Shivapada Ray COO, DSK Motowheels, on selling the Benelli and Hyosung brands in India, expanding the retail network, and why the superbike market could hit 20,000 units in a year’s time. An interview by Shobha Mathur.
Shivapada Ray, COO, DSK Motowheels, on selling the Benelli and Hyosung brands in India, expanding the retail network, and why the superbike market could hit 20,000 units in a year’s time. An interview by Shobha Mathur.
DSK Motowheels recently launched five Benelli superbikes in India with 300cc to 1131cc engines. What is the strategy for growing this brand?
The Benelli brand is doing phenomenally and today we don’t have bikes to deliver for the next 45 days. We never thought the response would be so overwhelming. Not even two months into it and we have received 500 bookings across India and we have already opened 8 showrooms with the ninth opening in Delhi soon. Another three more showrooms will be opened this month, so we are expanding in terms of stores. But the Benelli and the Hyosung business are totally separate. We started deliveries of the Benelli bikes from the day we launched them in India. But we did not have enough numbers to satisfy the demand.
We bring them as completely knocked down kits but the long-term plan is to sometime manufacture them in India because then you get a better market to compete in. Those plans are currently under discussion.
Are you assembling the Benelli bikes at the same Maharashtra facility where DSK Motowheels assembles the Hyosung brand? Is there adequate capacity to manage both brands?
Yes, we assemble them at the same facility but it has been expanded and compartmentalised even though assembly operations are undertaken under a single structure.
You have just inaugurated a superbike showroom in Delhi for Hyosung bikes. What are your plans to expand the retail outlets for the Hyosung brand?
We have been in this business for almost three years now and have 42 showrooms for the Hyosung brand. By the end of this fiscal, we are looking at 55-60 Hyosung showrooms and 22-25 Benelli outlets.
DSK Motowheels was planning to set up a new larger manufacturing facility. What is its status?
That will come up very soon, within this year – with Hyosung and Benelli both being assembled there. The current capacity is not able to fulfil the demand, so we have to move to a bigger capacity plant to ensure that supplies are streamlined. That is the immediate reason for shifting to a larger factory but when we decide to manufacture these bigger bikes in India, we will put up a full-fledged manufacturing facility in the same premises. Currently, it will be an assembly unit. Today if we are able to assemble 20 bikes a day in our current facility, we are looking at assembling close to 50 bikes in the new facility. If and when the full manufacturing capacity is set up, that plant will be able to roll out around 1,800 bikes a month.
How many models are you currently assembling of both brands?
We are assembling five of Benelli and five of Hyosung. A 250cc sports bike is very different from a 250cc cruiser so the takt or turnaround time is very different and now with the growing demand for the superbikes, the existing facility is not able to handle it.
Which brand are the customers more inclined to buy?
Actually another 10 brands are competing in the same market, so it is very difficult to say which brand they prefer – it’s each to his own. While Hyosung is a Korean manufacturer and its forte lies in full-faired bikes and cruisers, Benelli is an Italian manufacturer whose forte lies in multiple cylinders and racing heritage. Hyosung bikes are the best looking bikes in the country while Benelli is well known for technology, performance and power and nobody can match them. Our aim is to become the number one in the super-biking segment by 2017.
How are the company’s current sales and what is the sales roadmap?
Last fiscal (2014-15) we sold about 2,000-2,100 units and this fiscal we are targeting 2,000 units of Hyosung and 2,000 units of Benelli brands.
Who are your immediate competitors?
Hyosung’s immediate competition is with Kawasaki but for Benelli it will take time as a couple of more Italian brands – like Ducati – are coming in.
Are you planning to tie up with any other brand as well?
What we have is more than enough as of now.
There was talk of DSK Motowheels producing lower-capacity bikes in the range of 125cc and 150cc in the new facility?
One cannot assemble 125cc bikes in India and be price-competitive. It is just not possible because we pay a huge amount of customs duties on imports. So it has to go through the manufacturing route. Once we decide to take the plunge in manufacturing, then the 125cc bikes will come in.
When can DSK Motowheels look at the manufacturing route?
This larger facility starts assembling the products in another 4-5 months. Maybe in another two years.
Does the company have any plans to export India-assembled Hyosung bikes to neighbouring countries?
All this will come into the picture when we start manufacturing here. We are still trying to satisfy the domestic demand. For superbikes, the markets in neighbouring countries is too small. For instance, in Bangladesh you are not allowed to sell bikes beyond 125cc, Sri Lanka is again a very small market for superbikes and Nepal has also been going through a bad time, and South East Asian markets are directly serviced from South Korea. We are allowed to sell superbikes in SAARC nations but the other markets are not so big to make the effort to go out and sell.
How is the superbike market performing in India and what is the market share that DSK Hyosung holds?
We hold a market share of 22 percent and the superbike market grew by 50 percent last fiscal and is the fastest growing segment. In the past couple of years, around 10-11 superbike players have entered the market. Three years ago, there were three manufacturers and there are six more brands coming to India this year. That is the potential that India holds for superbikes.
What is driving growth in this segment and what is the profile of your customers?
First, is the high disposable income; growth in the motorcycle sector is not going down but is stagnating because the rural demand is slackening. But the scooter segment is growing phenomenally as they are sold in urban markets and similarly superbikes are also an urban phenomena.
In India, the luxury market is growing and there are a lot of youngsters with high disposable incomes, in addition to good roads boosting super biking for instance, like Pune to Lavasa. About 75 percent of sales come from big cities like Mumbai, Bangalore and Delhi and there are a lot of riding clubs that are coming up. There is an aspirational value to superbikes.
The customers who are buying the 250cc bikes are in the age group of 22-32 years and there is another set of customers for high-end cruisers. Then there are a lot of people in the age group of 40-50s who want to relive their younger days and want to splurge on themselves. We see this trend in IT cities like Bangalore, Pune and Hyderabad.
How much will DSK Motowheels’ market share be upped this fiscal with the new products?
The superbiking industry will grow by 50-60 percent and our market share from 22 to 30 percent of which the Benelli brand will contribute 15 percent and Hyosung another 15 percent. As Benelli is an Italian brand and new, we see huge sales happening there and also the products that are coming under the Benelli brand by this year-end will add to the sales.
Which new products will come under the Benelli brand?
The TNT 25 is a single-cylinder motorcycle which will be a major selling bike in India and the Benelli TreK Amazonas 1130 and another product that we have not yet decided. So, three products will be coming this calendar year.
In the Hyosung brand, we are bringing the GD 250 N and R, single-cylinder naked GD250N and the full-faired bike, GD250R.
We are seeing the 200-300cc motorcycle segments growing at a very fast pace, and the most important factor is affordability of the bike. That is the biggest challenge at hand to make these superbikes as affordable as possible and every manufacturer is trying that.
What are the various options to make superbikes affordable?
One is localisation, and even the big brands have realised that India has growth potential but the bikes have to be priced competitively. They are trying from their side to bring down the bike costs.
What is the localisation content in your Hyosung bikes currently?
Hardly anything but in two years you will see a local content of 30 percent. Today it is miniscule because we don’t have the volumes. Also, the degree of technology and finesse that is required for making components for superbikes is very high and Indian vendors still have some time to reach to that level. At present, sales of 200-300cc bikes are faring well. There are no auto component makers for making parts for higher-end 600-700cc bikes. But our localisation process has started and will take some time to reach fruition. Vendors have realised over the last 2 years that the superbike market is growing and there are a number of manufacturers coming to India not only to assemble but to manufacture them locally as well. So suppliers are bringing in technology, putting in machines to manufacture components for the superbikes.
Most of the luxury brands in India are offering merchandise along with their products. How are you positioned to take on competition in this area?
Benelli has a big merchandising range but unfortunately Hyosung never had a large merchandise but we are working on it and in the next six months you will see a lot of merchandise being added to the Hyosung brand. We have tied up with a Australian highway company Ugly Fish which specialises in highway products for riders – they have anti-fog glasses and glasses that don’t break in crashes on the highway and are resistant to scratches. These are present in Benelli outlets but will also come to Hyosung showrooms.
Is the company’s marketing strategy different for both the brands?
Yes, there are different marketing strategies for both the brands as both come from different backgrounds. Benelli is more than a 100-year-old brand so we want to position it as a marque and exotic Italian brand. We are undertaking all our activities in line with that. Hyosung is an Asian brand, a little unknown compared to Benelli so we have to create more awareness at the grassroots level about how good the bikes are.
The current market size of superbikes is 10,000 units annually in a 16 million two-wheeler market with the average ticket size being Rs 2-3 lakh.
What do you perceive to be the challenges to growth of the superbiking market?
Affordability and trying to build on the prices of the superbikes is the biggest challenge especially as we are spending a lot of money on customs duties for imported bikes. In addition, brandbuilding is another challenge as the market is still niche. But it will grow to 18,000-20,000 units within a year as this segment is not impacted by the slowdown. Superbikes are bought by passionate people.
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