
Toyota Kiroloskar too has expressed the desire to add capacity to meet demand. “We have a total production capacity of 73,000 units in a year at our Bangalore plant. Along with the commencement of production at our second factory next year, we would have a total production capacity of around 150,000 cars in India,” managing officer Toyota Motor Mitsuhiro Sonada said. Fortunner consumers who booked the vehicle at Toyota here in August would get their delivery by November-December this year.
Toyota Kirloskar Motor aims to sell 140,000 cars in 2011.
Two-wheelers
Iconic bike maker Royal Enfield too plans to build a new plant in Chennai that would be able to produce an additional 50-55,000 units by 2012. Touted as its best motorcycle, the 'Classic' has a waiting period of up to nine months. “We were producing 1,200 Classic motorcycles a month, but have increased that to 1,700 a month to bring down the waiting periods to 2-3 months as soon as possible,” chief operating officer Royal Enfield Venki Padmanabhan said. The company’s Chennai factory can produce 60-70,000 units per year.
Hero Honda Motors, the world’s largest two-wheeler maker, said it would decide a location for its fourth factory in one month. The new plant is meant for the company’s requirement in 2011. We aim to sell more than five million two-wheelers in 2010-11,” senior vice-president (marketing and sales) Hero Honda Motors Anil Dua said.
TVS Motor will pump in Rs 200 crore by April next year to increase its manufacturing capacity from 2.1 lakh units to 2.8 lakh units. The company expects to sell 1.8 million two-wheelers in the domestic market and 250,000 units in the overseas markets this financial year. It also expects to sell 50,000 three-wheelers. Two-wheeler sales at TVS Motor company rose 15 per cent to 1.52 million units in 2009-10.
Ford India also announced at the conference that it will launch eight new vehicles between now and 2015, a good part of which would be hatchbacks at its Chennai plant which has been upgraded to produce about 2 lakh units annually
Max for the masses
UTILITY ITS USP: With a tough and rugged build quality, Max 4R is for those who use bikes as load-luggers.
The Indian commuter motorcycle segment is suddenly abuzz with a whole new series of motorcycles taking to our roads. Models such as the Bajaj Discover 94.3cc DTS-Si, TVS Jive, Honda CB Twister and Yamaha YBR 110 have rolled in recently, leaving city bike buyers spoilt for choice. And now, TVS wants to make a mark in India's hinterland with its rugged and versatile Max4R.
Designed with utility as its USP, the plainly styled Max comprises a large speedometer calibrated upto 140kph flanked by a neutral beacon and turn indicators. But a big omission is a fuel gauge, which is de rigueur on a commuter bike. The switchgear, which includes a pass-light flasheroperates with a hard feel. The Max's palm grips are comfortable and its levers are nicely positioned. The latest TVS bike does well to provide good rear vision from its handlebar-mounted round mirrors.
The Max's voluminous 16-litre fuel tank comes with a hinged chrome fuel filler lid and offers adequate support to a rider's thighs. The graphics on the tank and side panels help liven up the bike's dull side profile. Rubberised brake and gearshift pedals are a nice touch and do provide good grip, even when riding in the wet.
A highlight to the Max is a detachable rear seat. The Max's lockable pillion seat is removable, and makes space for a flat, luggage compartment. The grab handle on this bike comes bolted to the frame, not welded, to facilitate easy removal and further expansion of the loading bay. TVS has also provided metal guards on either side of the seat; these serve as buffers between the rear tyre and shopping bags or farm produce that the company expects typical Max riders will transport. Another user-friendly touch is the bike's main-stand that requires minimal effort to haul even when the Max is fully-loaded.
Build quality feels decidedly tough and rugged, necessary for a bike that is built to spend a large chunk of its life on poor roads.
The Max4R uses a four-stroke, air-cooled 109.7cc engine. However, TVS has improved on this motor with a larger oil-flow pump. In keeping with its load-lugging nature, the Max also gets a heavy duty clutch, while overall gearing is altered to benefit low-end performance. Peak power is 8.4bhp at 7500rpm, while the engine develops max torque of 0.85kgm at 5500rpm. The Max comes with a four-speed gearbox that shifts in an all-down pattern via a conventional heel-and-toe shifter.
Engine refinement is good, with vibrations only perceptible at very high engine speeds, at which the bike is not expected to be ridden. Low-end grunt is admirable, and the Max will happily chug along in top gear from speeds as low as 25kph. While acceleration is decent, the bike runs out of steam at close to 60kph, acceptable considering that owners will seldom exceed this speed. The clutch is light to operate.
The Max deploys a single downtube frame, its engine used as a stressed member. Telescopic front forks work in conjunction with a unique four-shock absorber rear set-up, which bolts on to a rectangular swingarm. The second pair of shocks is here to support additional loads, with TVS informing us the bike is capable of taking on a payload up to 200kg. The bike's rear wheel also comes with fatter 4mm spokes.
The Max's riding saddle is wide, well-padded with the riding posture friendly and upright. Riding over uneven patches revealed decent ride quality, although a slightly twitchy feeling creeps in as speed rises. This TVS uses 130mm drums both front and rear, providing the bike with adequate stopping power. A cause for complaint though is the bike's tyres which lose traction all too easily when we attempted emergency stops.
On the fuel economy front, TVS claims an impressive 60kpl mileage from a fully-loaded Max but we are yet to verify this.
Priced at Rs. 37,590 (ex-showroom, Indore), the Max4R is a well-entrenched model in India. The Max is unlikely to set your pulse racing, but that's something it isn't aiming for. Targeted primarily at farmers, milkmen and the masses of Indian riders who have to use motorcycles as load-luggers, the Max4R with its trick seat, sturdy rear suspension and tough build looks all set to become an increasingly common sight on our roads.
The Indian commuter motorcycle segment is suddenly abuzz with a whole new series of motorcycles taking to our roads. Models such as the Bajaj Discover 94.3cc DTS-Si, TVS Jive, Honda CB Twister and Yamaha YBR 110 have rolled in recently, leaving city bike buyers spoilt for choice. And now, TVS wants to make a mark in India's hinterland with its rugged and versatile Max4R.
Designed with utility as its USP, the plainly styled Max comprises a large speedometer calibrated upto 140kph flanked by a neutral beacon and turn indicators. But a big omission is a fuel gauge, which is de rigueur on a commuter bike. The switchgear, which includes a pass-light flasheroperates with a hard feel. The Max's palm grips are comfortable and its levers are nicely positioned. The latest TVS bike does well to provide good rear vision from its handlebar-mounted round mirrors.
The Max's voluminous 16-litre fuel tank comes with a hinged chrome fuel filler lid and offers adequate support to a rider's thighs. The graphics on the tank and side panels help liven up the bike's dull side profile. Rubberised brake and gearshift pedals are a nice touch and do provide good grip, even when riding in the wet.
A highlight to the Max is a detachable rear seat. The Max's lockable pillion seat is removable, and makes space for a flat, luggage compartment. The grab handle on this bike comes bolted to the frame, not welded, to facilitate easy removal and further expansion of the loading bay. TVS has also provided metal guards on either side of the seat; these serve as buffers between the rear tyre and shopping bags or farm produce that the company expects typical Max riders will transport. Another user-friendly touch is the bike's main-stand that requires minimal effort to haul even when the Max is fully-loaded.
Build quality feels decidedly tough and rugged, necessary for a bike that is built to spend a large chunk of its life on poor roads.
The Max4R uses a four-stroke, air-cooled 109.7cc engine. However, TVS has improved on this motor with a larger oil-flow pump. In keeping with its load-lugging nature, the Max also gets a heavy duty clutch, while overall gearing is altered to benefit low-end performance. Peak power is 8.4bhp at 7500rpm, while the engine develops max torque of 0.85kgm at 5500rpm. The Max comes with a four-speed gearbox that shifts in an all-down pattern via a conventional heel-and-toe shifter.
Engine refinement is good, with vibrations only perceptible at very high engine speeds, at which the bike is not expected to be ridden. Low-end grunt is admirable, and the Max will happily chug along in top gear from speeds as low as 25kph. While acceleration is decent, the bike runs out of steam at close to 60kph, acceptable considering that owners will seldom exceed this speed. The clutch is light to operate.
The Max deploys a single downtube frame, its engine used as a stressed member. Telescopic front forks work in conjunction with a unique four-shock absorber rear set-up, which bolts on to a rectangular swingarm. The second pair of shocks is here to support additional loads, with TVS informing us the bike is capable of taking on a payload up to 200kg. The bike's rear wheel also comes with fatter 4mm spokes.
The Max's riding saddle is wide, well-padded with the riding posture friendly and upright. Riding over uneven patches revealed decent ride quality, although a slightly twitchy feeling creeps in as speed rises. This TVS uses 130mm drums both front and rear, providing the bike with adequate stopping power. A cause for complaint though is the bike's tyres which lose traction all too easily when we attempted emergency stops.
On the fuel economy front, TVS claims an impressive 60kpl mileage from a fully-loaded Max but we are yet to verify this.
Priced at Rs. 37,590 (ex-showroom, Indore), the Max4R is a well-entrenched model in India. The Max is unlikely to set your pulse racing, but that's something it isn't aiming for. Targeted primarily at farmers, milkmen and the masses of Indian riders who have to use motorcycles as load-luggers, the Max4R with its trick seat, sturdy rear suspension and tough build looks all set to become an increasingly common sight on our roads.
Royal Enfield to consolidate vendor base
Royal Enfield, an Eicher group company, plans to consolidate its vendor base to provide greater order value to its key suppliers and thus incentivise them to focus on the niche bike maker’s needs.
By cutting its supplier base from 120 at present the company hopes to ensure smoother flow of components which it hopes will help reduce the waiting period and address rising demand for its heavy-duty motorcycle models like Classic, Thunderbird and Bullet among others. “We are revamping our supplier base, since they are not able to meet our demand and deliver quality products on time,” a senior company official told Financial Chronicle.
Royal Enfield plans to bring down the number of suppliers to 100 by yearend, a cutback of 17 per cent. The company official said, “The component manufacturers from whom we source parts are also suppliers to other automobile manufacturers who are into the commuter segment. Since other players have large capacities and huge demand for components, there is delay in supply of components to us. This has led to nine-month waiting periods for models like Classic 350 and 500, and three months waiting for the Thunderbird.”
The revamp will see Royal Enfield favour single suppliers, who can produce and supply multiple parts to them. “We will go with a requirement basket of parts to suppliers which will give them a much larger order value to merit focussed attention to our needs,” the official added. At present, Kinetic Engineering is the only company which supplies multiple components to Royal Enfield, he added.
Royal Enfield also imports some components and is open to importing more if any overseas supplier agrees to supply multiple components of the requisite quality and can meet our production schedules. The company also expects to realise some savings in cost per part from the consolidation of its vendor base.
Recently, the company expanded the capacity of its plant in Chennai to produce 75,000 units per year from 45,000-50,000 per year to help meet rising demand. When the Royal Enfield paint shop was not able to cope with the demand for painted parts for Classic and Thunderbird, it used the paint facilities of Kinetic Motor and TI Cycles.
“The company has decided to set up another plant near the existing facility in Chennai. We would be investing around Rs 200 crore in four years to expand our capacity to over 1-1.2 lakh units a year,” he said.
By cutting its supplier base from 120 at present the company hopes to ensure smoother flow of components which it hopes will help reduce the waiting period and address rising demand for its heavy-duty motorcycle models like Classic, Thunderbird and Bullet among others. “We are revamping our supplier base, since they are not able to meet our demand and deliver quality products on time,” a senior company official told Financial Chronicle.
Royal Enfield plans to bring down the number of suppliers to 100 by yearend, a cutback of 17 per cent. The company official said, “The component manufacturers from whom we source parts are also suppliers to other automobile manufacturers who are into the commuter segment. Since other players have large capacities and huge demand for components, there is delay in supply of components to us. This has led to nine-month waiting periods for models like Classic 350 and 500, and three months waiting for the Thunderbird.”
The revamp will see Royal Enfield favour single suppliers, who can produce and supply multiple parts to them. “We will go with a requirement basket of parts to suppliers which will give them a much larger order value to merit focussed attention to our needs,” the official added. At present, Kinetic Engineering is the only company which supplies multiple components to Royal Enfield, he added.
Royal Enfield also imports some components and is open to importing more if any overseas supplier agrees to supply multiple components of the requisite quality and can meet our production schedules. The company also expects to realise some savings in cost per part from the consolidation of its vendor base.
Recently, the company expanded the capacity of its plant in Chennai to produce 75,000 units per year from 45,000-50,000 per year to help meet rising demand. When the Royal Enfield paint shop was not able to cope with the demand for painted parts for Classic and Thunderbird, it used the paint facilities of Kinetic Motor and TI Cycles.
“The company has decided to set up another plant near the existing facility in Chennai. We would be investing around Rs 200 crore in four years to expand our capacity to over 1-1.2 lakh units a year,” he said.
Murugappa Group to launch high-powered e-scooters soon
Chennai: In a first of its kind initiative, Tube Investments of India ltd (TII), the Rs 2,400-crore company from the Murugappa Group and one of the leading e-scooter manufacturers in the country, plans to launch high-powered scooters in the e-scooter segment. The company is working on two products.
K Balasubramanian, CFO, TII, said: “We are working on new products which will give the required power, speed, mileage and comfort, comparable to petrol scooters in India. It is too early talk about the prices, we expect to keep the price on a par with that of the petrol scooters.”
He added: “We make these scooters with key components imported from China with major localisation. These scooters will give power that of geared ones (automatic gears) and will have high battery capacity to give customers a joy ride. The company is working with two to three major battery manufacturers in India for developing the new product.” The company expects to launch this product soon, he added.
“We are working on another product which will come very close to petrol scooter. This could come sometime at the end of the fiscal, may be in March 2011. We believe, with this, we should be able to get a kind of a leadership position and also improve our market share and volumes. We are growing 1,000 units a month,” he said.
“We are in talks with several state governments to provide necessary subsidy to promote e-scooters in a big way,” he said. “With almost all unorganised players shutting shop, the 3-4 serious players in the organised sector set to benefit immensely,” he added.
K Balasubramanian, CFO, TII, said: “We are working on new products which will give the required power, speed, mileage and comfort, comparable to petrol scooters in India. It is too early talk about the prices, we expect to keep the price on a par with that of the petrol scooters.”
He added: “We make these scooters with key components imported from China with major localisation. These scooters will give power that of geared ones (automatic gears) and will have high battery capacity to give customers a joy ride. The company is working with two to three major battery manufacturers in India for developing the new product.” The company expects to launch this product soon, he added.
“We are working on another product which will come very close to petrol scooter. This could come sometime at the end of the fiscal, may be in March 2011. We believe, with this, we should be able to get a kind of a leadership position and also improve our market share and volumes. We are growing 1,000 units a month,” he said.
“We are in talks with several state governments to provide necessary subsidy to promote e-scooters in a big way,” he said. “With almost all unorganised players shutting shop, the 3-4 serious players in the organised sector set to benefit immensely,” he added.
M&M to launch motorbikes in a few months
Mahindra & Mahindra is planning to launch motorcycles ranging from low-cost to premium models, within the next few months. The company’s two-wheeler unit, headed by Anoop Mathur, is expected to break even in FY 2011-12, and will equal its immensely successful tractor and SUV businesses in size within the next 7 years. For its motorcycle unit, the company will use designs created by Italian company Engines Engineering, which it acquired in 2008. It may also export motorcycles to Latin America, Africa and other countries in South Asia, after starting operations in India.
M&M entered the two-wheeler segment in 2008, seeing the huge growth potential in it, and hopes to become a major player in the segment over the next few years. This may not be easy, however, with India’s two-wheeler space dominated by well-established brands like Hero Honda and Bajaj. The two-wheeler market in the country is almost five times bigger than its passenger car market.
M&M entered the two-wheeler segment in 2008, seeing the huge growth potential in it, and hopes to become a major player in the segment over the next few years. This may not be easy, however, with India’s two-wheeler space dominated by well-established brands like Hero Honda and Bajaj. The two-wheeler market in the country is almost five times bigger than its passenger car market.
Harley-Davidson to drive alone in India
Mumbai: Motorcycle maker Harley-Davidson on Wednesday said it will not look for a partner in the country if it plans to assemble bikes in India. The company has completed a year in the country and believes the next one year will be very crucial to decide its next step in the market.
“We have come with open eyes and will see if assembling is needed in the country. High import duty remains a concern. It all depends upon how we perform in the market. If we assemble, we will do it on our own and not under a joint venture. Harley-Davidson is all about how we build our motorcycles,” said Anoop Prakash, managing director, Harley-Davidson India.
Harley-Davidson has only one assembly facility outside the US - in Brazil, where it gets bikes in completely knocked down (CKD) position. If it decides to assemble in India, it will be its second outside the US and also first to start assembling superbikes in India. The company sees huge growth potential in the Asian, Middle East and European markets. In this part of the world, the company has a presence in China, Taiwan, Japan and Australia. Japan is the largest in terms of volumes.
The company will be going full swing in India with five dealerships by September. Harley Davidson opened its fourth dealership in the country in Mumbai. Asked about its sales, Sanjay Tripathi, director of marketing, Harley-Davidson India, said, “We will be in a position to disclose numbers by the third quarter of this year after all our five dealerships are up and running.”
The company will be announcing a new range of models for 2011 in January. At that time, the company will review the performance of the 12 models it has in the country and replace the ones not giving it decent volumes.
Asked if one can expect some price correction, Prakash said, “We do not believe in discounting. We keep our margins intact. We have sales happening at both lower as well as higher end.” Harley Davidson sells bikes in the range of Rs 6.95 to Rs 34.95 lakh (ex-showroom New Delhi) in the country. Some of the popular models include Softail Fat Boy, touring Road King and Dyna Street Bob. The company sees accessories also to get decent revenues in the country.
Harley-Davidson has a tie up with ICICI Bank for financing at an interest rate of...
“We have come with open eyes and will see if assembling is needed in the country. High import duty remains a concern. It all depends upon how we perform in the market. If we assemble, we will do it on our own and not under a joint venture. Harley-Davidson is all about how we build our motorcycles,” said Anoop Prakash, managing director, Harley-Davidson India.
Harley-Davidson has only one assembly facility outside the US - in Brazil, where it gets bikes in completely knocked down (CKD) position. If it decides to assemble in India, it will be its second outside the US and also first to start assembling superbikes in India. The company sees huge growth potential in the Asian, Middle East and European markets. In this part of the world, the company has a presence in China, Taiwan, Japan and Australia. Japan is the largest in terms of volumes.
The company will be going full swing in India with five dealerships by September. Harley Davidson opened its fourth dealership in the country in Mumbai. Asked about its sales, Sanjay Tripathi, director of marketing, Harley-Davidson India, said, “We will be in a position to disclose numbers by the third quarter of this year after all our five dealerships are up and running.”
The company will be announcing a new range of models for 2011 in January. At that time, the company will review the performance of the 12 models it has in the country and replace the ones not giving it decent volumes.
Asked if one can expect some price correction, Prakash said, “We do not believe in discounting. We keep our margins intact. We have sales happening at both lower as well as higher end.” Harley Davidson sells bikes in the range of Rs 6.95 to Rs 34.95 lakh (ex-showroom New Delhi) in the country. Some of the popular models include Softail Fat Boy, touring Road King and Dyna Street Bob. The company sees accessories also to get decent revenues in the country.
Harley-Davidson has a tie up with ICICI Bank for financing at an interest rate of...
Suzuki launches 125cc bike 'Slingshot'
Suzuki Motorcycles will soon invest upto Rs 500 crore in an attempt to increase its production to more than double to 5.4 lakh units per annum by 2012.
The announcement came along with the launch of the new bike Slingshot today. Mr. Atul Gupta, Vice President, Sales and Marketing, Suzuki Motorcycle India Pvt Ltd said, “It has been our constant endeavour to capitalize on emerging opportunities in the Indian motorcycle market and the Suzuki SlingShot is a direct result of us listening to what the customers want and delivering a world class product that meets their requirements. The Suzuki SlingShot offers a complete package in terms of Style, Comfort, Performance and Practicality – all combined in a 125 cc bike. The customer wanted a bike that was as frugal on fuel as a 100 cc bike, yet had the looks to match a 150 cc premium bike combined with a price point that made the product affordable yet met all requirements – which the Suzuki SlingShot offers.”
Inspired by its bigger siblings the GSX-R series, the Suzuki SlingShot comes with new design head lamps, front fender and a convenient gear position indicator. The 125 cc engine is fed by a BS carburettor with a Throttle Position Switch (TPS) optimizes the ignition timing coupled with a DC – CDI along with the SuzukiPulsed-secondary AIR-injection (PAIR) system that results in high combustion efficiency for enhanced mileage and reduced emissions, according to a release by the company.
Talking about the company’s other plans, the Chairman Katsumi Takata said, "We are aggressively expanding our production capacity to 5.4 lakh units from 2.5 lakh units by 2012."
The company has so far invested around Rs 450 crore in this year and another Rs 50 crore will be put in enhancing its capacity.
"In line with our production capacity expansion, we will concentrate on new product development and strengthening of distribution network," Takata said.
Read more: Suzuki launches 125cc bike 'Slingshot' - WheelsUnplugged New Automobile Launch
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The announcement came along with the launch of the new bike Slingshot today. Mr. Atul Gupta, Vice President, Sales and Marketing, Suzuki Motorcycle India Pvt Ltd said, “It has been our constant endeavour to capitalize on emerging opportunities in the Indian motorcycle market and the Suzuki SlingShot is a direct result of us listening to what the customers want and delivering a world class product that meets their requirements. The Suzuki SlingShot offers a complete package in terms of Style, Comfort, Performance and Practicality – all combined in a 125 cc bike. The customer wanted a bike that was as frugal on fuel as a 100 cc bike, yet had the looks to match a 150 cc premium bike combined with a price point that made the product affordable yet met all requirements – which the Suzuki SlingShot offers.”
Inspired by its bigger siblings the GSX-R series, the Suzuki SlingShot comes with new design head lamps, front fender and a convenient gear position indicator. The 125 cc engine is fed by a BS carburettor with a Throttle Position Switch (TPS) optimizes the ignition timing coupled with a DC – CDI along with the SuzukiPulsed-secondary AIR-injection (PAIR) system that results in high combustion efficiency for enhanced mileage and reduced emissions, according to a release by the company.
Talking about the company’s other plans, the Chairman Katsumi Takata said, "We are aggressively expanding our production capacity to 5.4 lakh units from 2.5 lakh units by 2012."
The company has so far invested around Rs 450 crore in this year and another Rs 50 crore will be put in enhancing its capacity.
"In line with our production capacity expansion, we will concentrate on new product development and strengthening of distribution network," Takata said.
Read more: Suzuki launches 125cc bike 'Slingshot' - WheelsUnplugged New Automobile Launch
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Tata motorr Piaggio may join race for scooter india
After reports of Mahindra & Mahindra and Atul Auto evincing interest in the purchase of a controlling stake in sick public sector company Scooters India Ltd (SIL), it seems that Tata Motors and Piaggio may also be in the race.
Top officials in the Heavy Industries Ministry told Business Line that Piaggio and Tata Motors have also shown interest in purchasing a 74 per cent stake in the Lucknow-based three-wheeler maker. Meanwhile, the Mahindras and Rajkot-based Atul Auto, have reportedly already spoken to Ministry officials.
Huge potential
“These four companies have already given an indication that they are interested, though the formal Expression of Interest (EoI) can only be made after the Cabinet approval. Many companies see huge potential in SIL because they expect a strong growth from the north Indian and Uttar Pradesh markets,” said the official.
However, when contacted, a Piaggio official said that they had not yet contacted the Ministry, though he expressed hope that the company would be informed when the formal EoI announcement is made. Earlier, in 2000, Piaggio had been interested in purchasing the company but had found the deal to be “not workable”. Tata Motors spokesperson denied the development.
Ministry plans
As part of a turnaround plan for the PSU, the Ministry has proposed divestment of a 74 per cent stake in SIL, whereby it will provide the 150 acre land and equipment. It will also clear the old debts of the sick company, amounting to about Rs 100 crore, while any fresh investment will have to be made by the new private partner.
Ministry officials also said that the fact that 800 people out of the 1,200-strong workforce will retire in the next two years, gives SIL a strong position in its sale. During the last sale attempt in 1996, the union issue was a big problem for the private players.
Sources in the Ministry added that the Cabinet approval is well on the way as the note is getting the final clearances from various departments.
“The sale process will surely happen by end-September,” said the source.
Top officials in the Heavy Industries Ministry told Business Line that Piaggio and Tata Motors have also shown interest in purchasing a 74 per cent stake in the Lucknow-based three-wheeler maker. Meanwhile, the Mahindras and Rajkot-based Atul Auto, have reportedly already spoken to Ministry officials.
Huge potential
“These four companies have already given an indication that they are interested, though the formal Expression of Interest (EoI) can only be made after the Cabinet approval. Many companies see huge potential in SIL because they expect a strong growth from the north Indian and Uttar Pradesh markets,” said the official.
However, when contacted, a Piaggio official said that they had not yet contacted the Ministry, though he expressed hope that the company would be informed when the formal EoI announcement is made. Earlier, in 2000, Piaggio had been interested in purchasing the company but had found the deal to be “not workable”. Tata Motors spokesperson denied the development.
Ministry plans
As part of a turnaround plan for the PSU, the Ministry has proposed divestment of a 74 per cent stake in SIL, whereby it will provide the 150 acre land and equipment. It will also clear the old debts of the sick company, amounting to about Rs 100 crore, while any fresh investment will have to be made by the new private partner.
Ministry officials also said that the fact that 800 people out of the 1,200-strong workforce will retire in the next two years, gives SIL a strong position in its sale. During the last sale attempt in 1996, the union issue was a big problem for the private players.
Sources in the Ministry added that the Cabinet approval is well on the way as the note is getting the final clearances from various departments.
“The sale process will surely happen by end-September,” said the source.
TVS GeNext has the freedom to start fresh enterprises
LAKSHMI Venu and her brother Sudarshan Venu, children of TVS MD, Venu Srinivasan, (55), and his wife, Mallika Srinivasan, 51, director, Tafe, will play an ‘effective role’ in the companies of both parents, and will also be free to start their own businesses if they so desire.
In an exclusive chat with ET, Venu Srinivasan, talked about the role that GeNext will play in his company and whether they will be allowed to start up businesses on their own.
“Right now, Lakshmi is working on strategy for TVS Motor but I am completely open to her doing something on her own as well. She has the freedom to decide,” he said.
He hoped that his kids will experiment and try out something on their own, just as he experimented with retail early in his career.
“In the future, I definitely hope Lakshmi will do something on her own. Just being an inheritor doesn’t get you very far. But that decision is up to her. I always liked to experiment -there are so many new things to do and a new generation of Indians demanding new types of services... So there’s a lot of opportunity out there. But it’s up to the kids to find it,” he said.
Twenty-seven-year old Lakshmi Venu is an economics graduate from Yale and recently completed her doctorate in business management from the University of Warwick. She worked as a management trainee at TVS Motor for three years as part of her doctorate studies before joining Sundaram Clayton, TVS Motor’s holding company as additional director in March this year.
Her engagement to Rohan Murthy, son of Infosys co-founder and chairman NR Narayana Murthy, has just been announced.
Mr Srinivasan also said his children will have the chance to play a role in the management of TVS Motor and Tafe.
“That option is always there. Both kids I hope will play an effective role in both businesses. It’s their inheritance... so they have every right to make effective contribution to both sides,” he added.
Sudarshan Venu, in his early twenties, is currently studying at Wharton and is expected to ‘be back and join the business in a year’s time,” Mr Srinivasan added.
The GeNext entry into TVS will come at an interesting time for the company as it readies to increase market share at home and abroad and consolidate its share of the two-wheeler and three-wheeler markets. TVS, which will hit over 2 million units of two-wheelers this year, is planning to increase capacity.
Mr Srinivasan heads TVS Motor, Sundaram Clayton and other group firms with a turnover of over $4 billion. Mallika Srinivasan spearheads India’s second largest tractor company Tafe ($750 million turnover), flagship of the Amalgamations group.
The children of other TVS family members have already begun playing a role in their respective companies. In the last few years, Arathi Krishna and Arundhati Krishna, daughters of Suresh Krishna, chairman and managing director of Sundram Fasteners, have joined the company.
Shobana Ramachandran, daughter of the late R Ramachandran, former chairman of TV Sundaram Iyengar & Sons, the parent company of the TVS group, has been functioning as managing director of the Madurai-based TVS Srichakra. The third largest two-wheeler company in India, TVS has managed to hold its own after parting ways with Japanese partner Suzuki nearly a decade ago.
This year, TVS is looking to invest around Rs 200 crore to expand capacity to 2.8 million units by April 2011, said Mr Srinivasan. All of the added capacity will be in India. This year, TVS is looking to sell 1.85 million motorcycles, scooters and mopeds in India and another 250,000 units in exports, up nearly 30% over the year ago. In three wheelers, too, TVS is looking to triple sales to 50,000 units from 15,000 last year.
Apart from stepping up sales at home, TVS is also looking to expand its export markets including new destinations like Brazil and parts of Africa and revive Columbia and Indonesia.
“Indonesia should hit 30,000 this year and we want South East Asia to do much better along with Sri Lanka and Bangladesh and we are looking to clock half a million units in exports eventually,” said Mr Srinivasan.
In an exclusive chat with ET, Venu Srinivasan, talked about the role that GeNext will play in his company and whether they will be allowed to start up businesses on their own.
“Right now, Lakshmi is working on strategy for TVS Motor but I am completely open to her doing something on her own as well. She has the freedom to decide,” he said.
He hoped that his kids will experiment and try out something on their own, just as he experimented with retail early in his career.
“In the future, I definitely hope Lakshmi will do something on her own. Just being an inheritor doesn’t get you very far. But that decision is up to her. I always liked to experiment -there are so many new things to do and a new generation of Indians demanding new types of services... So there’s a lot of opportunity out there. But it’s up to the kids to find it,” he said.
Twenty-seven-year old Lakshmi Venu is an economics graduate from Yale and recently completed her doctorate in business management from the University of Warwick. She worked as a management trainee at TVS Motor for three years as part of her doctorate studies before joining Sundaram Clayton, TVS Motor’s holding company as additional director in March this year.
Her engagement to Rohan Murthy, son of Infosys co-founder and chairman NR Narayana Murthy, has just been announced.
Mr Srinivasan also said his children will have the chance to play a role in the management of TVS Motor and Tafe.
“That option is always there. Both kids I hope will play an effective role in both businesses. It’s their inheritance... so they have every right to make effective contribution to both sides,” he added.
Sudarshan Venu, in his early twenties, is currently studying at Wharton and is expected to ‘be back and join the business in a year’s time,” Mr Srinivasan added.
The GeNext entry into TVS will come at an interesting time for the company as it readies to increase market share at home and abroad and consolidate its share of the two-wheeler and three-wheeler markets. TVS, which will hit over 2 million units of two-wheelers this year, is planning to increase capacity.
Mr Srinivasan heads TVS Motor, Sundaram Clayton and other group firms with a turnover of over $4 billion. Mallika Srinivasan spearheads India’s second largest tractor company Tafe ($750 million turnover), flagship of the Amalgamations group.
The children of other TVS family members have already begun playing a role in their respective companies. In the last few years, Arathi Krishna and Arundhati Krishna, daughters of Suresh Krishna, chairman and managing director of Sundram Fasteners, have joined the company.
Shobana Ramachandran, daughter of the late R Ramachandran, former chairman of TV Sundaram Iyengar & Sons, the parent company of the TVS group, has been functioning as managing director of the Madurai-based TVS Srichakra. The third largest two-wheeler company in India, TVS has managed to hold its own after parting ways with Japanese partner Suzuki nearly a decade ago.
This year, TVS is looking to invest around Rs 200 crore to expand capacity to 2.8 million units by April 2011, said Mr Srinivasan. All of the added capacity will be in India. This year, TVS is looking to sell 1.85 million motorcycles, scooters and mopeds in India and another 250,000 units in exports, up nearly 30% over the year ago. In three wheelers, too, TVS is looking to triple sales to 50,000 units from 15,000 last year.
Apart from stepping up sales at home, TVS is also looking to expand its export markets including new destinations like Brazil and parts of Africa and revive Columbia and Indonesia.
“Indonesia should hit 30,000 this year and we want South East Asia to do much better along with Sri Lanka and Bangladesh and we are looking to clock half a million units in exports eventually,” said Mr Srinivasan.
Hero Honda to decide on new plan in one month
The country’s largest two-wheeler manufacturer Hero Honda will take a final call on setting up the company's fourth plant in a month's time. Currently, Hero Honda has three manufacturing facilities at Dharuhera and Gurgaon in Haryana and at Haridwar in Uttarakhand.
Anil Dua, senior vice-president (marketing and sales) said, “The decision on the new plant will be finalised in a month or so.” Dua was speaking on the sidelines of the annual Siam conference on Thursday.
“We grew by 24% last year and we hope to close this year in double digit,” he said. The new plant for Hero Honda is meant for the company’s requirement in 2011. “We are on schedule to accomplish that,” he added.
The company also expects its sales in the current financial year to top 5 million units. This will be around 4,00,000 units more than what it sold last year. The company is also looking at launching five motorcycle models in the current fiscal.
The company recently said it planned to invest around Rs 115 crore to add 3,00,000 units a year capacity to its plant in Haridwar. The sales of motorcycles saw a 10% jump in the first quarter ended June 30, 2010. However, due to higher costs of raw material and money spent on meeting new emissions rules, Hero Honda saw a dip in its quarterly profit first time in the last three years. For the quarter ended June 30, 2010, the company posted a net profit of Rs 491.69 crore, down 1.65% compared to Rs 500.11 crore posted same quarter, a year ago.
Hero Honda, which makes close to half the motorcycles sold in the country, recently said that it believed that a further rate hike may take its own toll from the company. Ravi Sud, CFO, Hero Honda recently said that the demand will start to tumble in the second half of this year.
Anil Dua, senior vice-president (marketing and sales) said, “The decision on the new plant will be finalised in a month or so.” Dua was speaking on the sidelines of the annual Siam conference on Thursday.
“We grew by 24% last year and we hope to close this year in double digit,” he said. The new plant for Hero Honda is meant for the company’s requirement in 2011. “We are on schedule to accomplish that,” he added.
The company also expects its sales in the current financial year to top 5 million units. This will be around 4,00,000 units more than what it sold last year. The company is also looking at launching five motorcycle models in the current fiscal.
The company recently said it planned to invest around Rs 115 crore to add 3,00,000 units a year capacity to its plant in Haridwar. The sales of motorcycles saw a 10% jump in the first quarter ended June 30, 2010. However, due to higher costs of raw material and money spent on meeting new emissions rules, Hero Honda saw a dip in its quarterly profit first time in the last three years. For the quarter ended June 30, 2010, the company posted a net profit of Rs 491.69 crore, down 1.65% compared to Rs 500.11 crore posted same quarter, a year ago.
Hero Honda, which makes close to half the motorcycles sold in the country, recently said that it believed that a further rate hike may take its own toll from the company. Ravi Sud, CFO, Hero Honda recently said that the demand will start to tumble in the second half of this year.
Piaggio Vespa scooter to hit roads again
Italian two-wheeler company Piaggio is all set to revive the Vespa scooter brand in India on by 2011 through its Indian arm. The company had launched the cult scooter brand in 1950s. Then it relaunched the brand in 1960s, 1980s and 1990s in association with the Firodias first and later with LML.
But this time, the all new Vespa from Piaggio will be a 125cc gearless scooter that will hit the market late next year.
“This is the first time that Piaggio is coming on its own. The company is setting up a 1,50,000 unit per year capacity plant at Baramati in Maharashtra with an investment of around Rs 180 crore,” Ravi Chopra, Piaggio Vehicles chairman and managing director said on the sidelines of Society of Indian Automobile Manufacturers' (Siam) annual conference on Thursday.
Commenting on the company's expansion strategy, Chopra said that India is a significant market for Piaggio, and, therefore, it wants to have a significant presence here. The company is also planning to launch a 0.5 tonne mini-truck in the next two to three weeks. Piaggio India sells three-wheeler passenger and commercial and four-wheeler light commercial vehicles. “We hope to complete the current financial year with sales of 2,00,000 units," Chopra said.
In India, Vespa had a chequered run. It dominated the Indian roads for 20 years, in collaboration with the Firodias. But the Indira Gandhi government declined to renew its licence in 1971 paving way for the famous Bajaj 'Chetak'.
Vespa made a re-entry in 1983, this time in collaboration with the Lohias of the LML group but had to leave the shores again in 1999 after a protracted battle with the Indian partners. Vespa was made famous by the 1952 Hollywood blockbuster Roman Holiday.
But this time, the all new Vespa from Piaggio will be a 125cc gearless scooter that will hit the market late next year.
“This is the first time that Piaggio is coming on its own. The company is setting up a 1,50,000 unit per year capacity plant at Baramati in Maharashtra with an investment of around Rs 180 crore,” Ravi Chopra, Piaggio Vehicles chairman and managing director said on the sidelines of Society of Indian Automobile Manufacturers' (Siam) annual conference on Thursday.
Commenting on the company's expansion strategy, Chopra said that India is a significant market for Piaggio, and, therefore, it wants to have a significant presence here. The company is also planning to launch a 0.5 tonne mini-truck in the next two to three weeks. Piaggio India sells three-wheeler passenger and commercial and four-wheeler light commercial vehicles. “We hope to complete the current financial year with sales of 2,00,000 units," Chopra said.
In India, Vespa had a chequered run. It dominated the Indian roads for 20 years, in collaboration with the Firodias. But the Indira Gandhi government declined to renew its licence in 1971 paving way for the famous Bajaj 'Chetak'.
Vespa made a re-entry in 1983, this time in collaboration with the Lohias of the LML group but had to leave the shores again in 1999 after a protracted battle with the Indian partners. Vespa was made famous by the 1952 Hollywood blockbuster Roman Holiday.
India to anchor Suzuki's global sales
Japanese automaker Suzuki is banking on India to drive its global sales as the demand across the globe continues to stagnate. Chairman of Suzuki Motorcycle India Katsumi Takata told FE that the emerging markets account for roughly 50% of the company's overall global sales.
"China is becoming a mature market now, but it is India on the other hand that is growing rapidly . We are going scale up rapidly here," he said.
The company is also looking to make inroads into the growingmotorcyclespacewithpresence across all segments. "We want to be present in every segment...for this purpose we will launch a sub-100-cc bike and a 150 plus-cc bike as well," said Atul Gupta, vice-president (sales & marketing), Suzuki.
Gupta did not share the tenta tive price range of these bikes.
To create a niche for itself through a range of motorcycle launches, the company will invest around Rs 50 crore to increase capacity to Rs 5.4 lakh unitsin2012fromthecurrent2.5 lakh units. Suzuki Motorcycles onWednesdaylauncheda125-cc motorcycle, priced at Rs 43,945.
Gupta said the company would also look to increase its motorcycle sales vis-à-vis scooters. "Currently , our scooter sales accounts for 90% of our business. The new enhanced capacity motorcycles would constitute around 40%," he said. The company will also look to introduce at least three new two-wheeler models by the end of the next financial year. It is also planning to step up its exports to other countries in the next few years. "As of now, we only export to Nepal where we are doing around 500 units per month. Soon we will also start exporting to Sri Lanka and Bangaldesh. After that, we may also look at some of the mature markets," he said.
Gupta said the company would also look to use Maruti's strong vendor base to step up sales. He added that though the company was bullish on India, it was not looking to set itself an ambitious market share, especially when the two-wheeler industry is dominated by heavyweights. "We are not going to make any market share projection. We have a certain roadmap for India that we want to concentrate upon," he said.
"China is becoming a mature market now, but it is India on the other hand that is growing rapidly . We are going scale up rapidly here," he said.
The company is also looking to make inroads into the growingmotorcyclespacewithpresence across all segments. "We want to be present in every segment...for this purpose we will launch a sub-100-cc bike and a 150 plus-cc bike as well," said Atul Gupta, vice-president (sales & marketing), Suzuki.
Gupta did not share the tenta tive price range of these bikes.
To create a niche for itself through a range of motorcycle launches, the company will invest around Rs 50 crore to increase capacity to Rs 5.4 lakh unitsin2012fromthecurrent2.5 lakh units. Suzuki Motorcycles onWednesdaylauncheda125-cc motorcycle, priced at Rs 43,945.
Gupta said the company would also look to increase its motorcycle sales vis-à-vis scooters. "Currently , our scooter sales accounts for 90% of our business. The new enhanced capacity motorcycles would constitute around 40%," he said. The company will also look to introduce at least three new two-wheeler models by the end of the next financial year. It is also planning to step up its exports to other countries in the next few years. "As of now, we only export to Nepal where we are doing around 500 units per month. Soon we will also start exporting to Sri Lanka and Bangaldesh. After that, we may also look at some of the mature markets," he said.
Gupta said the company would also look to use Maruti's strong vendor base to step up sales. He added that though the company was bullish on India, it was not looking to set itself an ambitious market share, especially when the two-wheeler industry is dominated by heavyweights. "We are not going to make any market share projection. We have a certain roadmap for India that we want to concentrate upon," he said.
Hero Honda Expects India Motorcycle Sales to Slow on Rising Interest Rates
Hero Honda Motors Ltd., maker of about half the motorcycles sold in India, said demand will grow more slowly this year as the central bank raises interest rates to pare inflation.
“In the second half, demand should start tapering off,” Chief Financial Officer Ravi Sud said yesterday in an interview at his office in New Delhi. The company plans to boost production about 8.7 percent in the year ending March to more than 5 million motorcycles and scooters compared with a 23 percent increase last fiscal year.
India may take further steps to damp rising prices, Sud said, after four interest-rate increases since March failed to bring inflation down from near 10 percent. Rising prices have stoked public protests and sap demand for motorcycles in India, the world’s second-biggest two-wheeler market.
“Growth will definitely come down,” said Umesh Karne, an analyst at Mumbai-based Brics Securities. “Hero Honda may also lose some market share as rivals add new products.”
Mahindra & Mahindra Ltd., India’s biggest sport-utility vehicle marker, has said it plans to begin selling its first motorcycles before the end of the year. Bajaj Auto Ltd. and TVS Motor Co., the country’s No. 2 and No. 3 motorcycle-makers, are also adding new models.
Hero Honda, part-owned by Tokyo-based Honda Motor Co., fell 1.8 percent to 1,889.95 rupees in Mumbai trading today. The stock has risen 11 percent this year.
The motorcycle-maker expects industrywide two-wheeler sales to grow on average as much as 12 percent annually for the next three years, Sud said. That compares with a 26 percent jump in the year to March, according to figures from the Society of Indian Automobile Manufacturers.
State Bank of India, the country’s biggest bank, raised its benchmark lending rate to 12.25 percent from 11.75 percent last week. ICICI Bank Ltd., the second largest, increased its prime lending rate to 16.25 percent from 15.75 percent.
To meet rising demand, Hero Honda plans to spend 1.15 billion rupees ($25 million) to add 300,000 units a year capacity to its plant in Haridwar in northern India by January, Sud said.
The motorcycle-maker boosted unit sales 10 percent in the three months ended June. Quarterly profit fell for the first time in almost three years because of higher raw material costs and money spent on meeting new emissions rules.
India, Asia’s third-biggest economy, is spending more to build roads connecting villages and to improve electricity, phone and health-care services. The infrastructure investments and rising prices for farm produce are boosting rural incomes.
“A lot of purchasing power has come there,” Sud said. “With higher disposable incomes and prosperity, who doesn’t want personal transportation.”
“In the second half, demand should start tapering off,” Chief Financial Officer Ravi Sud said yesterday in an interview at his office in New Delhi. The company plans to boost production about 8.7 percent in the year ending March to more than 5 million motorcycles and scooters compared with a 23 percent increase last fiscal year.
India may take further steps to damp rising prices, Sud said, after four interest-rate increases since March failed to bring inflation down from near 10 percent. Rising prices have stoked public protests and sap demand for motorcycles in India, the world’s second-biggest two-wheeler market.
“Growth will definitely come down,” said Umesh Karne, an analyst at Mumbai-based Brics Securities. “Hero Honda may also lose some market share as rivals add new products.”
Mahindra & Mahindra Ltd., India’s biggest sport-utility vehicle marker, has said it plans to begin selling its first motorcycles before the end of the year. Bajaj Auto Ltd. and TVS Motor Co., the country’s No. 2 and No. 3 motorcycle-makers, are also adding new models.
Hero Honda, part-owned by Tokyo-based Honda Motor Co., fell 1.8 percent to 1,889.95 rupees in Mumbai trading today. The stock has risen 11 percent this year.
The motorcycle-maker expects industrywide two-wheeler sales to grow on average as much as 12 percent annually for the next three years, Sud said. That compares with a 26 percent jump in the year to March, according to figures from the Society of Indian Automobile Manufacturers.
State Bank of India, the country’s biggest bank, raised its benchmark lending rate to 12.25 percent from 11.75 percent last week. ICICI Bank Ltd., the second largest, increased its prime lending rate to 16.25 percent from 15.75 percent.
To meet rising demand, Hero Honda plans to spend 1.15 billion rupees ($25 million) to add 300,000 units a year capacity to its plant in Haridwar in northern India by January, Sud said.
The motorcycle-maker boosted unit sales 10 percent in the three months ended June. Quarterly profit fell for the first time in almost three years because of higher raw material costs and money spent on meeting new emissions rules.
India, Asia’s third-biggest economy, is spending more to build roads connecting villages and to improve electricity, phone and health-care services. The infrastructure investments and rising prices for farm produce are boosting rural incomes.
“A lot of purchasing power has come there,” Sud said. “With higher disposable incomes and prosperity, who doesn’t want personal transportation.”
M&M, Atul Auto eye 74 pc stake in Scooters India
With the heavy industries ministry planning to offer up to 74 per cent in Scooters India, at least two private sector players have lined up to acquire controlling stake in the sick public sector company. Mahindra & Mahindra (M&M), which yesterday signed preliminary agreement with Ssangyong to pick up a majority stake in the Korean firm, and Rajkot-based three-wheeler manufacturer Atul Auto have separately shown interest in the company.
Scooters India, in which the government owns about 95 per cent, reported a Rs 22 crore loss in the fiscal year ending March 2010, according to data on the Bombay Stock Exchange. However, on reports of the stake sale, shares in state-run firm opened up 4.74 per cent and rose to 4.88 per cent at Rs 39.75, its maximum daily limit. Company shares have risen 36 per cent so far in the year, outperforming the broader BSE Auto Index, which rose around 20 per cent.
A spokesperson for M&M said the firm would not comment on speculation. An auto analyst said M&M, which has about 11 per cent market share in the three-wheeler segment, is looking at acquiring Scooters India for its 150 acre plot close to the Lucknow airport. What M&M will also gain is the enterprise's manufacturing unit to ramp up its own three-wheeler plans. With M&M planning to foray into two-wheelers, acquiring Scooters India could be an advantage, the analyst said.
Scooters India, in which the government owns about 95 per cent, reported a Rs 22 crore loss in the fiscal year ending March 2010, according to data on the Bombay Stock Exchange. However, on reports of the stake sale, shares in state-run firm opened up 4.74 per cent and rose to 4.88 per cent at Rs 39.75, its maximum daily limit. Company shares have risen 36 per cent so far in the year, outperforming the broader BSE Auto Index, which rose around 20 per cent.
A spokesperson for M&M said the firm would not comment on speculation. An auto analyst said M&M, which has about 11 per cent market share in the three-wheeler segment, is looking at acquiring Scooters India for its 150 acre plot close to the Lucknow airport. What M&M will also gain is the enterprise's manufacturing unit to ramp up its own three-wheeler plans. With M&M planning to foray into two-wheelers, acquiring Scooters India could be an advantage, the analyst said.
TVS Motor to invest Rs 200 cr in expansion
Chennai-based motorcycle maker TVS Motor said on Thursday it is going to invest Rs 200 crore by April 2011 to increase capacity from 2.1 million to 2.8 million units. “We will increase production of our two-wheelers in line with the industry demands. We will invest about Rs 200 crore to increase capacity to 2.8 million units,” chairman of TVS Motor Venu Srinivasan said.
The company is also looking to set up a design centre in Indonesia where it already has a manufacturing unit. Srinivasan said the company's Indonesian unit would break even by next year. “I feel that by next year the company should break even,” he said. The company expects to sell 18 lakh of two-wheelers in the domestic market and export 2.5 lakh units this year.
On the export front Srinivasan said that the company would increase its exports to Sri Lanka, Bangladesh and the Asean countries. He also said that TVS may use its Brazilian facility to expand into other South American countries like Columbia at a later date.
The company is also looking to set up a design centre in Indonesia where it already has a manufacturing unit. Srinivasan said the company's Indonesian unit would break even by next year. “I feel that by next year the company should break even,” he said. The company expects to sell 18 lakh of two-wheelers in the domestic market and export 2.5 lakh units this year.
On the export front Srinivasan said that the company would increase its exports to Sri Lanka, Bangladesh and the Asean countries. He also said that TVS may use its Brazilian facility to expand into other South American countries like Columbia at a later date.
Crisil reaffirms ratings on Hero group companies
Rating agency Crisil has reaffirmed all the ratings on the Hero group entities following the arrangement finalised by members of the Munjal family.
“Crisil has completed its assessment of the ratings on entities in the Hero group and reaffirmed all the ratings. The reaffirmation factors in the contours of the family arrangement, the performance of each group entity, its business and growth strategies, and management structure,” said a statement from the rating agency.
Crisil believes that despite the family arrangement, the business profiles of the rated entities remain unchanged. Despite being managed by different family groups, all four rated automobile component companies — Rockman Industries Ltd, Munjal Showa Ltd, Highway Industries Ltd and Sunbeam Auto — will remain dependent on Hero Honda Motors for business growth.
The managements of the various factions have assured Crisil that the commercial arrangements between the groups will continue unchanged. Any change in this stance by any of the four family factions will remain a key rating sensitivity, the statement said.
Hero Honda, the flagship company of the group, has been given a rating of AAA/Stable by Crisil for its Rs 125-crore cash credit limit, Rs 15-crore non-convertible debenture programme and fixed deposit programme.
Ratings on the debt programmes and bank facilities of Hero Honda Motors Ltd continue to reflect its strong business risk profile, marked by leadership in the motorcycles market in India and robust financial risk profile, supported by large networth, negligible debt and liquid surpluses, it said.
“Crisil has completed its assessment of the ratings on entities in the Hero group and reaffirmed all the ratings. The reaffirmation factors in the contours of the family arrangement, the performance of each group entity, its business and growth strategies, and management structure,” said a statement from the rating agency.
Crisil believes that despite the family arrangement, the business profiles of the rated entities remain unchanged. Despite being managed by different family groups, all four rated automobile component companies — Rockman Industries Ltd, Munjal Showa Ltd, Highway Industries Ltd and Sunbeam Auto — will remain dependent on Hero Honda Motors for business growth.
The managements of the various factions have assured Crisil that the commercial arrangements between the groups will continue unchanged. Any change in this stance by any of the four family factions will remain a key rating sensitivity, the statement said.
Hero Honda, the flagship company of the group, has been given a rating of AAA/Stable by Crisil for its Rs 125-crore cash credit limit, Rs 15-crore non-convertible debenture programme and fixed deposit programme.
Ratings on the debt programmes and bank facilities of Hero Honda Motors Ltd continue to reflect its strong business risk profile, marked by leadership in the motorcycles market in India and robust financial risk profile, supported by large networth, negligible debt and liquid surpluses, it said.
Enfield dreams big, guns for California
The romance of motorbikes took on a new dimension in the consumer psyche acrossthe globe after the highly rated 1969 American road movie Easy Rider in which Peter Fonda and Dennis Hopper ride through the American southwest with the aim of achieving freedom.
America’s biking country, California, also the Wild West of yore, is ready to get a taste of a new bike -- shipped all the way from India to mark its presence along side the legendary Harley-Davidson in its own backyard.
Chennai-based manufacturer of Bullet motorcycles, Royal Enfield Motors, is preparing to launch its Classic range of 500cc bikes in the state of California, which accounts for half of the US motorcycle market.
“We are already present in the US for many years now. We are looking at California since it happens to be more of a year-round market because their winter is not that severe. We have the products ready and our first shipment is already on its way,” said Siddhartha Lal, MD and CEO of Eicher Motors, the parent company of Royal Enfield Motors.
The numbers may be small as of now. Royal Enfield at present sells about 500 bikes of its various models annually in the US market, but not in California. That’s way behind the 160,000 units sold by Milwaukee-based Harley-Davidson. But the pricing is just right for Enfield’s Classic to find itself a place on the highways snaking through California’s desert lands or speed down The Strip in Las Vegas.
According to RL Ravichandran, CEO, Royal Enfield Motors, the company plans to price the Classic at around Rs 3.2 lakh. In comparison, the cheapest Harley-Davidson available in America sports a price tag of around Rs 3.7 lakh. “We do not fix retail pricing in the USA; the distributors do it. In India, our Classic 500cc model is retailed at Rs 1.5 lakh.”
One can pick up a basic Harley-Davidson motorcycle in India for Rs 6.95 lakh and the price range goes up to Rs 34.95 lakh.
The launch of Royal Enfield’s Classic bikes in California, powered by a single-cylinder 500cc unit construction engine, supported by electronic fuel injection, is expected to yield significant sales for the company.
More importantly, even though it may be a long haul for the Classic to hit top gear in California, the sheer presence of the model in America’s bike country is likely to provide a significant brand rub-off on its sales back home.
During January-July 2010, the company exported 1,934 units to various markets compared with 1,100 units in the same period in the previous year, according to SIAM. The total heavyweight motorcycle sales in the US last year were about three lakh units.
Royal Enfield motorcycles are primarily exported to the UK, the US, Germany, France, Spain and Italy, among others. The company seeks to expand to markets like Latin America and Canada later this year. Nearly seven per cent of Royal Enfield’s sales come from exports.
“I do not expect, even at 100,000-unit capacity level, exports will be more than 10 per cent maximum. However, we will continue to develop export markets as our product has global appeal,” said Lal.
He pointed out that the Indian market would be extremely buoyant, and, over the next 18 months, the real issue will be supply. So, in the short and medium terms, the company’s entire efforts are towards improving supply.
“We produced around 25,000 units in the first half, but certainly that is lower than our expectation. In our march towards 100,000 plus motorcycles, there is absolutely no question that the current family of vehicles will certainly be able to support us to reach that capacity. We expect good growth out of current segments that we are in for the next five to eight years, even longer. The margins are good, competition is minimal, and the opportunity for exports is excellent,” said Lal.
America’s biking country, California, also the Wild West of yore, is ready to get a taste of a new bike -- shipped all the way from India to mark its presence along side the legendary Harley-Davidson in its own backyard.
Chennai-based manufacturer of Bullet motorcycles, Royal Enfield Motors, is preparing to launch its Classic range of 500cc bikes in the state of California, which accounts for half of the US motorcycle market.
“We are already present in the US for many years now. We are looking at California since it happens to be more of a year-round market because their winter is not that severe. We have the products ready and our first shipment is already on its way,” said Siddhartha Lal, MD and CEO of Eicher Motors, the parent company of Royal Enfield Motors.
The numbers may be small as of now. Royal Enfield at present sells about 500 bikes of its various models annually in the US market, but not in California. That’s way behind the 160,000 units sold by Milwaukee-based Harley-Davidson. But the pricing is just right for Enfield’s Classic to find itself a place on the highways snaking through California’s desert lands or speed down The Strip in Las Vegas.
According to RL Ravichandran, CEO, Royal Enfield Motors, the company plans to price the Classic at around Rs 3.2 lakh. In comparison, the cheapest Harley-Davidson available in America sports a price tag of around Rs 3.7 lakh. “We do not fix retail pricing in the USA; the distributors do it. In India, our Classic 500cc model is retailed at Rs 1.5 lakh.”
One can pick up a basic Harley-Davidson motorcycle in India for Rs 6.95 lakh and the price range goes up to Rs 34.95 lakh.
The launch of Royal Enfield’s Classic bikes in California, powered by a single-cylinder 500cc unit construction engine, supported by electronic fuel injection, is expected to yield significant sales for the company.
More importantly, even though it may be a long haul for the Classic to hit top gear in California, the sheer presence of the model in America’s bike country is likely to provide a significant brand rub-off on its sales back home.
During January-July 2010, the company exported 1,934 units to various markets compared with 1,100 units in the same period in the previous year, according to SIAM. The total heavyweight motorcycle sales in the US last year were about three lakh units.
Royal Enfield motorcycles are primarily exported to the UK, the US, Germany, France, Spain and Italy, among others. The company seeks to expand to markets like Latin America and Canada later this year. Nearly seven per cent of Royal Enfield’s sales come from exports.
“I do not expect, even at 100,000-unit capacity level, exports will be more than 10 per cent maximum. However, we will continue to develop export markets as our product has global appeal,” said Lal.
He pointed out that the Indian market would be extremely buoyant, and, over the next 18 months, the real issue will be supply. So, in the short and medium terms, the company’s entire efforts are towards improving supply.
“We produced around 25,000 units in the first half, but certainly that is lower than our expectation. In our march towards 100,000 plus motorcycles, there is absolutely no question that the current family of vehicles will certainly be able to support us to reach that capacity. We expect good growth out of current segments that we are in for the next five to eight years, even longer. The margins are good, competition is minimal, and the opportunity for exports is excellent,” said Lal.
Enfield dreams big, guns for California
The romance of motorbikes took on a new dimension in the consumer psyche acrossthe globe after the highly rated 1969 American road movie Easy Rider in which Peter Fonda and Dennis Hopper ride through the American southwest with the aim of achieving freedom.
America’s biking country, California, also the Wild West of yore, is ready to get a taste of a new bike -- shipped all the way from India to mark its presence along side the legendary Harley-Davidson in its own backyard.
Chennai-based manufacturer of Bullet motorcycles, Royal Enfield Motors, is preparing to launch its Classic range of 500cc bikes in the state of California, which accounts for half of the US motorcycle market.
“We are already present in the US for many years now. We are looking at California since it happens to be more of a year-round market because their winter is not that severe. We have the products ready and our first shipment is already on its way,” said Siddhartha Lal, MD and CEO of Eicher Motors, the parent company of Royal Enfield Motors.
The numbers may be small as of now. Royal Enfield at present sells about 500 bikes of its various models annually in the US market, but not in California. That’s way behind the 160,000 units sold by Milwaukee-based Harley-Davidson. But the pricing is just right for Enfield’s Classic to find itself a place on the highways snaking through California’s desert lands or speed down The Strip in Las Vegas.
According to RL Ravichandran, CEO, Royal Enfield Motors, the company plans to price the Classic at around Rs 3.2 lakh. In comparison, the cheapest Harley-Davidson available in America sports a price tag of around Rs 3.7 lakh. “We do not fix retail pricing in the USA; the distributors do it. In India, our Classic 500cc model is retailed at Rs 1.5 lakh.”
One can pick up a basic Harley-Davidson motorcycle in India for Rs 6.95 lakh and the price range goes up to Rs 34.95 lakh.
The launch of Royal Enfield’s Classic bikes in California, powered by a single-cylinder 500cc unit construction engine, supported by electronic fuel injection, is expected to yield significant sales for the company.
More importantly, even though it may be a long haul for the Classic to hit top gear in California, the sheer presence of the model in America’s bike country is likely to provide a significant brand rub-off on its sales back home.
During January-July 2010, the company exported 1,934 units to various markets compared with 1,100 units in the same period in the previous year, according to SIAM. The total heavyweight motorcycle sales in the US last year were about three lakh units.
Royal Enfield motorcycles are primarily exported to the UK, the US, Germany, France, Spain and Italy, among others. The company seeks to expand to markets like Latin America and Canada later this year. Nearly seven per cent of Royal Enfield’s sales come from exports.
“I do not expect, even at 100,000-unit capacity level, exports will be more than 10 per cent maximum. However, we will continue to develop export markets as our product has global appeal,” said Lal.
He pointed out that the Indian market would be extremely buoyant, and, over the next 18 months, the real issue will be supply. So, in the short and medium terms, the company’s entire efforts are towards improving supply.
“We produced around 25,000 units in the first half, but certainly that is lower than our expectation. In our march towards 100,000 plus motorcycles, there is absolutely no question that the current family of vehicles will certainly be able to support us to reach that capacity. We expect good growth out of current segments that we are in for the next five to eight years, even longer. The margins are good, competition is minimal, and the opportunity for exports is excellent,” said Lal.
America’s biking country, California, also the Wild West of yore, is ready to get a taste of a new bike -- shipped all the way from India to mark its presence along side the legendary Harley-Davidson in its own backyard.
Chennai-based manufacturer of Bullet motorcycles, Royal Enfield Motors, is preparing to launch its Classic range of 500cc bikes in the state of California, which accounts for half of the US motorcycle market.
“We are already present in the US for many years now. We are looking at California since it happens to be more of a year-round market because their winter is not that severe. We have the products ready and our first shipment is already on its way,” said Siddhartha Lal, MD and CEO of Eicher Motors, the parent company of Royal Enfield Motors.
The numbers may be small as of now. Royal Enfield at present sells about 500 bikes of its various models annually in the US market, but not in California. That’s way behind the 160,000 units sold by Milwaukee-based Harley-Davidson. But the pricing is just right for Enfield’s Classic to find itself a place on the highways snaking through California’s desert lands or speed down The Strip in Las Vegas.
According to RL Ravichandran, CEO, Royal Enfield Motors, the company plans to price the Classic at around Rs 3.2 lakh. In comparison, the cheapest Harley-Davidson available in America sports a price tag of around Rs 3.7 lakh. “We do not fix retail pricing in the USA; the distributors do it. In India, our Classic 500cc model is retailed at Rs 1.5 lakh.”
One can pick up a basic Harley-Davidson motorcycle in India for Rs 6.95 lakh and the price range goes up to Rs 34.95 lakh.
The launch of Royal Enfield’s Classic bikes in California, powered by a single-cylinder 500cc unit construction engine, supported by electronic fuel injection, is expected to yield significant sales for the company.
More importantly, even though it may be a long haul for the Classic to hit top gear in California, the sheer presence of the model in America’s bike country is likely to provide a significant brand rub-off on its sales back home.
During January-July 2010, the company exported 1,934 units to various markets compared with 1,100 units in the same period in the previous year, according to SIAM. The total heavyweight motorcycle sales in the US last year were about three lakh units.
Royal Enfield motorcycles are primarily exported to the UK, the US, Germany, France, Spain and Italy, among others. The company seeks to expand to markets like Latin America and Canada later this year. Nearly seven per cent of Royal Enfield’s sales come from exports.
“I do not expect, even at 100,000-unit capacity level, exports will be more than 10 per cent maximum. However, we will continue to develop export markets as our product has global appeal,” said Lal.
He pointed out that the Indian market would be extremely buoyant, and, over the next 18 months, the real issue will be supply. So, in the short and medium terms, the company’s entire efforts are towards improving supply.
“We produced around 25,000 units in the first half, but certainly that is lower than our expectation. In our march towards 100,000 plus motorcycles, there is absolutely no question that the current family of vehicles will certainly be able to support us to reach that capacity. We expect good growth out of current segments that we are in for the next five to eight years, even longer. The margins are good, competition is minimal, and the opportunity for exports is excellent,” said Lal.
TVS to spend $32 million to increase capacity & develop new products
TVS Motor Co., India’s third-largest motorcycle maker, plans to spend as much as 1.5 billion rupees ($32 million) to add capacity and develop new products this financial year as demand increases.
The company will boost maximum production of motorcycles, scooters and mopeds by 17 percent to 2.8 million units a year by March, S.G. Murali, executive vice president, finance, said by phone yesterday. Three-wheeler capacity will rise 80 percent to 90,000 units at the Chennai-based company, he said.
TVS Motor in November unveiled an automatic Jive motorcycle and Wego scooter, spurring sales, as economic growth and higher disposable incomes boost consumer spending in the world’s biggest market for motorcycles after China.
“A huge middle class, double-income families in larger towns and people requiring mobility point to a huge growth in the market,” said Murali. “There is enough money in the rural market with government spending on infrastructure.”
The company, including units, reported profit of 335.2 million rupees in the year ended March 31 after posting losses in the previous two financial years, according to its website. Murali declined to say how much he expects profit to grow in the current financial year.
Two-Wheeled Boom
Per-capita incomes have almost doubled in the past five years in India. The nation’s economy has grown an average 8.5 percent annually during the past five years and will probably expand at a 9 percent pace by the year ending March 31, 2012, Prime Minister Manmohan Singh said at a June summit of the Group of 20 countries in Toronto.
The company expects to sell 1.95 million motorcycles, scooters and mopeds in India and abroad in the year ending March 31, 2011, or 30 percent more than the year-earlier period, Murali said, declining to provide a break up. Sales of three wheelers may more than triple to 50,000 units from 15,000 last year, he said.
TVS Motor will pay for the capacity addition from its cash reserves, Murali said. It had about 3.5 billion rupees in cash and short-term investments at the end of March, he said.
Industrywide sales of motorcycles may increase by 9.5 percent to 8.04 million units in the year to March 31, the Society of Indian Automobile Manufacturers said in July. Scooter sales are forecast to rise 13.7 percent to 1.66 million units
The company will boost maximum production of motorcycles, scooters and mopeds by 17 percent to 2.8 million units a year by March, S.G. Murali, executive vice president, finance, said by phone yesterday. Three-wheeler capacity will rise 80 percent to 90,000 units at the Chennai-based company, he said.
TVS Motor in November unveiled an automatic Jive motorcycle and Wego scooter, spurring sales, as economic growth and higher disposable incomes boost consumer spending in the world’s biggest market for motorcycles after China.
“A huge middle class, double-income families in larger towns and people requiring mobility point to a huge growth in the market,” said Murali. “There is enough money in the rural market with government spending on infrastructure.”
The company, including units, reported profit of 335.2 million rupees in the year ended March 31 after posting losses in the previous two financial years, according to its website. Murali declined to say how much he expects profit to grow in the current financial year.
Two-Wheeled Boom
Per-capita incomes have almost doubled in the past five years in India. The nation’s economy has grown an average 8.5 percent annually during the past five years and will probably expand at a 9 percent pace by the year ending March 31, 2012, Prime Minister Manmohan Singh said at a June summit of the Group of 20 countries in Toronto.
The company expects to sell 1.95 million motorcycles, scooters and mopeds in India and abroad in the year ending March 31, 2011, or 30 percent more than the year-earlier period, Murali said, declining to provide a break up. Sales of three wheelers may more than triple to 50,000 units from 15,000 last year, he said.
TVS Motor will pay for the capacity addition from its cash reserves, Murali said. It had about 3.5 billion rupees in cash and short-term investments at the end of March, he said.
Industrywide sales of motorcycles may increase by 9.5 percent to 8.04 million units in the year to March 31, the Society of Indian Automobile Manufacturers said in July. Scooter sales are forecast to rise 13.7 percent to 1.66 million units
Bajaj Auto revs up for next growth surge
Bajaj Auto, which has had a heady run with the Pulsar and Discover motorcycles, is now preparing the groundwork for the next phase of growth.
“We are looking at a fresh onslaught of products which will keep our growth momentum going. Will it be a new Pulsar or Discover? Or will it be something out of the ordinary? I really have no answers at this point but do know that an aggressive strategy is being worked out,” Mr Rajiv Bajaj, Managing Director, told Business Line.
It remains to be seen, though, whether the company will take a detour from its twin brand focus, which has worked wonders in terms of big numbers and doubling market share in a brief span of time.
The Pulsar and Discover are clocking monthly volumes of over 2,00,000 units. In fact, the more recently launched Discover 150 has spawned a new product category in the form of the sporty commuter segment.
“The next step is to increase volumes of these two brands to levels of 2,50,000 to 3,00,000 units a month. We are confident that this can be done in the coming months,” Mr Bajaj said.
From the company's point of view, the most heartening news is that it finally has a strong foothold in the commuter segment where Hero Honda is the market leader. The fact that the Discover brand has overtaken the Passion and is now second to the Splendor has also been cause for cheer.
Sports segment scores
These changing dynamics have also had their impact in the two-wheeler sector. For instance, the overall commuter motorcycle segment accounted for nearly 86 per cent of the industry in 2008-09 but has since fallen to 82 per cent in the first quarter of this fiscal.
Despite this shrinkage, Bajaj Auto has seen its own share in the commuter category increase from 25 per cent to 30 per cent in this time period. According to Mr Bajaj, the Discover 100 and 150 have clearly played a big role in making this happen with monthly sales of nearly 1.5 lakh units.
Likewise, the share of the sports segment has increased from the level of 14 per cent in FY'09 to 18 per cent in April-June 2010. In the case of Bajaj Auto, the good showing of the Pulsar has seen its share move up to 50 per cent from 43 per cent a little over a year ago.
“These figures clearly show that we are on track and being driven by a good, robust brand strategy,” Mr Bajaj said. Monthly sales of the Pulsar are a little over 75,000 units today compared with barely 35,000 bikes in 2008-09.
Indications are that the share of the overall commuter category could reduce even further, though very gradually, from the current 82 per cent level. Customers are increasingly showing a preference for sports bikes and scooters. Clearly, the rules of the game are changing rapidly in the two-wheeler space.
“We are looking at a fresh onslaught of products which will keep our growth momentum going. Will it be a new Pulsar or Discover? Or will it be something out of the ordinary? I really have no answers at this point but do know that an aggressive strategy is being worked out,” Mr Rajiv Bajaj, Managing Director, told Business Line.
It remains to be seen, though, whether the company will take a detour from its twin brand focus, which has worked wonders in terms of big numbers and doubling market share in a brief span of time.
The Pulsar and Discover are clocking monthly volumes of over 2,00,000 units. In fact, the more recently launched Discover 150 has spawned a new product category in the form of the sporty commuter segment.
“The next step is to increase volumes of these two brands to levels of 2,50,000 to 3,00,000 units a month. We are confident that this can be done in the coming months,” Mr Bajaj said.
From the company's point of view, the most heartening news is that it finally has a strong foothold in the commuter segment where Hero Honda is the market leader. The fact that the Discover brand has overtaken the Passion and is now second to the Splendor has also been cause for cheer.
Sports segment scores
These changing dynamics have also had their impact in the two-wheeler sector. For instance, the overall commuter motorcycle segment accounted for nearly 86 per cent of the industry in 2008-09 but has since fallen to 82 per cent in the first quarter of this fiscal.
Despite this shrinkage, Bajaj Auto has seen its own share in the commuter category increase from 25 per cent to 30 per cent in this time period. According to Mr Bajaj, the Discover 100 and 150 have clearly played a big role in making this happen with monthly sales of nearly 1.5 lakh units.
Likewise, the share of the sports segment has increased from the level of 14 per cent in FY'09 to 18 per cent in April-June 2010. In the case of Bajaj Auto, the good showing of the Pulsar has seen its share move up to 50 per cent from 43 per cent a little over a year ago.
“These figures clearly show that we are on track and being driven by a good, robust brand strategy,” Mr Bajaj said. Monthly sales of the Pulsar are a little over 75,000 units today compared with barely 35,000 bikes in 2008-09.
Indications are that the share of the overall commuter category could reduce even further, though very gradually, from the current 82 per cent level. Customers are increasingly showing a preference for sports bikes and scooters. Clearly, the rules of the game are changing rapidly in the two-wheeler space.
Bajaj Auto revs up for next growth surge
Bajaj Auto, which has had a heady run with the Pulsar and Discover motorcycles, is now preparing the groundwork for the next phase of growth.
“We are looking at a fresh onslaught of products which will keep our growth momentum going. Will it be a new Pulsar or Discover? Or will it be something out of the ordinary? I really have no answers at this point but do know that an aggressive strategy is being worked out,” Mr Rajiv Bajaj, Managing Director, told Business Line.
It remains to be seen, though, whether the company will take a detour from its twin brand focus, which has worked wonders in terms of big numbers and doubling market share in a brief span of time.
The Pulsar and Discover are clocking monthly volumes of over 2,00,000 units. In fact, the more recently launched Discover 150 has spawned a new product category in the form of the sporty commuter segment.
“The next step is to increase volumes of these two brands to levels of 2,50,000 to 3,00,000 units a month. We are confident that this can be done in the coming months,” Mr Bajaj said.
From the company's point of view, the most heartening news is that it finally has a strong foothold in the commuter segment where Hero Honda is the market leader. The fact that the Discover brand has overtaken the Passion and is now second to the Splendor has also been cause for cheer.
Sports segment scores
These changing dynamics have also had their impact in the two-wheeler sector. For instance, the overall commuter motorcycle segment accounted for nearly 86 per cent of the industry in 2008-09 but has since fallen to 82 per cent in the first quarter of this fiscal.
Despite this shrinkage, Bajaj Auto has seen its own share in the commuter category increase from 25 per cent to 30 per cent in this time period. According to Mr Bajaj, the Discover 100 and 150 have clearly played a big role in making this happen with monthly sales of nearly 1.5 lakh units.
Likewise, the share of the sports segment has increased from the level of 14 per cent in FY'09 to 18 per cent in April-June 2010. In the case of Bajaj Auto, the good showing of the Pulsar has seen its share move up to 50 per cent from 43 per cent a little over a year ago.
“These figures clearly show that we are on track and being driven by a good, robust brand strategy,” Mr Bajaj said. Monthly sales of the Pulsar are a little over 75,000 units today compared with barely 35,000 bikes in 2008-09.
Indications are that the share of the overall commuter category could reduce even further, though very gradually, from the current 82 per cent level. Customers are increasingly showing a preference for sports bikes and scooters. Clearly, the rules of the game are changing rapidly in the two-wheeler space.
“We are looking at a fresh onslaught of products which will keep our growth momentum going. Will it be a new Pulsar or Discover? Or will it be something out of the ordinary? I really have no answers at this point but do know that an aggressive strategy is being worked out,” Mr Rajiv Bajaj, Managing Director, told Business Line.
It remains to be seen, though, whether the company will take a detour from its twin brand focus, which has worked wonders in terms of big numbers and doubling market share in a brief span of time.
The Pulsar and Discover are clocking monthly volumes of over 2,00,000 units. In fact, the more recently launched Discover 150 has spawned a new product category in the form of the sporty commuter segment.
“The next step is to increase volumes of these two brands to levels of 2,50,000 to 3,00,000 units a month. We are confident that this can be done in the coming months,” Mr Bajaj said.
From the company's point of view, the most heartening news is that it finally has a strong foothold in the commuter segment where Hero Honda is the market leader. The fact that the Discover brand has overtaken the Passion and is now second to the Splendor has also been cause for cheer.
Sports segment scores
These changing dynamics have also had their impact in the two-wheeler sector. For instance, the overall commuter motorcycle segment accounted for nearly 86 per cent of the industry in 2008-09 but has since fallen to 82 per cent in the first quarter of this fiscal.
Despite this shrinkage, Bajaj Auto has seen its own share in the commuter category increase from 25 per cent to 30 per cent in this time period. According to Mr Bajaj, the Discover 100 and 150 have clearly played a big role in making this happen with monthly sales of nearly 1.5 lakh units.
Likewise, the share of the sports segment has increased from the level of 14 per cent in FY'09 to 18 per cent in April-June 2010. In the case of Bajaj Auto, the good showing of the Pulsar has seen its share move up to 50 per cent from 43 per cent a little over a year ago.
“These figures clearly show that we are on track and being driven by a good, robust brand strategy,” Mr Bajaj said. Monthly sales of the Pulsar are a little over 75,000 units today compared with barely 35,000 bikes in 2008-09.
Indications are that the share of the overall commuter category could reduce even further, though very gradually, from the current 82 per cent level. Customers are increasingly showing a preference for sports bikes and scooters. Clearly, the rules of the game are changing rapidly in the two-wheeler space.
Bajaj Auto revs up for next growth surge
Bajaj Auto, which has had a heady run with the Pulsar and Discover motorcycles, is now preparing the groundwork for the next phase of growth.
“We are looking at a fresh onslaught of products which will keep our growth momentum going. Will it be a new Pulsar or Discover? Or will it be something out of the ordinary? I really have no answers at this point but do know that an aggressive strategy is being worked out,” Mr Rajiv Bajaj, Managing Director, told Business Line.
It remains to be seen, though, whether the company will take a detour from its twin brand focus, which has worked wonders in terms of big numbers and doubling market share in a brief span of time.
The Pulsar and Discover are clocking monthly volumes of over 2,00,000 units. In fact, the more recently launched Discover 150 has spawned a new product category in the form of the sporty commuter segment.
“The next step is to increase volumes of these two brands to levels of 2,50,000 to 3,00,000 units a month. We are confident that this can be done in the coming months,” Mr Bajaj said.
From the company's point of view, the most heartening news is that it finally has a strong foothold in the commuter segment where Hero Honda is the market leader. The fact that the Discover brand has overtaken the Passion and is now second to the Splendor has also been cause for cheer.
Sports segment scores
These changing dynamics have also had their impact in the two-wheeler sector. For instance, the overall commuter motorcycle segment accounted for nearly 86 per cent of the industry in 2008-09 but has since fallen to 82 per cent in the first quarter of this fiscal.
Despite this shrinkage, Bajaj Auto has seen its own share in the commuter category increase from 25 per cent to 30 per cent in this time period. According to Mr Bajaj, the Discover 100 and 150 have clearly played a big role in making this happen with monthly sales of nearly 1.5 lakh units.
Likewise, the share of the sports segment has increased from the level of 14 per cent in FY'09 to 18 per cent in April-June 2010. In the case of Bajaj Auto, the good showing of the Pulsar has seen its share move up to 50 per cent from 43 per cent a little over a year ago.
“These figures clearly show that we are on track and being driven by a good, robust brand strategy,” Mr Bajaj said. Monthly sales of the Pulsar are a little over 75,000 units today compared with barely 35,000 bikes in 2008-09.
Indications are that the share of the overall commuter category could reduce even further, though very gradually, from the current 82 per cent level. Customers are increasingly showing a preference for sports bikes and scooters. Clearly, the rules of the game are changing rapidly in the two-wheeler space.
“We are looking at a fresh onslaught of products which will keep our growth momentum going. Will it be a new Pulsar or Discover? Or will it be something out of the ordinary? I really have no answers at this point but do know that an aggressive strategy is being worked out,” Mr Rajiv Bajaj, Managing Director, told Business Line.
It remains to be seen, though, whether the company will take a detour from its twin brand focus, which has worked wonders in terms of big numbers and doubling market share in a brief span of time.
The Pulsar and Discover are clocking monthly volumes of over 2,00,000 units. In fact, the more recently launched Discover 150 has spawned a new product category in the form of the sporty commuter segment.
“The next step is to increase volumes of these two brands to levels of 2,50,000 to 3,00,000 units a month. We are confident that this can be done in the coming months,” Mr Bajaj said.
From the company's point of view, the most heartening news is that it finally has a strong foothold in the commuter segment where Hero Honda is the market leader. The fact that the Discover brand has overtaken the Passion and is now second to the Splendor has also been cause for cheer.
Sports segment scores
These changing dynamics have also had their impact in the two-wheeler sector. For instance, the overall commuter motorcycle segment accounted for nearly 86 per cent of the industry in 2008-09 but has since fallen to 82 per cent in the first quarter of this fiscal.
Despite this shrinkage, Bajaj Auto has seen its own share in the commuter category increase from 25 per cent to 30 per cent in this time period. According to Mr Bajaj, the Discover 100 and 150 have clearly played a big role in making this happen with monthly sales of nearly 1.5 lakh units.
Likewise, the share of the sports segment has increased from the level of 14 per cent in FY'09 to 18 per cent in April-June 2010. In the case of Bajaj Auto, the good showing of the Pulsar has seen its share move up to 50 per cent from 43 per cent a little over a year ago.
“These figures clearly show that we are on track and being driven by a good, robust brand strategy,” Mr Bajaj said. Monthly sales of the Pulsar are a little over 75,000 units today compared with barely 35,000 bikes in 2008-09.
Indications are that the share of the overall commuter category could reduce even further, though very gradually, from the current 82 per cent level. Customers are increasingly showing a preference for sports bikes and scooters. Clearly, the rules of the game are changing rapidly in the two-wheeler space.
Two-wheelers morphing out of their socialist utility shadow
The days of getting 30 kilos of wheat from the ration shop in a much used sack on your dependable Bajaj scooter are long gone. Today, the slow transition from low powered scooters to status symbol bikes has come full circle and the scooter has become a symbol of chic and fashion too. Girls in urban Indian society who till 10 years ago were demurely moving into tank tops and jeans have now become blasé about such style statements and would want a personal scooty of their own to zip around with boyfriends who lovingly caress the pillion seat with their behinds.
Scooters, heavy bikes and also cruiser bikes number greatly in the urban and suburban roads of India and are neck to neck in small towns with cars. Companies such as Mahindra Scooters and Harley Davidson India have repeatedly tried to gain consumer mind recall with their unique positioning. Harley Davidson, a brand, which is firmly etched with the vision of biker leather and long, deserted highways, has been trying to creep into the other areas of consumerism.
However, Mahindra Scooters has remained steadfastly onto the positioning of fun scooters, which are easy to ride and do not pinch your pocket or your time during servicing. They have also been positioned as being tough products, which can go to Leh and come back.
The product, company and operations have been continually successful, as the company, under the successful leadership of Sulaja Firodia Motwani has worked extensively on the products, designs and technology along with the advertising and marketing of the product . Slowly and gradually, the product has made inroads into the hearts of the average Indian from all kinds of economic profiles.
In comparison, Bajaj Scooters gave up manufacturing scooters and declared that scooters do not sell any more. However, Mahindra Scooters are doing very well and looks like they will continue to do so.
This has resulted from their foolproof research into the target segment and execution .In fact, the same reason Bajaj has given up.
Scooters, heavy bikes and also cruiser bikes number greatly in the urban and suburban roads of India and are neck to neck in small towns with cars. Companies such as Mahindra Scooters and Harley Davidson India have repeatedly tried to gain consumer mind recall with their unique positioning. Harley Davidson, a brand, which is firmly etched with the vision of biker leather and long, deserted highways, has been trying to creep into the other areas of consumerism.
However, Mahindra Scooters has remained steadfastly onto the positioning of fun scooters, which are easy to ride and do not pinch your pocket or your time during servicing. They have also been positioned as being tough products, which can go to Leh and come back.
The product, company and operations have been continually successful, as the company, under the successful leadership of Sulaja Firodia Motwani has worked extensively on the products, designs and technology along with the advertising and marketing of the product . Slowly and gradually, the product has made inroads into the hearts of the average Indian from all kinds of economic profiles.
In comparison, Bajaj Scooters gave up manufacturing scooters and declared that scooters do not sell any more. However, Mahindra Scooters are doing very well and looks like they will continue to do so.
This has resulted from their foolproof research into the target segment and execution .In fact, the same reason Bajaj has given up.
Hero Honda keen to set up facility in Himachal
Shimla, Aug 19 (IANS) Hero Honda, the world’s largest two-wheeler manufacturer, is keen to set up a manufacturing unit in Himachal Pradesh, a minister said here Thursday.
“Hero Honda has shown interest in setting up its manufacturing unit with an outlay of Rs.2,200 crore,” Industries Minister Kishan Kapoor said in a written reply in the assembly.
He said a team of officials of the company had visited the state in June this year to finalise the land for the facility.
“We are awaiting formal investment proposal for the company,” he added.
Later talking to IANS, Kapoor said the company officials had identified 1,500 bighas (one bigha is 0.4 hectare) near Nalagarh town in Solan district.
“It is private land and the company on its own has identified it,” the minister said.
The company would also set up its auxiliary units along with the main unit, he added.
This will be the company’s fourth unit in the country. It has two units in Gurgaon, Haryana, and another in Haridwar, Uttarakhand.
Industry sources said the company is keen to set up its fourth unit in Himachal Pradesh as it is located close to its Haridwar facility. Moreover, the company could enjoy several benefits like cheaper and sufficient electricity.
Hero Honda is a joint venture between the Hero Group of India and Honda of Japan.
“Hero Honda has shown interest in setting up its manufacturing unit with an outlay of Rs.2,200 crore,” Industries Minister Kishan Kapoor said in a written reply in the assembly.
He said a team of officials of the company had visited the state in June this year to finalise the land for the facility.
“We are awaiting formal investment proposal for the company,” he added.
Later talking to IANS, Kapoor said the company officials had identified 1,500 bighas (one bigha is 0.4 hectare) near Nalagarh town in Solan district.
“It is private land and the company on its own has identified it,” the minister said.
The company would also set up its auxiliary units along with the main unit, he added.
This will be the company’s fourth unit in the country. It has two units in Gurgaon, Haryana, and another in Haridwar, Uttarakhand.
Industry sources said the company is keen to set up its fourth unit in Himachal Pradesh as it is located close to its Haridwar facility. Moreover, the company could enjoy several benefits like cheaper and sufficient electricity.
Hero Honda is a joint venture between the Hero Group of India and Honda of Japan.
Yamaha targets more growth
Japanese two-wheeler major Yamaha today said it aims to enhance India’s share in its global salesto 10 per cent within the next 3-4 years, after slowing demand worldwide caused the company to post a net loss of 216.15 billion yen (about ` 11,678 crore) in 2009.
Yamaha sold about 58.5 lakh unit globally last year, but is a marginal player in the 94 lakh units Indian two wheeler market. It sold just 2.2 lakh units in India in 2009. But now aims to sell 10 lakh units in the next 3-4 years.
To achieve this objective, it plans to invest more meney on launching new models and expending its sales network. As part of the move, the firm’s wholly-owned subsidiary, India Yamaha Motor, Today launched Three commuter segment bikes, with a price tag of ` 47,000- `52,000 (Ex-showroom, Delhi).
Yamaha sold about 58.5 lakh unit globally last year, but is a marginal player in the 94 lakh units Indian two wheeler market. It sold just 2.2 lakh units in India in 2009. But now aims to sell 10 lakh units in the next 3-4 years.
To achieve this objective, it plans to invest more meney on launching new models and expending its sales network. As part of the move, the firm’s wholly-owned subsidiary, India Yamaha Motor, Today launched Three commuter segment bikes, with a price tag of ` 47,000- `52,000 (Ex-showroom, Delhi).
Harley-Davidson 'hogs' ride into India
Harley-Davidson ride into India AFP/File
NEW DELHI (AFP) – Iconic motorbike maker Harley-Davidson is revving up to go full throttle on India's famously potholed roads.
The big-engine bike manufacturer has opened its first three dealerships and is planning to launch two more this year in the country of 1.2 billion people where motorcycles are far and away the most popular transport.
The Milwaukee-based firm, which has been battling weakening US sales, is hoping to exploit what it sees as a virgin market for its heavyweight bikes in the world's second-largest two-wheeler market after China.
"We see this incredible motorcycling culture here that is waiting for this new category of heavyweight motorcycles," Anoop Prakash, managing director of Harley-Davidson India, who fell in love with the bikes when he was a US marine.
But the bulky bikes -- known as hogs to loyal fans -- won't come cheap.
The range of 12 two-wheelers start at 695,000 rupees (15,000 dollars) for the least expensive model and range up to 3.5 million rupees -- double the US price -- due to import duties.
Harley-Davidson doesn't expect a rush of orders in India where the average cost of a motorbike -- seen by most buyers as a transitional vehicle between a bicycle and a car -- is around 1,500 dollars.
But the company hopes as luxury car sales boom in increasingly affluent India so will the market for its snorting high-end bikes which boast 883cc to 1550cc engines.
"We feel there's great demand for global brands here," Prakash told AFP.
"This bike is my boyhood dream," said Umesh Anand, 47, a company chief executive who bought a monster wide-seated Heritage Soft Tail Classic last week at the Harley-Davidson's New Delhi glitzy showroom.
The firm already operates in over 70 countries and aims to boost international sales to 40 percent of revenues by 2014 from 33 percent now.
But India is the only country where it is building its own dealership market right away rather than piggybacking onto other distributors, Rod Copes, Harley-Davidson senior international sales vice president, told AFP.
"Going into India this way is a real vote of confidence in what we believe is the market in India," said Copes.
The India venture is key for the company which is in the throes of a massive restructuring to cut costs and increase profitability.
Managing director Prakash is reluctant to name sales targets but he says he has big plans for the company in India where he has tied up with the country's second-largest lender, ICICI Bank, to offer buyers financing.
He also plans to set up Harley Owners Groups -- whence the hog moniker -- famed in the United States for members riding and partying together while swapping biking tales.
Harley-Davidson's competition on Indian roads in the cult bike stakes is the Royal Enfield Bullet -- known as the Thumper for its signature thud-thud four-stroke engine that has been cruising Indian roads for over half a century.
But the engine power of the Royal Enfield -- and its cost -- is much lower. The Royal Enfield ranges in price from 90,000 rupees to 150,000 rupees.
"The Royal Enfield was the first cruiser (in India) but I think at 500cc and below it is an entire different experience from our higher performance machine -- there's room for both of us," said Prakash.
Harley-Davidson says it believes its bikes can easily stand up to the rigours of India's unforgiving roads which are some of most bone-jarring and congested in the world with an eclectic mix of transport from cars to camels, trucks and elephants.
"I've ridden these motorcycles on roads that could break trucks but we keep riding them," said Harley Davidson Indian service manager John McEnaney.
Still, Royal Enfield believes it has an edge over Harley Davidson in the servicing department.
"You can find yourself in any corner of India and there will be a mechanic who can put your Royal Enfield together," Royal Enfield product marketing manager Praveen Prakash told AFP.
NEW DELHI (AFP) – Iconic motorbike maker Harley-Davidson is revving up to go full throttle on India's famously potholed roads.
The big-engine bike manufacturer has opened its first three dealerships and is planning to launch two more this year in the country of 1.2 billion people where motorcycles are far and away the most popular transport.
The Milwaukee-based firm, which has been battling weakening US sales, is hoping to exploit what it sees as a virgin market for its heavyweight bikes in the world's second-largest two-wheeler market after China.
"We see this incredible motorcycling culture here that is waiting for this new category of heavyweight motorcycles," Anoop Prakash, managing director of Harley-Davidson India, who fell in love with the bikes when he was a US marine.
But the bulky bikes -- known as hogs to loyal fans -- won't come cheap.
The range of 12 two-wheelers start at 695,000 rupees (15,000 dollars) for the least expensive model and range up to 3.5 million rupees -- double the US price -- due to import duties.
Harley-Davidson doesn't expect a rush of orders in India where the average cost of a motorbike -- seen by most buyers as a transitional vehicle between a bicycle and a car -- is around 1,500 dollars.
But the company hopes as luxury car sales boom in increasingly affluent India so will the market for its snorting high-end bikes which boast 883cc to 1550cc engines.
"We feel there's great demand for global brands here," Prakash told AFP.
"This bike is my boyhood dream," said Umesh Anand, 47, a company chief executive who bought a monster wide-seated Heritage Soft Tail Classic last week at the Harley-Davidson's New Delhi glitzy showroom.
The firm already operates in over 70 countries and aims to boost international sales to 40 percent of revenues by 2014 from 33 percent now.
But India is the only country where it is building its own dealership market right away rather than piggybacking onto other distributors, Rod Copes, Harley-Davidson senior international sales vice president, told AFP.
"Going into India this way is a real vote of confidence in what we believe is the market in India," said Copes.
The India venture is key for the company which is in the throes of a massive restructuring to cut costs and increase profitability.
Managing director Prakash is reluctant to name sales targets but he says he has big plans for the company in India where he has tied up with the country's second-largest lender, ICICI Bank, to offer buyers financing.
He also plans to set up Harley Owners Groups -- whence the hog moniker -- famed in the United States for members riding and partying together while swapping biking tales.
Harley-Davidson's competition on Indian roads in the cult bike stakes is the Royal Enfield Bullet -- known as the Thumper for its signature thud-thud four-stroke engine that has been cruising Indian roads for over half a century.
But the engine power of the Royal Enfield -- and its cost -- is much lower. The Royal Enfield ranges in price from 90,000 rupees to 150,000 rupees.
"The Royal Enfield was the first cruiser (in India) but I think at 500cc and below it is an entire different experience from our higher performance machine -- there's room for both of us," said Prakash.
Harley-Davidson says it believes its bikes can easily stand up to the rigours of India's unforgiving roads which are some of most bone-jarring and congested in the world with an eclectic mix of transport from cars to camels, trucks and elephants.
"I've ridden these motorcycles on roads that could break trucks but we keep riding them," said Harley Davidson Indian service manager John McEnaney.
Still, Royal Enfield believes it has an edge over Harley Davidson in the servicing department.
"You can find yourself in any corner of India and there will be a mechanic who can put your Royal Enfield together," Royal Enfield product marketing manager Praveen Prakash told AFP.
Bajaj gears up to launch high-end Pulsars next year
Bajaj Auto, the highest valued two-wheeler company, will re-enter the segment which gave it the identity of a performance motorcycle maker, with the launch of a range of high-end Pulsars planned for next year.
New model launches in the higher engine capacity segment will be the first from the company after a gap of more than three years. Bajaj had shifted focus from this segment to low capacity commuter motorcycles, to address Hero Honda’s dominance in that segment.
The Pulsar range starts at 135cc and goes up to 220cc, with four models. It is the most high-margin brand for Bajaj Auto, which is also India’s second largest two-wheeler company. The range constitutes about 40 per cent of the company’s total monthly sales.
Bajaj says it’s on-target for selling a million units of the Pulsar in this financial year, aided primarily by the entry-level 135cc.
Price factor
The company states that volumes of high-end bikes in India, generally above 200cc in engine capacity, are not as big as some of the 150cc range, due to high price tags. It is working on solutions for the price.
“When we reduced the price of the Pulsar 220, we received tremendous response. This means if a power bike is offered at an affordable price, buyers will not shy away, despite having to compromise on issues like fuel efficiency,” said the Bajaj official.
The Pulsar 220 was first launched in the middle of 2007, at close to Rs 82,000. The company later brought it down to Rs 70,000, with changes to engine technology. Bajaj is presently selling 4,500 units a month of the bike; it has a month’s waiting period.
Although finer details of the new range of Pulsars are yet to be made public, market sources say Bajaj is developing a 250cc one, with a new engine. This bike will compete against Kawasaki’s Ninja in engine power but should be available at less than half the price. The Ninja, assembled at the Chakan facility of Bajaj, is priced at Rs 2.8 lakh.
Meanwhile, Bajaj has phased out the Discover 135 motorcycle, succeeded by the more powerful Discover 150, at a price tag almost on par with the outgoing model.
New model launches in the higher engine capacity segment will be the first from the company after a gap of more than three years. Bajaj had shifted focus from this segment to low capacity commuter motorcycles, to address Hero Honda’s dominance in that segment.
The Pulsar range starts at 135cc and goes up to 220cc, with four models. It is the most high-margin brand for Bajaj Auto, which is also India’s second largest two-wheeler company. The range constitutes about 40 per cent of the company’s total monthly sales.
Bajaj says it’s on-target for selling a million units of the Pulsar in this financial year, aided primarily by the entry-level 135cc.
Price factor
The company states that volumes of high-end bikes in India, generally above 200cc in engine capacity, are not as big as some of the 150cc range, due to high price tags. It is working on solutions for the price.
“When we reduced the price of the Pulsar 220, we received tremendous response. This means if a power bike is offered at an affordable price, buyers will not shy away, despite having to compromise on issues like fuel efficiency,” said the Bajaj official.
The Pulsar 220 was first launched in the middle of 2007, at close to Rs 82,000. The company later brought it down to Rs 70,000, with changes to engine technology. Bajaj is presently selling 4,500 units a month of the bike; it has a month’s waiting period.
Although finer details of the new range of Pulsars are yet to be made public, market sources say Bajaj is developing a 250cc one, with a new engine. This bike will compete against Kawasaki’s Ninja in engine power but should be available at less than half the price. The Ninja, assembled at the Chakan facility of Bajaj, is priced at Rs 2.8 lakh.
Meanwhile, Bajaj has phased out the Discover 135 motorcycle, succeeded by the more powerful Discover 150, at a price tag almost on par with the outgoing model.
Enfield to double capacity to 1 lakh by 2012
The Chennai-based Royal Enfield, the makers of the iconic Bullet, today announced that it will double its capacity to 1 lakh units per annum by the turn of 2012 to meet its rapidly growing demand.
The company will be investing nearly Rs 80 crore to ramp up its capacity at its Chennai plant in a phased manner, Royal Enfield Marketing and Sales Head Shaji Koshy said, adding the company has already almost doubled its capacity from 28,000 units in 2007-08 to 52,000 units in 2009.
The Siddharth Lal-promoted company will be jacking up its capacity to over 60,000 units this calendar year, while by 2012, the installed capacity will be 1 lakh units, Koshy said, while opening its 11th Brand Store in the country at Nerul in New Mumbai.
Koshy further said since the introduction of the Classic models across the company's brand portfolio early this year, there has been a massive jump in demand, which the company is unable to meet despite operating at above the installed capacity.
"There is a long waiting period of six to eight months now for all the models," Koshy said, adding the waiting period is so long that we are forced to return the booking amount.
"The Brand Stores are our way acknowledging the importance of consumers of this city, as well as our way to let our customers experience the unique brand. The basic purpose of the Brand Store is to help our customers build a community around the brand and also make our stores a one-stop motorcycling destination," said Koshy.
He further informed that all the brand stores are owned and operated by the company.
The first Brand Store was opened in Hyderabad way back in 2004 and since then the company has opened 10 more in cities like Chennai, Jaipur, Bangalore, Mumbai (Bandra and New Mumbai), Coimbatore, Kochi, and Lucknow among others.
On the success of the Brand Stores, Koshy said 10 per cent of the overall sales come from these stores now. The New Delhi-based Eicher Motors-owned Royal Enfield has 176 dealers across the country now.
Significantly, the demand is growing not in the traditional markets of Punjab and Kerala but in the Metros like Chennai and Bangalore, the marketing head said.
Enfield currently exports to 30 countries, including to Britain, where the company was originated in 1906, and the US and the EU, among others. Soon they will be entering the land of Hardly Davidson, California in the US, too, Koshy said.
On the entry of the world famous luxury bike maker Harly Davidson in the domestic market, Koshy quipped: "We are a loner; we want somebody to give us company. The entry of premium bikes will only widen the market."
The company also flagged of the Tour NH 17 Ride, under which 23 Enfield riders will traverse the 1,400-km way from Mumbai to Goa in six days. The flag-off ceremony was graced by the New Mumbai mayor Sagar Naik and city police commissioner Ahmed Javed
The company will be investing nearly Rs 80 crore to ramp up its capacity at its Chennai plant in a phased manner, Royal Enfield Marketing and Sales Head Shaji Koshy said, adding the company has already almost doubled its capacity from 28,000 units in 2007-08 to 52,000 units in 2009.
The Siddharth Lal-promoted company will be jacking up its capacity to over 60,000 units this calendar year, while by 2012, the installed capacity will be 1 lakh units, Koshy said, while opening its 11th Brand Store in the country at Nerul in New Mumbai.
Koshy further said since the introduction of the Classic models across the company's brand portfolio early this year, there has been a massive jump in demand, which the company is unable to meet despite operating at above the installed capacity.
"There is a long waiting period of six to eight months now for all the models," Koshy said, adding the waiting period is so long that we are forced to return the booking amount.
"The Brand Stores are our way acknowledging the importance of consumers of this city, as well as our way to let our customers experience the unique brand. The basic purpose of the Brand Store is to help our customers build a community around the brand and also make our stores a one-stop motorcycling destination," said Koshy.
He further informed that all the brand stores are owned and operated by the company.
The first Brand Store was opened in Hyderabad way back in 2004 and since then the company has opened 10 more in cities like Chennai, Jaipur, Bangalore, Mumbai (Bandra and New Mumbai), Coimbatore, Kochi, and Lucknow among others.
On the success of the Brand Stores, Koshy said 10 per cent of the overall sales come from these stores now. The New Delhi-based Eicher Motors-owned Royal Enfield has 176 dealers across the country now.
Significantly, the demand is growing not in the traditional markets of Punjab and Kerala but in the Metros like Chennai and Bangalore, the marketing head said.
Enfield currently exports to 30 countries, including to Britain, where the company was originated in 1906, and the US and the EU, among others. Soon they will be entering the land of Hardly Davidson, California in the US, too, Koshy said.
On the entry of the world famous luxury bike maker Harly Davidson in the domestic market, Koshy quipped: "We are a loner; we want somebody to give us company. The entry of premium bikes will only widen the market."
The company also flagged of the Tour NH 17 Ride, under which 23 Enfield riders will traverse the 1,400-km way from Mumbai to Goa in six days. The flag-off ceremony was graced by the New Mumbai mayor Sagar Naik and city police commissioner Ahmed Javed
Market upswing surprises TVS Motor
To invest Rs 100 cr to increase capacity.
Mr Venu Srinivasan
M. Ramesh
Chennai, Aug. 10
For Mr Venu Srinivasan it is “a better problem to have”.
Caught by surprise at the market upswing, the company (indeed like many others in the automotive industry) is grappling with the problem of getting its supply chain pump in more.
“Who would have expected this kind of market growth,” the Chairman and Managing Director of TVS Motor Company, told Business Line today.
In July, the company produced the highest ever number of two wheelers — 1,65,000 — but the record would be broken by August.
Come the year-end, TVS Motor will be spot-on, or at least pretty close to, its dream sales figure of one million motorcycles. “We are producing 10,000 WeGos (a month),” he said, referring to the 110-cc gearless scooters that the company launched last November. “We should be doing at least 15,000.” Similarly, the company is “stuck with 3,000” on its three-wheelers, whereas the market pull is for 5,000.
Supply chain ramp up
The issue the company is facing is this: sensing the market upswing, TVS Motor is investing Rs 100 crore in expansion, taking the total capacity from twomillion to three million. But how many of its tier-II and tier-III suppliers can ramp up?
“For about 18 months, they had no business. Now, they have to run a race,” admits Mr Srinivasan.. TVS Motor has to try all the tricks in the book to sprint with the market. For instance, “we air-freighted 2-3 (types of) components for two months,” from Taiwan and China.
All this has resulted in “rationing of products” to dealers, which “is neither good for the dealer nor for the manufacturer, because all your selling skills go away,” Mr Srinivasan said.
But he is convinced that the supply chain will also ramp up. The problem will get resolved in August and in the following months, the company will ask its dealers to stock up for the festival season.
TVS Credit
It is here that Mr Srinivasan sees a big role for the group's new finance company, TVS Credit Services, because “taking along with you your own finance company significantly eases the ability of the customer to buy.”
But aren't there enough financiers in the market already? True, says Mr Srinivasan, but a captive finance company could structure funding around customers' needs. For instance, if a dealer needs to increase his floor stock in a busy market — here is the finance. Come a dull season when other financiers are not keen, “we can open the tap.” Mr Srinivasan is convinced that the two-wheeler market would achieve a steady-state growth rate of 15 per cent. The happening development of public transport-spruce up — metro rails — will not, according to him, dampen the two-wheeler market. “There is a huge demand from semi-urban and rural areas,” he said.
Hence the Rs 100-crore expansion in capacity.
Asked if TVS Motor would put up a greenfield facility, Mr Srinivasan said, “In India, a greenfield site is out of question.”
Mr Venu Srinivasan
M. Ramesh
Chennai, Aug. 10
For Mr Venu Srinivasan it is “a better problem to have”.
Caught by surprise at the market upswing, the company (indeed like many others in the automotive industry) is grappling with the problem of getting its supply chain pump in more.
“Who would have expected this kind of market growth,” the Chairman and Managing Director of TVS Motor Company, told Business Line today.
In July, the company produced the highest ever number of two wheelers — 1,65,000 — but the record would be broken by August.
Come the year-end, TVS Motor will be spot-on, or at least pretty close to, its dream sales figure of one million motorcycles. “We are producing 10,000 WeGos (a month),” he said, referring to the 110-cc gearless scooters that the company launched last November. “We should be doing at least 15,000.” Similarly, the company is “stuck with 3,000” on its three-wheelers, whereas the market pull is for 5,000.
Supply chain ramp up
The issue the company is facing is this: sensing the market upswing, TVS Motor is investing Rs 100 crore in expansion, taking the total capacity from twomillion to three million. But how many of its tier-II and tier-III suppliers can ramp up?
“For about 18 months, they had no business. Now, they have to run a race,” admits Mr Srinivasan.. TVS Motor has to try all the tricks in the book to sprint with the market. For instance, “we air-freighted 2-3 (types of) components for two months,” from Taiwan and China.
All this has resulted in “rationing of products” to dealers, which “is neither good for the dealer nor for the manufacturer, because all your selling skills go away,” Mr Srinivasan said.
But he is convinced that the supply chain will also ramp up. The problem will get resolved in August and in the following months, the company will ask its dealers to stock up for the festival season.
TVS Credit
It is here that Mr Srinivasan sees a big role for the group's new finance company, TVS Credit Services, because “taking along with you your own finance company significantly eases the ability of the customer to buy.”
But aren't there enough financiers in the market already? True, says Mr Srinivasan, but a captive finance company could structure funding around customers' needs. For instance, if a dealer needs to increase his floor stock in a busy market — here is the finance. Come a dull season when other financiers are not keen, “we can open the tap.” Mr Srinivasan is convinced that the two-wheeler market would achieve a steady-state growth rate of 15 per cent. The happening development of public transport-spruce up — metro rails — will not, according to him, dampen the two-wheeler market. “There is a huge demand from semi-urban and rural areas,” he said.
Hence the Rs 100-crore expansion in capacity.
Asked if TVS Motor would put up a greenfield facility, Mr Srinivasan said, “In India, a greenfield site is out of question.”
Yamaha’s triple joy for commuters
Japanese bike maker Yamaha recently launched three new bikes for the mass Indian market priced between Rs 47,000 and Rs 52,000. The three motorcycles named SZ, SZ-X and YBR 125 have 123cc and 153cc engines, and mark the companies first step to reach out to the middle-class India.
“We were lagging behind in this segment and there have been issues regarding mileage with our bikes. But here we are offering bikes that can give an average of 71.4 km per litre(YBR-125) and 62.6 km per litre(SZ series),” Yukimine Tsuji, chief executive, Yamaha Motor India said.
Point noted, the company’s previous offerings — Alba and the Gladiator — struggled to make a mark in the segment, and despite Yamaha’s efforts, commuters preferred the Hero Honda Splendor. The biggest drawback for Yamaha bikes were low mileage, and then the lacklustre designing.
Yamaha churns out around 50 million units every year, of which 10 million are sold in India, and the automaker sees the three bikes as the “game changers” in volume segment.
“India is the most important market for us and we realised we need to address the segment who commute everyday for their work and are looking for a vehicle that has comfortable seating and excellent mileage,” Tsuji said.
The SZ and SZ-X, it says, have been designed keeping performance and styling in mind and targets young bikers, looking for “something extra”. The YBR 125, on the other hand, Yamaha says, has been designed for daily commuting, keeping executive segment customers who want a commuter bike which also offers a comfortable ride.
But how attractive will these new offerings be remains to be seen, especially when the YBR looks at lot similar to the “failed” Alba motorcycle, and the SZ borrows its headlamps from the FZ-S. Their only standing ground will be the mileage, and how well the swing arm suspension and the drum brakes perform on the bumpy Indian roads.
“We were lagging behind in this segment and there have been issues regarding mileage with our bikes. But here we are offering bikes that can give an average of 71.4 km per litre(YBR-125) and 62.6 km per litre(SZ series),” Yukimine Tsuji, chief executive, Yamaha Motor India said.
Point noted, the company’s previous offerings — Alba and the Gladiator — struggled to make a mark in the segment, and despite Yamaha’s efforts, commuters preferred the Hero Honda Splendor. The biggest drawback for Yamaha bikes were low mileage, and then the lacklustre designing.
Yamaha churns out around 50 million units every year, of which 10 million are sold in India, and the automaker sees the three bikes as the “game changers” in volume segment.
“India is the most important market for us and we realised we need to address the segment who commute everyday for their work and are looking for a vehicle that has comfortable seating and excellent mileage,” Tsuji said.
The SZ and SZ-X, it says, have been designed keeping performance and styling in mind and targets young bikers, looking for “something extra”. The YBR 125, on the other hand, Yamaha says, has been designed for daily commuting, keeping executive segment customers who want a commuter bike which also offers a comfortable ride.
But how attractive will these new offerings be remains to be seen, especially when the YBR looks at lot similar to the “failed” Alba motorcycle, and the SZ borrows its headlamps from the FZ-S. Their only standing ground will be the mileage, and how well the swing arm suspension and the drum brakes perform on the bumpy Indian roads.
Automobile sales climb new peak
Driven by record sales in passenger car and two-wheeler segments, the Indian automobile industry posted its best ever monthly sales of 12,37,461 units in July, beating the previous high achieved in March 2010.
According to the figures released by the Society of Indian Automobile Manufacturers (Siam) today, automobile sales grew by 31.50 per cent to 12,37,461 units in July compared to 9,41,070 units in the same month last year.
“The growth in the automobile industry during July was mainly due to good growth in the passenger car segment, scooters and mopeds as new model launches, penetration into rural markets and availability of finances continue to boost sales,” Siam director general, Mr Vishnu Mathur, told reporters here.
He said the previous best ever sales were achieved in March this year with 12,26,944 units.
Passenger car sales in July were also the best ever attained in a month at 1,58,764 units, beating the previous high of 1,55,600 units in March. The sales jumped by 37.95 per cent over 1,15,084 units in July 2009.
Car market leader Maruti Suzuki's domestic sales grew by 26.83 per cent to 76,111 units in July, while rival Hyundai Motor India also registered 24.22 per cent growth at 28,811 units. Tata Motors' sales jumped by 69.31 per cent to 24,613 units during the month.
Mr Mathur also said the total two-wheeler sales achieved in July at 9,38,514 units were the all-time high, surpassing the previous record of 9,36,555 in May. Sales of two-wheelers were up 30.41 per cent over 7,19,656 units in July 2009.
“Availability of finance and hardening of interest rates will be challenges, which we are seeing on the horizon now, in the months to come,” he said.
Motorcycle sales in India during July also went up by 30.09 per cent to 7,10,621 units compared to 5,46,233 units in the year-ago period.
The country's largest motorcycle maker Hero Honda posted a growth rate of 13.96 per cent in sales at 3,89,795 units in July 2010 while rival Bajaj Auto saw sales soaring by 76.01 per cent to 1,92,138 units.
While Chennai-based TVS Motor Company posted a 37.51 per cent growth at 43,888 units in July, Honda Motorcycle & Scooter India (HMSI) saw its bike sales jumping by 43.30 per cent to 55,540 units.
In the scooter segment, sales jumped by 35.65 per cent to 1,67,195 units against 1,23,259 units in the year-ago period, Siam said.
HMSI's scooter sales were up by 13.79 per cent at 75,180 units, while TVS Motor's scooter sales grew by 46.06 per cent in July at 38,453 units. Hero Honda's scooter sales jumped by 39.87 per cent to 24,776 units in last month.
The commercial vehicles segment carried forward the upward trend that began in July 2009, with sales in last month going up by 36.99 per cent to 51,481 units from 37,580 units in the year-ago period, according to the latest Siam data.
Light commercial vehicle sales rose 25.28 per cent in July to 26,912 units from 21,481 units. Medium and heavy commercial vehicle sales surged by 52.61 per cent to 24,569 units compared to 16,099 units in the same month last year. Three-wheeler sales during July were up 25.44 per cent at 45,373 units compared to 36,171 units, Siam added.
According to the figures released by the Society of Indian Automobile Manufacturers (Siam) today, automobile sales grew by 31.50 per cent to 12,37,461 units in July compared to 9,41,070 units in the same month last year.
“The growth in the automobile industry during July was mainly due to good growth in the passenger car segment, scooters and mopeds as new model launches, penetration into rural markets and availability of finances continue to boost sales,” Siam director general, Mr Vishnu Mathur, told reporters here.
He said the previous best ever sales were achieved in March this year with 12,26,944 units.
Passenger car sales in July were also the best ever attained in a month at 1,58,764 units, beating the previous high of 1,55,600 units in March. The sales jumped by 37.95 per cent over 1,15,084 units in July 2009.
Car market leader Maruti Suzuki's domestic sales grew by 26.83 per cent to 76,111 units in July, while rival Hyundai Motor India also registered 24.22 per cent growth at 28,811 units. Tata Motors' sales jumped by 69.31 per cent to 24,613 units during the month.
Mr Mathur also said the total two-wheeler sales achieved in July at 9,38,514 units were the all-time high, surpassing the previous record of 9,36,555 in May. Sales of two-wheelers were up 30.41 per cent over 7,19,656 units in July 2009.
“Availability of finance and hardening of interest rates will be challenges, which we are seeing on the horizon now, in the months to come,” he said.
Motorcycle sales in India during July also went up by 30.09 per cent to 7,10,621 units compared to 5,46,233 units in the year-ago period.
The country's largest motorcycle maker Hero Honda posted a growth rate of 13.96 per cent in sales at 3,89,795 units in July 2010 while rival Bajaj Auto saw sales soaring by 76.01 per cent to 1,92,138 units.
While Chennai-based TVS Motor Company posted a 37.51 per cent growth at 43,888 units in July, Honda Motorcycle & Scooter India (HMSI) saw its bike sales jumping by 43.30 per cent to 55,540 units.
In the scooter segment, sales jumped by 35.65 per cent to 1,67,195 units against 1,23,259 units in the year-ago period, Siam said.
HMSI's scooter sales were up by 13.79 per cent at 75,180 units, while TVS Motor's scooter sales grew by 46.06 per cent in July at 38,453 units. Hero Honda's scooter sales jumped by 39.87 per cent to 24,776 units in last month.
The commercial vehicles segment carried forward the upward trend that began in July 2009, with sales in last month going up by 36.99 per cent to 51,481 units from 37,580 units in the year-ago period, according to the latest Siam data.
Light commercial vehicle sales rose 25.28 per cent in July to 26,912 units from 21,481 units. Medium and heavy commercial vehicle sales surged by 52.61 per cent to 24,569 units compared to 16,099 units in the same month last year. Three-wheeler sales during July were up 25.44 per cent at 45,373 units compared to 36,171 units, Siam added.
TVS Motor to re-start twin spark-plug Flame
TVS Motor Company will bring back the Flame, the 125 cc motorcycle that was at the centre of a patent litigation between the company and Bajaj Auto two years ago.
TVS Motor's Chairman and Managing Director, Mr Venu Srinivasan, told Business Line on Tuesday that the company has been selling “small volumes” of the Flame.
TVS Motor is now in the process of switching back to the ‘twin spark-plug' version of the motorcycle. Production is set to start soon.
In 2008, rival two-wheeler manufacturer Bajaj Auto Ltd sued TVS Motor claiming “patent infringement”, holding that the Flame motorcycle had a twin spark plug — a feature that Bajaj said it owned the patent for.
Legal battle
In the the first round of the legal battle, the Madras High Court restrained TVS Motor from selling motorcycles with twin spark-plugs.
TVS won in its appeal in the Supreme Court, but in the meantime, the company had begun selling the Flame motorcycle with single spark-plug.
Following the favourable Supreme Court judgment of September last year, TVS Motor announced the re-launch of twin spark-plug Flame.
Making a point
Perhaps because the market in 2009 was rather lacklustre, it looked like TVS Motor's interest was more to make a point in the market that it had won the patent litigation, and therefore was above reproach.
The company now plans to bring back the Flame with a bang.
“We are clearing the stocks of the single spark-plug version. Production of twin spark-plug Flame will begin this month,” he said.
The Flame will occupy a key slot in TVS Motor's product portfolio.
The company has a range of products in the 100 cc segment (Star, Max 100). Last year, it launched the 110 cc Jive.
As of now, the Jive is selling around 8,000 units a month and Mr Srinivasan is confident of ramping it up to 12,000 by September and to 15,000 during the ‘season' (October-November).
Mopeds are selling well, too, which is a bit of a surprise because it was generally believed that the tiny two-wheeler was a ‘sunset' product.
This year, TVS Motor's moped sales will be up at least 20 per cent.
The company has budgeted to sell 650,000 mopeds this year.
Outside South
“The entire growth of 20 per cent is coming from outside South,” Mr Srinivasan said. This is against the widespread belief that mopeds are a ‘southern phenomenon'.
All of a sudden, the mopeds market seems to have picked up in the North and West.
Mr Srinivasan pointed out that the need for the vehicle was common across the country. “It is a doodh-walla, subzi-walla vehicle.”
Marketing
He felt that if the vehicle had not sold well outside the South earlier, it was more due to less-than-adequate marketing.
To a question, he said that mopeds may be lower-margin vehicles, but their production does occupy significant capacities because mopeds' production lines are unique.
TVS Motor's Chairman and Managing Director, Mr Venu Srinivasan, told Business Line on Tuesday that the company has been selling “small volumes” of the Flame.
TVS Motor is now in the process of switching back to the ‘twin spark-plug' version of the motorcycle. Production is set to start soon.
In 2008, rival two-wheeler manufacturer Bajaj Auto Ltd sued TVS Motor claiming “patent infringement”, holding that the Flame motorcycle had a twin spark plug — a feature that Bajaj said it owned the patent for.
Legal battle
In the the first round of the legal battle, the Madras High Court restrained TVS Motor from selling motorcycles with twin spark-plugs.
TVS won in its appeal in the Supreme Court, but in the meantime, the company had begun selling the Flame motorcycle with single spark-plug.
Following the favourable Supreme Court judgment of September last year, TVS Motor announced the re-launch of twin spark-plug Flame.
Making a point
Perhaps because the market in 2009 was rather lacklustre, it looked like TVS Motor's interest was more to make a point in the market that it had won the patent litigation, and therefore was above reproach.
The company now plans to bring back the Flame with a bang.
“We are clearing the stocks of the single spark-plug version. Production of twin spark-plug Flame will begin this month,” he said.
The Flame will occupy a key slot in TVS Motor's product portfolio.
The company has a range of products in the 100 cc segment (Star, Max 100). Last year, it launched the 110 cc Jive.
As of now, the Jive is selling around 8,000 units a month and Mr Srinivasan is confident of ramping it up to 12,000 by September and to 15,000 during the ‘season' (October-November).
Mopeds are selling well, too, which is a bit of a surprise because it was generally believed that the tiny two-wheeler was a ‘sunset' product.
This year, TVS Motor's moped sales will be up at least 20 per cent.
The company has budgeted to sell 650,000 mopeds this year.
Outside South
“The entire growth of 20 per cent is coming from outside South,” Mr Srinivasan said. This is against the widespread belief that mopeds are a ‘southern phenomenon'.
All of a sudden, the mopeds market seems to have picked up in the North and West.
Mr Srinivasan pointed out that the need for the vehicle was common across the country. “It is a doodh-walla, subzi-walla vehicle.”
Marketing
He felt that if the vehicle had not sold well outside the South earlier, it was more due to less-than-adequate marketing.
To a question, he said that mopeds may be lower-margin vehicles, but their production does occupy significant capacities because mopeds' production lines are unique.
Govt may sell Scooters India stake to pvt sector
The Ministry of Heavy Industries plans to sell a controlling stake in Scooters India Ltd (SIL) to a private auto manufacturer. The latest thinking comes after its attempted revival of SIL in 1996 proved unsuccessful, with the company sliding back into the red within a few years.
Sources in the Ministry of Heavy Industries and Public Enterprises told Business Line that in a recent Board for Reconstruction of Public Sector Enterprises (BRPSE) meeting it had largely been agreed to sell off around a 74 per cent stake in the Lucknow-based firm to a private sector company and form a joint venture. The Ministry is now expected to seek a Cabinet approval for the proposal in a month.“As part of our share, we will provide around 150 acres near the Lucknow airport and equipment. The thinking in the Government is that auto manufacturing is not a core business area like steel - because the response time to competition is usually slow. Besides, large investments have to be made in new technology to remain competitive,” said the source.
“To make the company attractive for private investment, we will have to clean up the old debts of around Rs 100 crore. Any fresh investment will have to be made by the new partner,” added the source.
Since 2006-07, SIL has been amounting losses every year - with the total adding up to Rs 826.62 crore up till the end of 2009-10. In February, it announced that according to its 2008-09 financial record, its net worth has been eroded due to the total accumulated losses and it has thus been referred to the Board for Industrial and Financial Reconstruction (BIFR). Previously, the company had also been referred to the BIFR in 1996, after which it had shown profits for a few consecutive years. SIL had last reported profits of Rs 17.03 crore in 2005-06. “After its revival at around 2000, it made profits for a few years and seemed to be doing well. But, it subsequently slid back to losses by the end of 2008-09,” said the source. Industry sources have indicated that among the various private players looking to expand their two and three wheelers operations, Mahindra & Mahindra is a big contender for buying out the majority SIL stake
Sources in the Ministry of Heavy Industries and Public Enterprises told Business Line that in a recent Board for Reconstruction of Public Sector Enterprises (BRPSE) meeting it had largely been agreed to sell off around a 74 per cent stake in the Lucknow-based firm to a private sector company and form a joint venture. The Ministry is now expected to seek a Cabinet approval for the proposal in a month.“As part of our share, we will provide around 150 acres near the Lucknow airport and equipment. The thinking in the Government is that auto manufacturing is not a core business area like steel - because the response time to competition is usually slow. Besides, large investments have to be made in new technology to remain competitive,” said the source.
“To make the company attractive for private investment, we will have to clean up the old debts of around Rs 100 crore. Any fresh investment will have to be made by the new partner,” added the source.
Since 2006-07, SIL has been amounting losses every year - with the total adding up to Rs 826.62 crore up till the end of 2009-10. In February, it announced that according to its 2008-09 financial record, its net worth has been eroded due to the total accumulated losses and it has thus been referred to the Board for Industrial and Financial Reconstruction (BIFR). Previously, the company had also been referred to the BIFR in 1996, after which it had shown profits for a few consecutive years. SIL had last reported profits of Rs 17.03 crore in 2005-06. “After its revival at around 2000, it made profits for a few years and seemed to be doing well. But, it subsequently slid back to losses by the end of 2008-09,” said the source. Industry sources have indicated that among the various private players looking to expand their two and three wheelers operations, Mahindra & Mahindra is a big contender for buying out the majority SIL stake
Royal Enfield plans massive ramp up
Indian owned classic Brit bike maker plans to up the production capacity at its Chennai based plant. Will this move mark a change in its fortune?
After the strong demand and the consequent long waiting periods for its new breed of motorcycles, Royal Enfield has revealed plans of upping the capacity at its Chennai plant to almost double its current limit within the span of three years. While the current capacity of the plant rests at 52,000 units a year, the phased ramp up will ensure that 70,000 RE bikes hit the streets in 2011, and the figure is expected to reach 1,00,000 units by the time expansion plans reach their completion in 2013. The move marks a change in fortunes for the Indian-owned Brit bike brand after its new-tech fuel injected and unit construction engines significantly improved emission and reliability levels, which coincided almost perfectly with a newfound and widespread interest in the brand locally and globally. While it all started with the 350cc unit construction twinspark engine on its Thunderbird model, the move towards more modern engines was carried forth with the fuel injected 500cc Bullet Classic late last year. Recently, Royal Enfield's entire lineup was converted to be powered by these two engines, including the venerable Std 350 and Electra models.
After the strong demand and the consequent long waiting periods for its new breed of motorcycles, Royal Enfield has revealed plans of upping the capacity at its Chennai plant to almost double its current limit within the span of three years. While the current capacity of the plant rests at 52,000 units a year, the phased ramp up will ensure that 70,000 RE bikes hit the streets in 2011, and the figure is expected to reach 1,00,000 units by the time expansion plans reach their completion in 2013. The move marks a change in fortunes for the Indian-owned Brit bike brand after its new-tech fuel injected and unit construction engines significantly improved emission and reliability levels, which coincided almost perfectly with a newfound and widespread interest in the brand locally and globally. While it all started with the 350cc unit construction twinspark engine on its Thunderbird model, the move towards more modern engines was carried forth with the fuel injected 500cc Bullet Classic late last year. Recently, Royal Enfield's entire lineup was converted to be powered by these two engines, including the venerable Std 350 and Electra models.
Good rains, new models accelerate auto sales in July
Good rains coupled with positive business sentiment and new models revved up car sales in July. Market leader Maruti Suzuki crossed the one lakh-mark for the second time even as Hyundai Motor India sped past 50,000 units.
“The general business sentiment is buoyant and the normal monsoon is another positive,” said Mr Shashank Srivastava, Chief General Manager, Sales, Maruti. The automaker's local sales were its highest ever at 90,144 units.
Its compact car range comprising the Alto, the Wagon R, the Estilo Zen, the Ritz, the Swift and the A-Star grew 33 per cent to post sales of 64,079 units. The multipurpose options of the Eeco and the Omni reported 86 per cent growth while the sedan segment crossed the 10,000-unit mark. Exports, likewise, were over 10,000 vehicles.
Hyundai's total sales grew 11 per cent to 50,411 units in July of which the domestic market accounted for 28,811 units (growth of 24 per cent) with exports taking up the balance. The drop in international business was largely due to shrinking demand in Europe where scrappage incentive schemes came to an end.
“The market continues to be positive and we expect the trend to continue next quarter with the festive season,” said Mr Arvind Saxena, Director, Marketing and Sales.
Tata Motors reported 62 per cent growth in passenger vehicle sales at 27,864 units, thanks largely to the Nano, which sold 9,000 units, and the Indigo (7,007 units). Growing demand for the Indigo Manza ensured good numbers in the sedan category. As for Mahindra & Mahindra, sales of its utility vehicles were almost flat at 16,720 units. However, the Logan's volumes grew 69 per cent to 752 units in July. M&M had taken over the responsibility of producing the car from former ally Renault.
Ford India's sales showed a four-fold increase at 8,739 against 2,146 units for the same month last year with the Figo compact being the key growth driver. Toyota's numbers were up 36 per cent to 6,835 units while Nissan India sold 1,005 units in July of which the recently launched Micra took up 928 units.
Two-wheeler
In the two-wheeler space, Hero Honda sold 4.27 lakh units in July, a 17 per cent growth over 3.66 lakh units sold in the corresponding month last year. “We have a series of new launches planned in the coming months leading up to the festive season,” said Mr Anil Dua, Senior Vice-President, Marketing & Sales.
Bajaj Auto's volumes were up 66 per cent to 2.8 lakh motorcycles in July. Mr Rajiv Bajaj, Managing Director, said production constraints had limited sales.
TVS Motor reported a 35 per cent jump at 1.63 lakh units. M&M's two-wheeler sales grew four-fold to 12,033 units.
“The general business sentiment is buoyant and the normal monsoon is another positive,” said Mr Shashank Srivastava, Chief General Manager, Sales, Maruti. The automaker's local sales were its highest ever at 90,144 units.
Its compact car range comprising the Alto, the Wagon R, the Estilo Zen, the Ritz, the Swift and the A-Star grew 33 per cent to post sales of 64,079 units. The multipurpose options of the Eeco and the Omni reported 86 per cent growth while the sedan segment crossed the 10,000-unit mark. Exports, likewise, were over 10,000 vehicles.
Hyundai's total sales grew 11 per cent to 50,411 units in July of which the domestic market accounted for 28,811 units (growth of 24 per cent) with exports taking up the balance. The drop in international business was largely due to shrinking demand in Europe where scrappage incentive schemes came to an end.
“The market continues to be positive and we expect the trend to continue next quarter with the festive season,” said Mr Arvind Saxena, Director, Marketing and Sales.
Tata Motors reported 62 per cent growth in passenger vehicle sales at 27,864 units, thanks largely to the Nano, which sold 9,000 units, and the Indigo (7,007 units). Growing demand for the Indigo Manza ensured good numbers in the sedan category. As for Mahindra & Mahindra, sales of its utility vehicles were almost flat at 16,720 units. However, the Logan's volumes grew 69 per cent to 752 units in July. M&M had taken over the responsibility of producing the car from former ally Renault.
Ford India's sales showed a four-fold increase at 8,739 against 2,146 units for the same month last year with the Figo compact being the key growth driver. Toyota's numbers were up 36 per cent to 6,835 units while Nissan India sold 1,005 units in July of which the recently launched Micra took up 928 units.
Two-wheeler
In the two-wheeler space, Hero Honda sold 4.27 lakh units in July, a 17 per cent growth over 3.66 lakh units sold in the corresponding month last year. “We have a series of new launches planned in the coming months leading up to the festive season,” said Mr Anil Dua, Senior Vice-President, Marketing & Sales.
Bajaj Auto's volumes were up 66 per cent to 2.8 lakh motorcycles in July. Mr Rajiv Bajaj, Managing Director, said production constraints had limited sales.
TVS Motor reported a 35 per cent jump at 1.63 lakh units. M&M's two-wheeler sales grew four-fold to 12,033 units.
Strains in Hero Honda tech pact
Hero Honda Motors, the country’s largest two-wheeler manufacturer, could face speed bumps down the road as the technology agreement which forms the foundation of the joint venture comes up for renewal. The agreement is renegotiated every ten years between the partners – the Hero group of Munjals and Honda Motor Company of Japan—who hold 26% each in the company. The agreement comes up for review in 2014.
According to industry sources, Honda Motor Company wants Hero Honda to source more components from its wholly-owned spare parts subsidiary Honda Motor India (HMI) to increase revenues. Honda Motor Company is believed to have made this sourcing commitment a precondition to renewing the agreement.
However, sources said that the Munjals are not keen to source from HMI; instead, the Munjals want Hero Honda to opt for engine sharing and platform sharing (as part of other synergies) with Honda Motorcycles and Scooters India (HMSI), a wholly-owned owned subsidiary of Honda.
Hero Honda has contracts to source raw materials and components from several suppliers. A major part of the sourcing is also done through Hero Group’s automotive parts business.
“It seems the Hero Group will not step up sourcing from HMI, especially in the backdrop of rising competition... Sourcing components is key for any auto company and Hero Honda would want independence in the matter,” an industry source said on condition of anonymity.
When contacted, a Hero Honda spokesperson acknowledged that such issues have arisen in the past but ruled out any impact on future relations between the two. “This matter is in the past and outdated, with no relevance today. We have our own component suppliers and it continues as it has been. Beyond this, we do not want to comment on market speculation,” the spokesperson said.
Ever since Honda set up its 100% subsidiary HMSI in India to produce motorcycles and scooters, there have been whispers about a possible end to the relationship. HMSI entered the booming motorcycle segment in 2004, pitting its Honda Unicorn bike against several leading bike brands from Hero Honda. The technology agreement was renewed in 2004, amid speculation that Honda would opt out. HMSI has put in place a reasonably wide network of dealers and channel agents. HMSI now makes a ranges of bikes and scooters.
Auto analyst with Angel Broking, Vaishali Jajoo said that Honda Motor Company, like most companies, would want to step up sourcing from emerging markets like India and China. She said: “As far as Hero Honda is concerned, a large part of sourcing is done through its own captive company apart from other North India based vendors.”
The Hero Group first signed the technical agreement with Honda in 1984, which was renewed in 1994 and 2004.
Jajoo said that following HMSI's entry into the motorcycle segment has caused marginal cannibalisation.
However, she ruled out any major impact on Hero Honda's sales.
Currently, Hero Honda enjoys 59% market share in the two-wheeler segment. In July, the company sold 4,27,686 units, a growth of 16.6% over the corresponding month in 2009, when it had sold 366,808 units.
The company derives over 80% of its revenues from the Splendor-Passion combine in the executive segment—the most crowded section of the motorcycle market.
On Monday, Hero Honda shares closed up 0.55% on the Bombay Stock Exchange at Rs 1,825.40.
According to industry sources, Honda Motor Company wants Hero Honda to source more components from its wholly-owned spare parts subsidiary Honda Motor India (HMI) to increase revenues. Honda Motor Company is believed to have made this sourcing commitment a precondition to renewing the agreement.
However, sources said that the Munjals are not keen to source from HMI; instead, the Munjals want Hero Honda to opt for engine sharing and platform sharing (as part of other synergies) with Honda Motorcycles and Scooters India (HMSI), a wholly-owned owned subsidiary of Honda.
Hero Honda has contracts to source raw materials and components from several suppliers. A major part of the sourcing is also done through Hero Group’s automotive parts business.
“It seems the Hero Group will not step up sourcing from HMI, especially in the backdrop of rising competition... Sourcing components is key for any auto company and Hero Honda would want independence in the matter,” an industry source said on condition of anonymity.
When contacted, a Hero Honda spokesperson acknowledged that such issues have arisen in the past but ruled out any impact on future relations between the two. “This matter is in the past and outdated, with no relevance today. We have our own component suppliers and it continues as it has been. Beyond this, we do not want to comment on market speculation,” the spokesperson said.
Ever since Honda set up its 100% subsidiary HMSI in India to produce motorcycles and scooters, there have been whispers about a possible end to the relationship. HMSI entered the booming motorcycle segment in 2004, pitting its Honda Unicorn bike against several leading bike brands from Hero Honda. The technology agreement was renewed in 2004, amid speculation that Honda would opt out. HMSI has put in place a reasonably wide network of dealers and channel agents. HMSI now makes a ranges of bikes and scooters.
Auto analyst with Angel Broking, Vaishali Jajoo said that Honda Motor Company, like most companies, would want to step up sourcing from emerging markets like India and China. She said: “As far as Hero Honda is concerned, a large part of sourcing is done through its own captive company apart from other North India based vendors.”
The Hero Group first signed the technical agreement with Honda in 1984, which was renewed in 1994 and 2004.
Jajoo said that following HMSI's entry into the motorcycle segment has caused marginal cannibalisation.
However, she ruled out any major impact on Hero Honda's sales.
Currently, Hero Honda enjoys 59% market share in the two-wheeler segment. In July, the company sold 4,27,686 units, a growth of 16.6% over the corresponding month in 2009, when it had sold 366,808 units.
The company derives over 80% of its revenues from the Splendor-Passion combine in the executive segment—the most crowded section of the motorcycle market.
On Monday, Hero Honda shares closed up 0.55% on the Bombay Stock Exchange at Rs 1,825.40.
HMSI sales grow 23% in July
Two-wheeler manufacturer Honda Motorcycle & Scooter India (HMSI) today reported a 22.68 per cent growth in sales at 1,38,445 units in July over the year-ago period.
The company's total sales stood at 1,12,855 units in the corresponding month of the previous year, HMSI said in a statement.
Motorcycle sales jumped 35.02 per cent to 61,769 units in July this year, against 45,748 units in July 2009, it added.
The company reported an increase of 14.26 per cent in scooter sales to 76,676 units in the previous month, compared to 67,107 units during the same month of the previous year.
The company's total sales stood at 1,12,855 units in the corresponding month of the previous year, HMSI said in a statement.
Motorcycle sales jumped 35.02 per cent to 61,769 units in July this year, against 45,748 units in July 2009, it added.
The company reported an increase of 14.26 per cent in scooter sales to 76,676 units in the previous month, compared to 67,107 units during the same month of the previous year.
M&M motor bike foray by year-end
Having sold a record one lakh scooters in a span of just 10 months, Mah-indra & Mahindra (M&M) is now firming up plans to enter the domestic motor-cycle market by end of this year, a top company official said. “We have achieved a milestone by selling one lakh scooters in just 10 months as against a set target of 18 months. Our plan now is to enter the motor-cycle market by end-this year,” Mahindra two-Wheelers’ president, Mr Anoop Mathur, said. “We are working on a unique product that will be assembled in the same plant where our scooters are manufactured,” he said. The company is designing the motor-cycle at its Italy-based Engines Engineer-ing, which was acquired by Mahindra in 2008.
Yamaha phases out three bikes on low demand
Bike maker India Yamaha Motor has phased out three of its models from India owing to low demand and new emission norms that kicked in from April 2010. Pankaj Dubey, national business head of India Yamaha Motor, told FE that the company has stopped production of its sub 110 cc bikes Alba and G5 and 125cc Gladiator since the market for these bikes had shrunk considerably.
“If consumer demand is low for certain products then we have to take a call...also there are stringent emission norms,” Dubey said. As per government notification all two-wheelers had to upgrade to Bharat Stage III norms by April 2010. Yamaha, however, decided against upgrading Alba and G5 because of its low demand. The company instead is going to concentrate in the 150cc category to drive up sales.
Dubey said that the company had set a target to achieve 30% market share in the 150cc category. “We are not looking to compete with some of the big names in the Indian motorcycle market...Yamaha is looking to chalk out its own strategy and make our own way into the market,” Dubey said. He added that as per industry average a total of 1 lakh 150cc bikes are sold in the country on an average with Yamaha selling about 10,000 units in the category.
The company sources almost 95% components from Indian vendors, he said.
On Wednesday, the company launched three new models priced between Rs 47,000 and Rs 52,000. The new bikes launched – 150 cc SZ and SZ-X and 123 cc YBR 125 – is an attempt on the part of the company to increase its volumes from the Indian market. “So far, we were only present in the Rs 65,000-Rs 98,000 segments...the bike launches on Wednesday is in a bid to gain volumes from this segment,” he said.
“If consumer demand is low for certain products then we have to take a call...also there are stringent emission norms,” Dubey said. As per government notification all two-wheelers had to upgrade to Bharat Stage III norms by April 2010. Yamaha, however, decided against upgrading Alba and G5 because of its low demand. The company instead is going to concentrate in the 150cc category to drive up sales.
Dubey said that the company had set a target to achieve 30% market share in the 150cc category. “We are not looking to compete with some of the big names in the Indian motorcycle market...Yamaha is looking to chalk out its own strategy and make our own way into the market,” Dubey said. He added that as per industry average a total of 1 lakh 150cc bikes are sold in the country on an average with Yamaha selling about 10,000 units in the category.
The company sources almost 95% components from Indian vendors, he said.
On Wednesday, the company launched three new models priced between Rs 47,000 and Rs 52,000. The new bikes launched – 150 cc SZ and SZ-X and 123 cc YBR 125 – is an attempt on the part of the company to increase its volumes from the Indian market. “So far, we were only present in the Rs 65,000-Rs 98,000 segments...the bike launches on Wednesday is in a bid to gain volumes from this segment,” he said.
Vespa looks both ways: China, India
Italy—During a recent meeting with engineers and designers, Piaggio SpA Chairman Roberto Colaninno mounted the back seat of a cherry-red Vespa with his legs dangling over one side of the scooter.
"The ladies sit this way," Mr. Colaninno said, demonstrating how women in India typically ride side-saddle on the back of a scooter to accommodate their floor-length saris.
For months, Piaggio designers in India and Tuscany had been retooling the design of the red scooter, which Mr. Colaninno informally calls the "Indian Vespa." As Mr. Colaninno spoke, an engineer offered to add a fin-like footrest to the scooter's left side.
Redesigning the Vespa to appeal to different markets is a big part of Piaggio's plans to push deeper into Asia, the world's largest scooter market. In India, Piaggio will invest €100 million ($129 million) over the next three years to double production capacity. The strategy calls for Piaggio to produce Vespas locally by the end of 2012, after a 15-year absence. It also involves re-engineering a new line of tiny trucks and three-wheel "tuk-tuks" that keep India's economy humming along.
In Vietnam, the company is beefing up the factory it opened a year ago to produce a new generation of Vespas for Vietnam, Malaysia, Indonesia and the Philippines.
Piaggio is also taking tentative steps to enter China, the world's single-biggest scooter market by deliveries. In August, Piaggio will begin selling the MP3, its three-wheel, high performance scooter, in showrooms across China, Mr. Colaninno said. The Vespa will be shipped to China soon, but delivery dates haven't yet been set, nor has the price.
Piaggio's shift toward faster growing-Asian markets aims to offset sluggishness in Europe, where a deep recession and limping recovery have undercut Piaggio's revenue. Squeezed by the sovereign-debt crisis, governments such as Italy are now withdrawing incentives that helped Piaggio and other manufacturers survive the worst of the recession. Piaggio's European revenue declined 4.9% over the first five months of the year to €444 million, compared with the same period last year. In Asia, revenue increased 74% to €200 million.
Growing car traffic, Mr. Colaninno said, will spur sales of scooters that can easily weave between cars that have begun to choke Asia's streets and park in tight spaces.
"Now you have the problem of the traffic, [which] is going to be very, very heavy," he said.
The barriers to entering China, India and other emerging Asian economies are high. European scooter and motorcycle makers have traditionally struggled to match the cutthroat prices of Asian rivals. Piaggio must compete against better-known Japanese brands including Honda Motor Co. and Yamaha Motor Co., as well as domestic manufacturers, such as India's Bajaj Auto Ltd., that churn out low-priced scooters with few frills. China accounts for more than 40% of the motorcycles and scooters sold world-wide but generates only 15% of the industry's revenue.
The Vespa, with a swan-like body molded from steel rather than the low-cost plastic used by rivals, is "too much of a higher-end product" for markets like China, said Alessandro Falcioni, an analyst at UniCredit.
Mr. Colaninno, who is also chairman of CAI Alitalia SpA, is considered a maverick industrialist. In the late 1990s he engineered a buyout of Telecom Italia SpA in what was then Europe's largest ever hostile takeover. After selling out of the telecommunications operator, he invested €100 million though his Immsi SpA holding company to buy a controlling stake in Piaggio.
At the time, Piaggio was burning through cash and struggling with massive debts. The Vespa, in particular, had disappeared from most markets during the late 1980s and early 1990s, because its steel body was considered too costly to make.
Mr. Colaninno retooled Piaggio's assembly lines so that any kind of scooter could be produced in Pontedera. Today, the plant can churn out 50 different versions of the Vespa as well as high-tech scooters such as hybrids and the MP3, which has three wheels for stability but can tilt on an axis like a two-wheel scooter.
In Piaggio's design studio, at the center of the sprawling Pontedera plant, designers carve prototypes out of synthetic wood that are then scanned into computers.
One Vespa prototype, painted in bubblegum blue, had a sleek space-age silhouette. Mr. Coloninno worries that the unconventional design hadn't tested strongly with focus groups in some European markets. "Maybe it could work in Los Angeles," he said.
For now, Piaggio will export Vespa and MP3 scooters produced in Italy to dealerships in Shanghai, Beijing and other Chinese cities in order to test the market. Given the competition, Piaggio is aiming to target the high-end market there. Those scooters will carry European-level price tags.
The Vespa LX 125 sells for about €3,380 (about $4,300) in European markets, while the latest MP3 models retail for about double that price.
If China responds well to the MP3, Piaggio could begin to produce it there within the next three years, significantly lowering the scooter's price, he said.
Piaggio is already at work bringing down the price of the Vespa in India, which will be sold there by the end of 2012. Mr. Colaninno said a Vespa scooter will cost about $800 to produce in India, about half of what it costs to produce a similar model in Italy. Models are expected to be competitively priced in the Indian market.
The Indian Vespa's engine won't have a fuel-injection system and isn't designed to meet emissions standards in Europe and North America. The scooter is fitted with drum brakes instead of disc brakes, making it easier to change tires that frequently get flattened along India's patchy roadways.
Designers narrowed the Vespa's floorboard so the feet of riders, who tend to be shorter in India, according to Piaggio's market research, can easily reach the ground.
A similar design challenge, he said, has recently cropped up in Vietnam where more women have begun to wear high-heel shoes. "You need to pay attention to the ergonomic design in relation to the people you're targeting," Mr. Colaninno said. "And now with the heels...we have to modify."
"The ladies sit this way," Mr. Colaninno said, demonstrating how women in India typically ride side-saddle on the back of a scooter to accommodate their floor-length saris.
For months, Piaggio designers in India and Tuscany had been retooling the design of the red scooter, which Mr. Colaninno informally calls the "Indian Vespa." As Mr. Colaninno spoke, an engineer offered to add a fin-like footrest to the scooter's left side.
Redesigning the Vespa to appeal to different markets is a big part of Piaggio's plans to push deeper into Asia, the world's largest scooter market. In India, Piaggio will invest €100 million ($129 million) over the next three years to double production capacity. The strategy calls for Piaggio to produce Vespas locally by the end of 2012, after a 15-year absence. It also involves re-engineering a new line of tiny trucks and three-wheel "tuk-tuks" that keep India's economy humming along.
In Vietnam, the company is beefing up the factory it opened a year ago to produce a new generation of Vespas for Vietnam, Malaysia, Indonesia and the Philippines.
Piaggio is also taking tentative steps to enter China, the world's single-biggest scooter market by deliveries. In August, Piaggio will begin selling the MP3, its three-wheel, high performance scooter, in showrooms across China, Mr. Colaninno said. The Vespa will be shipped to China soon, but delivery dates haven't yet been set, nor has the price.
Piaggio's shift toward faster growing-Asian markets aims to offset sluggishness in Europe, where a deep recession and limping recovery have undercut Piaggio's revenue. Squeezed by the sovereign-debt crisis, governments such as Italy are now withdrawing incentives that helped Piaggio and other manufacturers survive the worst of the recession. Piaggio's European revenue declined 4.9% over the first five months of the year to €444 million, compared with the same period last year. In Asia, revenue increased 74% to €200 million.
Growing car traffic, Mr. Colaninno said, will spur sales of scooters that can easily weave between cars that have begun to choke Asia's streets and park in tight spaces.
"Now you have the problem of the traffic, [which] is going to be very, very heavy," he said.
The barriers to entering China, India and other emerging Asian economies are high. European scooter and motorcycle makers have traditionally struggled to match the cutthroat prices of Asian rivals. Piaggio must compete against better-known Japanese brands including Honda Motor Co. and Yamaha Motor Co., as well as domestic manufacturers, such as India's Bajaj Auto Ltd., that churn out low-priced scooters with few frills. China accounts for more than 40% of the motorcycles and scooters sold world-wide but generates only 15% of the industry's revenue.
The Vespa, with a swan-like body molded from steel rather than the low-cost plastic used by rivals, is "too much of a higher-end product" for markets like China, said Alessandro Falcioni, an analyst at UniCredit.
Mr. Colaninno, who is also chairman of CAI Alitalia SpA, is considered a maverick industrialist. In the late 1990s he engineered a buyout of Telecom Italia SpA in what was then Europe's largest ever hostile takeover. After selling out of the telecommunications operator, he invested €100 million though his Immsi SpA holding company to buy a controlling stake in Piaggio.
At the time, Piaggio was burning through cash and struggling with massive debts. The Vespa, in particular, had disappeared from most markets during the late 1980s and early 1990s, because its steel body was considered too costly to make.
Mr. Colaninno retooled Piaggio's assembly lines so that any kind of scooter could be produced in Pontedera. Today, the plant can churn out 50 different versions of the Vespa as well as high-tech scooters such as hybrids and the MP3, which has three wheels for stability but can tilt on an axis like a two-wheel scooter.
In Piaggio's design studio, at the center of the sprawling Pontedera plant, designers carve prototypes out of synthetic wood that are then scanned into computers.
One Vespa prototype, painted in bubblegum blue, had a sleek space-age silhouette. Mr. Coloninno worries that the unconventional design hadn't tested strongly with focus groups in some European markets. "Maybe it could work in Los Angeles," he said.
For now, Piaggio will export Vespa and MP3 scooters produced in Italy to dealerships in Shanghai, Beijing and other Chinese cities in order to test the market. Given the competition, Piaggio is aiming to target the high-end market there. Those scooters will carry European-level price tags.
The Vespa LX 125 sells for about €3,380 (about $4,300) in European markets, while the latest MP3 models retail for about double that price.
If China responds well to the MP3, Piaggio could begin to produce it there within the next three years, significantly lowering the scooter's price, he said.
Piaggio is already at work bringing down the price of the Vespa in India, which will be sold there by the end of 2012. Mr. Colaninno said a Vespa scooter will cost about $800 to produce in India, about half of what it costs to produce a similar model in Italy. Models are expected to be competitively priced in the Indian market.
The Indian Vespa's engine won't have a fuel-injection system and isn't designed to meet emissions standards in Europe and North America. The scooter is fitted with drum brakes instead of disc brakes, making it easier to change tires that frequently get flattened along India's patchy roadways.
Designers narrowed the Vespa's floorboard so the feet of riders, who tend to be shorter in India, according to Piaggio's market research, can easily reach the ground.
A similar design challenge, he said, has recently cropped up in Vietnam where more women have begun to wear high-heel shoes. "You need to pay attention to the ergonomic design in relation to the people you're targeting," Mr. Colaninno said. "And now with the heels...we have to modify."