India @75: When the Japanese came calling in the 1980s

The Eighties were an action packed decade for the Indian automotive industry and in a sense heralded the first wave of reforms. 

This was the time the Japanese entered the market with the focus being on two-wheelers and light commercial vehicles (LCVs). Suddenly, a host of new brands littered the landscape ranging from Honda, Suzuki, Yamaha and Kawasaki to Toyota, Mazda, Nissan and Mitsubishi. This was heady stuff in a market used to familiar homegrown brands such as Tata, Bajaj, Premier and Ambassador. 

The mood was upbeat especially in the two-wheeler space where alliances with local players were formed quickly. The TVS group, whose presence was confined to the moped till then, tied up with Suzuki for motorcycles while Hero, which was largely into bicycles, joined hands with Honda. Escorts, the manufacturers of Rajdoot, entered into a joint venture with Yamaha while Bajaj, the reigning scooter monarch, got into a technical agreement with Kawasaki.

Forging partnerships
In the LCV segment likewise, partnerships with local players became the order of the day with DCM Toyota, Eicher Mitsubishi, Allwyn Nissan and Swaraj Mazda. The mood was buoyant and the stage was set for an interesting tug-of-war with an established player like Telco.

All eyes were also on Suzuki which had emerged the favoured ally for the Centre in its small car project christened Maruti Udyog. The Japanese automaker also had a two-wheeler alliance with the TVS group but the stakes were a lot higher in the partnership with the Centre. After all, the Prime Minister’s late son was keen on a small car project and it was Indira Gandhi’s way of fulfilling Sanjay’s dream.

Maruti had to contend with two key rivals in Hindustan Motors and Premier Automobiles who were destined to lose out to this new entrant and eventually fade into oblivion. Maruti, meanwhile, would grow from strength to strength and continue to remain market leader for nearly four decades without any signs of losing its grip to this date.

Yet, it was not as if the Japanese emerged triumphant in this new picture that was emerging in India;s automotive arena. On the contrary, it required the leader in commercial vehicles, Telco, to show them their place with its 407 LCV that knocked the stuffing out of the Japanese quartet. 

Frugal engineering, which was to become a fashionable term in later years, was in fact part and parcel of the Tata LCV which left its well established rivals in the global market completely gobsmacked. Its customers loved it for its cost of operations, easy availability of parts, massive service network etc. 

The Japanese brands had strong local allies but lost out simply because they did not have the cost structure or network like Telco. The 407 showed what Indian mettle was all about and it was no mean feat taking on top global brands and throwing them out of the ring.

New mobility options
While left red-faced in the LCV arena, the Japanese showed their calibre in the two-wheeler space where they ushered in new mobility options beyond the tried and tested geared scooter. Bajaj Auto was the monarch of this space but would soon realise that it was now up against a virtual motorcycle blitzkrieg in the form of Honda, Suzuki and Yamaha. Sure, it had an ally too in the form of Kawasaki but failed to see the writing on the wall.

It looked as if the Bajaj geared scooter was not going to fall off its perch in a hurry but the shift to motorcycles happened so quickly that the market leader just could not react on time. Hero Honda got the eye of a new generation of riders in a big way and the tagline ‘fill it, shut it, forget it’ conveyed the message of mileage so effectively that people just queued up for its motorcycles. 

The company would, by the turn of the century, dislodge Bajaj Auto from its top slot and has remained the market leader since then despite attempts by rivals to launch competitive products. Even after its split with Honda in 2011, Hero has held its own and the fact that the Splendor continues to be a pull brand even today is a tribute to its durability and customer connect.

While motorcycles were changing the landscape rapidly, another revolution was happening in the form of gearless scooters where Honda (yet again!) joined hands with the Pune-based Kinetic group to offer this mobility option. In a macho world of bikes, the gearless scooter was seen as a pansy offering especially with a new growing customer base of macho riders but Kinetic Honda hit the bulls-eye and sales soared.

Women were the biggest beneficiaries of the gearless scooter which was virtually a boon to them for city travel. Till then, they had to silently cope with the ordeal of packing themselves like sardines in crowded trains and buses. With the Kinetic Honda scooter, they felt truly emancipated and did not have to constantly navigate through a male-dominated arena. 

The gearless scooter was indeed a huge revolution on wheels and Honda capitalised on it after parting ways with Kinetic in later years. When it set up its wholly-owned subsidiary, HMSI (Honda Motorcycle & Scooter India), it first launched the Activa which continues to be one of the biggest brands in the two-wheeler space. 

Other manufacturers like Yamaha and Suzuki also took the cue from HMSI and introduced their own gearless scooters while TVS Motor which had already set a blazing trail with the moped and Scooty went on to launch the successful Jupiter scooter. Ironically, the exception to the rule was Bajaj Auto which despite its long scooter association chose to focus on motorcycles. It was only in more recent times that it revived the Chetak brand for its foray into electric scooters.

The Japanese two-wheeler alliances began on a promising note and models like the Yamaha RX 100 and Suzuki Shogun took the market by storm. Honda chose to focus on the commuter space with its TCO (total cost of ownership) theme and surged ahead of the rest. Kawasaki had its share of successes too with Bajaj like the Eliminator but these models were too niche to bother Hero Honda whose numbers catapulted it to the top place.

It is hardly surprising, therefore, that it was this alliance that lasted the longest — for over 25 years — while Escorts Yamaha and TVS Suzuki would part ways sooner for their own specific reasons. Bajaj and Kawasaki had a technical partnership and were getting along just fine except that the need of the hour was that special product which would make all the difference. This became a reality with Bajaj Auto’s Pulsar but more on that later. 

Independent strategies
With Hero Honda ruling the roost, the other alliances were now coming unstuck with the partners now drafting their own scripts for India. After parting ways with Escorts, Yamaha was now free to pursue an independent strategy except that there was too much baggage from the joint venture along with the fact it appeared clueless about creating a niche for itself. After all, Honda was on a roll with Hero and there was just no way Yamaha could make a dent in the commuter space. Attempts to do so failed miserably and the company wisely decided to focus on premium bikes and scooters. 

TVS and Suzuki, likewise, decided to part ways and the former was brimming with confidence after the heady market response to its 110cc Victor. The motorcycle was such a runaway hit in its early period that this was the first big jolt to Hero Honda which was the monarch of all it surveyed in the commuter space. The Victor was doubtless a smash success initially but ran out of steam which meant that TVS Motor had to do a rethink on its new product range.

In the case of Bajaj Auto, it struck gold with the 150cc Pulsar which just took the market by storm. For those used to the terrain of commuter motorcycles, here was a sports bike which was stylish and powerful and at a competitive price to boot. The success of Pulsar was also an important confirmation to Bajaj Auto that its decision to focus on motorcycles was not misplaced. 

It would also have a bearing on its own relationship with Kawasaki in later years. At one point, there was loud thinking within Bajaj to hive off its motorcycle business as a separate entity with its Japanese partner picking a 10 percent stake. There was really no point contemplating something like this any longer with the Pulsar racing away to the top and effectively changing the image of Bajaj Auto as a motorcycle maker.

Hence, nearly two decades after the Japanese had entered India’s two-wheeler segment, the dynamics had changed completely by the turn of the 21st century. Yamaha was on its own but still struggling to get its act together with only fond memories of the RX 100 to fall back on. 

Suzuki, likewise, was out of the TVS alliance and was now looking at a new facility for its operations. Honda was the exception to the rule and its alliance with Hero was only getting stronger by the day. Bajaj and Kawasaki still had their technical pact in place but the former was clearly far more confident about its competencies in motorcycles following the success of Pulsar.

After its split with Honda, Kinetic was languishing in contrast and it was no surprise that it eventually sold its two-wheeler business to Mahindra & Mahindra which was keen on expanding its role to becoming a mobility solutions provider. It was getting increasingly clear that despite its efforts to forge new alliances with the likes of Hyosung of South Korea, Kinetic just could not cope with an increasingly competitive market. Divesting its business to M&M was just the most practical way out to stay afloat and focus on other business segments like components.

In the midst of all this action where companies were in consolidation mode, a legacy brand, Royal Enfield, was attempting to script a revival plan for its two-wheeler operations which were happening at a decades-old factory at Tiruvottiyur near Chennai. Siddhartha Lal, the young scion of the Eicher group which had acquired Royal Enfield, was absolutely determined to get the business back on track even though it seemed a tall order. 

Monthly numbers were minuscule at barely 2,500 units even though there were no two ways about the fact that the Bullet was a strong pull brand which only needed to get a fix on quality. With an able leadership in place, Lal and his team virtually slogged it out to bring Royal Enfield out of the abyss. The success of the Classic was the best piece of news to the company which has not really looked back since then. 

Today’s monthly numbers are comfortably over 60,000 units and two new plants have been commissioned in Chennai’s more contemporary automotive hub at Oragadam. Beyond India, Royal Enfield is now targeting marketing overseas too, especially in the Asia-Pacific region where its motorcycles are catching the fancy of buyers. 

Pure motorcycling experience
In an interview with this writer, Lal had said that his company was keen on creating a “wonderful space” for a different kind of motorcycling which “we call the pure motorcycling experience”. As he put it, this would be unadulterated, hardly intimidating and accessible where the bike is built “for your joy and not for your ego”.

It was also Lal’s view that all Royal Enfield bikes were for global markets and not specific to any particular region. “In India, we have become the definitive premium bike and the larger bikes which are imported are what we call the poser categories in our opinion. In international markets, we become the definitive mid-size bike. But it is the same bike and the same story where the brand has to mean one thing across the world,” he had said.

Royal Enfield has walked the talk since then and even while it has had its share of challenges emanating from exodus of top leaders over the years, its brand continues to draw customers. Over the years, rivals have tried hard to make a dent in its category but the company has managed to hold its own. The key is to continue growing in a segment which will become more competitive in the coming years.

Getting back to the main theme of this narrative, Bajaj and TVS were now keen on taking their growth story forward even while Hero Honda continued to maintain leadership position. Following the success of the Pulsar, Bajaj quickly figured out that the only way to stand out was to be a quality differentiator rather than a ‘me too’ player. Keeping this in mind, it launched the Discover 125 instead of putting another 100cc in the market. 

The new offering did very well in its initial period till its manufacturer decided to follow this up with the XCD 125 without giving the Discover enough time to settle down. In the process, the script started to go awry and with more Discover siblings joining the stable, there was just a sense of confusion among buyers. In hindsight, Bajaj ought to have taken one thing at a time and let the Discover find its own place in the sun. Instead the move to introduce more versions hardly helped its cause.

The company, though, was now categorical about the fact that its legacy geared scooter business had to be shown the door if it had to meet its objective of becoming a motorcycle specialist. The top management was also clear in its mind about being a global player and, over time, the Bajaj Auto brand has truly spread its wings beyond India. It is the world’s largest exporter of two and three-wheelers with numbers exceeding 2.5 million units annually.

In 2007, Bajaj bought a 14 percent stake in Austrian bike maker, KTM, and this has increased more than three fold over the years. More than the equity shareholding, the partners have constantly reiterated that it is the mutual trust that has been the biggest reason for the strong bonding. Today, Bajaj makes sub 400cc KTM motorcycles at its Chakan plant which are exported to a host of countries. 

The two have also taken their alliance to the next level with big plans on the electrification front. The geared scooter plant at Akurdi which was home to heated scooters will now be the electric hub for two-wheelers where the Chetak brand has been revived in an all-new avatar. 

Going forward, the Bajaj-KTM-Husqvarna combine will be firing on all cylinders both in India and across the world. The marketing tie-up with Triumph of the UK for midsize bikes will once again see the Chakan facility emerge as a global manufacturing powerhouse for Bajaj Auto. The company has clearly come a long way since its Kawasaki days and has leveraged the KTM alliance to take its growth story to the next level.

As for TVS Motor, it was on a roll for a few years after parting ways with Suzuki thanks largely to Victor which conclusively proved that the company could stand on its own. However, the going was a lot more difficult subsequently when the market gave the next product, Centra, the cold shoulder.

The Flame also did precious little to improve TVS Motor’s position in the market and it was Apache that finally did the trick in getting it back on a sound footing. All this while, the company focused on quality and processes as top priority even while the going was not easy. 

It is this hard work that has paid off with success stories like the Jupiter and a lot expected from the recently launched Ronin. Meanwhile, Apache continues to be a big draw and it is this premium biking vertical which will be integral to TVS going forward. The company has forged a critical alliance with BMW Motorrad which has now extended to the electric space while the acquisition of the UK-based Norton Motorcycles will translate into a vital footprint in Europe and North America.

Strategic acquisitions
Beyond motorcycles, TVS Motor is also betting big on e-biking and some strategic acquisitions have been made in recent times which will give it a fillip across Europe. It is only a matter of time before India also becomes part of the e-biking roadmap as more and more people take to it on the same lines as their counterparts in the West. 

For a company which began its two-wheeler journey with mopeds and then graduated to an alliance with Suzuki, TVS Motor has come a long way. It is now a strong player to contend with in the domestic market and has emerged the second largest two-wheeler exporter after Bajaj Auto. Beyond this, the company has made it clear that it is keen on pursuing electrification aggressively for which all the building blocks are quickly being put into place.

The leader of the pack, Hero MotoCorp, continues to put out impressive monthly numbers which is tribute to its tenacity in fighting it out even after a good decade of parting ways with Honda. Critics will insist that Hero continues to bank on the Splendor as its prime mover in the market but this could just be a case of sour grapes. 

The loyalty that brand Hero commands across India is testimony to the fact that the company is going the extra mile in ensuring that it is literally reaching out to every potential bike customer pretty much on the lines of what Maruti Suzuki has done in cars. It is this astonishing retail strength that gives the edge to Hero even while its rivals arguably have more contemporary products to offer. 

Its erstwhile partner, Honda, has been trying hard to dislodge Hero from the leadership slot but has met with little success thus far. Perhaps this decade could see the seesaw tilt thanks to the focus on electrification where the likes of TVS and Bajaj could take the lead among the traditional players. 

Yet, if the experience of the post-Honda era is any indication, Hero is not going to be a pushover. It will also be interesting to see what emerges from its alliance with Harley in the coming years. The American iconic brand shut down its motorcycle operations at Haryana and is now hoping for a second lease of life with Hero.

What can one say about the Japanese who began as the dominant partners in the two-wheeler space? Honda remains formidable but it is not as if TVS and Bajaj are lagging behind on the quality front. Suzuki and Yamaha are marginal players though keen on enhancing their presence. 

In short, the local players including Royal Enfield have surged ahead and also spread their wings in new geographies. Each of them has walked the talk and ably demonstrated that when the going gets tough, the tough get going.

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India at 75: StaIwarts who paved the way for India’s auto sector