Three things stood out in India’s two-wheeler sector in calendar 2012. Firstly, sales of scooters saw their first big surge of 18 percent after years of tepid or insignificant growth riding on the launch of new products from the likes of Hero MotoCorp, India Yamaha Motor and Piaggio Vehicles. Secondly, two-wheeler manufacturers committed significant amounts to R&D with Mahindra 2-Wheelers and Hero MotoCorp investing Rs 100 crore and Rs 400 crore respectively in such facilities. Finally, the sector saw much lower growth at 5.5 percent than in 2011 with some of the top players seeing a fall in sales, albeit by small amounts.
The last is, perhaps, the most significant given that two-wheelers, particularly motorcycles, have seen years of good growth until 2012. The fall has been attributed to the general slowdown in the economy, continuing high inflation, and interest rates. Two-wheelers, particularly bikes, are a family’s first set of wheels and the falling numbers are a clear indication of the impact of a slowdown.
When the Society of Indian Automobile Manufacturers (SIAM) met in early January 2013 to assess the auto sector, it lowered the sales forecast for two-wheelers from 5-7 percent in October 2012 to 3-5 percent for the current financial year.
As per SIAM data, aggregate sales of all players in 2012 rose 5.55 percent to 13,818,549 units as against 13,091,365 units in 2011. Hero MotoCorp, which has completed two years since it parted ways with Honda of Japan, still retains its premier position in the segment with sales of 59,54,807 units, down just a tad from 59,63,611 units in the previous calendar year. Bajaj Auto retained its No. 2 position with sales of 25,24,232 units as against 25,67,493 units in 2011, but this is still a small decline of 1.68 percent.
The players that has clearly made the greatest strides in 2012 are Honda Motorcycle & Scooter (HMSI) and Suzuki Motorcycle India. HMSI saw its sales surge 40 percent in 2012 to touch 25,22,593 units as against 17,97,058 units in 2011, pushing TVS Motor to fourth position. Chief among its successful products was the Dream Yuga, the 100cc commuter offering first displayed at the Auto Expo which has sold well, and in the process chipped away at the top player’s formidable position with its Splendor and Passion range. In fact, for December 2012, the latest period for which model-break-ups are available, the Dream Yuga already figures in the top 10 with sales of 26,571 units. Another player that did well was Suzuki, whose sales rose by nearly 33 percent, thanks to burgeoning sales of the Hayate commuter bike.
The leader, model-wise, in the pack continues to be the Hero Splendor which sold 179,418 units in December 2012 while the Bajaj Discover sold 111,204 units. Hero's Passion and CD Deluxe had sales of 115,532 units and 87,999 units respectively. So Hero MotoCorp has locked up three slots in the top five in the bike pecking order. But will this be the same scenario at the end of the calendar 2013?
Battle to hot up in 2013
The fight for the top slot is set to get more intense and firing its first salvo in the year is Bajaj Auto, which launched its new Discover 100T priced at five percent more than its nearest competitiors, the Passion Pro and the Dream Yuga.
The company hopes to create a new segment with this bike and woo new buyers with the bike offering 30 percent more power and tech features. Bajaj is confident that this bike can take off and has targeted 45,000 units a month, which is close to what Honda’s Shine sells (December 2012 sales were 44,125 units).
In mid-January, HMSI has launched all its scooter offerings – the Activa, Aviator and Dio – on a new platform, a clear indication that it wishes to zealously guard its top slot in the scooter market.
What is interesting is that while the entry-level bike segment has fallen in size (partly because buyers are keen on products with higher cubic capacity and features), Bajaj is betting that it can be a formidable player here as the top-end segment has gone up by a third to 18 percent.
With regard to scooters, typically targeted at women and collegians in the Tier 1 and Tier 2 cities, the top-seller continues to be the Honda Activa which sold over 87,000 units, over twice its nearest competitor, Hero MotoCorp’s Pleasure that has now been joined with the Maestro, Hero’s first offering after it parted ways with Honda.
The Hero Maestro has done reasonably well, figuring in the top five and selling more than the TVS Wego, a much older product and reliable offering. However, a scooter that bears close watching is the Yamaha Ray, launched last September and which could bring in key numbers, even though it has been targeted at women buyers exclusively.
The aggressive strategies of Honda and Bajaj have impacted TVS Motor which had held on to its third slot for quite a while but has lost now. The company sold 17,97,908 units in calendar 2012, down 4.64 percent from 2011 total sales. The company hopes to now deliver more numbers with its Phoenix, a 125cc bike launched a few months ago. While the company is well known for its technology strengths, a supplier says that TVS is now able to effectively leverage this at a marketing level where it can be a matter of pure hardsell.
Mahindra 2-Wheelers has yet to make any real impact in the market with the company’s sales falling by 23 percent. The company recently launched its Pantero and Centuro models, the former replacing the Stallio which was effectively a non-starter, and the Centuro being a more upmarket version. The task ahead for the company is uphill, given that the top players are now well entrenched in their respective segments and dislodging them is not going to be easy.
As far as the other Japanese players go, Yamaha has seen sales go up just a tad to 348,346 units but with a new plant being built in South India and expected to come on stream in a year's time, it hopes to cater to markets there.
Suzuki has had much better success with sales in 2012 up 33 percent to 420,831 units. The launch of the Hayate that takes on the big players and with 57,000-and-odd sales so far since its launch in mid-2012, this bike could help its manufacturer bring in some numbers.
In the premium two-wheeler segment, the company that has made a mark for itself was Royal Enfield which has a waiting period for most of its bikes. The iconic bikemaker has seen its sales in 2012 increase by nearly 60 percent from 69,550 units to 109,900 units.
Piaggio’s premium scooter offering, the Vespa LX125 has sold 25,641 units since its debut in April 2012. Piaggio recently made the price cut in October last year for the festive season permanent. This scooter is now available at a price of Rs 68,827 (on-road, Pune), down from Rs 74,590 (on-road, Pune).
With the slowdown continuing, two-wheeler manufacturers will go all out to woo buyers. The impact of liberalised fuel prices and their effect on inflation will have a bearing on the sales of two-wheelers in the year to come even as buyers continue to demand fuel-sipping and sporty bikes.
BRIAN DE SOUZA