Two wheeler sales in India rises in the 2^nd month of 2011 too

India’s two-wheeler market is showing no signs of slowing down as the sales momentum was kept going in the month of February, with all the three major manufacturers, Hero Honda, Bajaj Auto and TVS Motor, recording better growth than the previous month. Bajaj topped the list of companies exporting their vehicles followed by TVS, while Hero Honda made four lakh plus sales.

The Pune based company, Bajaj Auto, sold a total of 286,657 units resulting in a 22% increase since last year. Exports of the company too rose by 32% as they sold 102,433 units. Hero Honda, India’s largest two wheeler company, posted a 24% growth whereas TVS’s sales of two wheelers grew to 23 % in the month of February. Hero Honda sold 472,055 units, crossing the 4 lakh mark for the 10^th consecutive month.

 

Despite the hike and import duty for CKD bikes, Harleys will maintain their current prices.

US based cult bike maker, Harley Davidson, has announced that they will not be raising the prices of their two models, which are assembled in India even as the government has increased the import duty for completely knock down bikes (CKD). 

In the recent budget proposal the government had changed the definition of CKD’s where automobile imported might end up paying 30% import duty instead of the regular 10%.

The company has been evaluating different options, in wake of the new rules imposed for the import duties for CKD. The Superlow and the 883 Iron will be the first two bikes to roll out the CKD facility unit is Bawal, Haryana. Harley Davidson MD Anoop Prakash told the media that the company is committed to their customers, dealers and enthusiasts.

As mangoes were allowed to be sold in the US market, India relaxed the emission norms on bikes above 800cc allowing the Harleys to start assembling and selling their bikes in India.

 

Words: Raymond Raj

Honda CBR 250R to reach the showrooms by the first week of April

 

Any major launch in this year cannot come close to the eagerness with which bike enthusiasts are waiting for the Honda CBR 250R and much to their relief, the bike isn’t that far now. Recently launched in Thailand, Honda’s latest single-cylinder, 250-cc offering will reach the showrooms across the country by the first week of April. Due to the unfortunate catastrophe and loss of life in Japan, the company has planned not to hold any formal launch event. The bike will be available in standard and combi-ABS variants and has been priced at Rs 1.51 lakh and Rs 1.77 lakh respectively (ex-showroom, Mumbai).

 

Talking about the company’s future plans, Shinji Aoyama, President & CEO, Honda Motorcycle & Scooter India Pvt. Ltd, said- “ In India Year 2011 marks beginning of a new Era for Honda. With new aggression, Honda has set up plans for rapid expansion to serve customers better. To meet the expectations of existing customers, our second manufacturing facility at Tapukara, Rajasthan will soon be operational from early 2nd half of 2011 taking our total production capacity to 22 lakh units in FY 2011-12.”,

 

Words: Gasha Aeri

Garware Motors and S&T Motors denies Hyosung buyout

A few weeks back, the rumour mill was buzzing with news about the Hero Group and Mahindra 2’Wheelers looking to buy out Korea-based S&T Motors Co Ltd., parent company of Hyosung, manufacturers of the Comet 250, GT650R and ST7 motorcycles. However, Garware Motors have sent us a press release wherein they have made it clear that there are no ongoing negotiations between S&T Motors and any Indian manufactuer, Hero and Mahindra included, on this matter. For those outside the loop, Garware Motors and Hyosung have an ongoing aggrement wherein the former is to exclusively assemble motorcycles under the Hyosung brand name and market them in India. The agreement still holds firm and Garware will continue selling the GT650R sportsbike and ST7 cruiser in India.

We hope they stick together and launch the 250-cc bike in India as well.

Words: Saeed Akhtar

Cricketer Virat Kohli to be company’s new face

 

 

TVS Motor Company has signed cricketer Virat Kohli as the brand ambassador for their all new TVS Sport motorcycle. The cricketer will feature on all advertising and retail material related to TVS Sport. As per the official statement issued by H. S. Goindi, President Marketing, TVS Motor Company, “Virat Kohli is known for making distinctive style statements, whether on or off the field and represents the aspirations of many a young Indian. Virat is a perfect fit to the brand.”Especially with the ongoing World Cup fever running through the entire country’s veins, such an announcement would grab some additional eye-balls for the company.

Words: Gasha Aeri

The US based-bike manufacturing company planning to enter Indian market by next year

Victory Motorcycles, US-based company is looking forward to participate in next year’s Delhi Auto Expo and maybe enter Indian market in second half of next year, depending on the response they get at the Expo. Following the success of Harley Davidson, which sold on an average more than 2 units every three days this calender year, Victory Motorcycles, manufacturing luxury touring bikes, classic-styled motorcycles and inter-state cruisers, is keen on entering the growing motorcycle market here. The company is aiming to introduce models that would be best suitable for Indian riding conditions and roads. Harley managing to get its costs as low as Rs 5.5 lakh for their basic model, Victory Motorcycles will face tough competition as their price range is between Rs 5.68 lakh and Rs 12.73 lakh internationally. With Indian government’s high import duties the price of these bikes will effectively be doubled since they will be imported as CBU’s.  The Indian bike enthusiast will have to wait and watch out for next year’s Auto Expo and hope, that just maybe the import duty rates are relaxed a bit.

Words: Raymond Raj

Hero and Mahindra both looking to buy Hyosung

Like a perfectly set up deck of Dominoes, a string of the world’s foremost automotive brands has toppled before the Indian juggernaut in the last few years. And now, it seems like the latest two-wheeler manufacturer which is set to join the Indian bandwagon is Hyosung Motors. Bike India has just got hold of some inside-industry news which states that the Hero Group and the newly formed Mahindra 2 Wheelers are in negotiations to take over the Korean brand. Both the Indian conglomerates involved in this deal has got the money needed for such an enormous takeover but not the technology – Hero recently ended its twenty six year long association with Honda – and could benefit greatly if the deal comes through. Hyosung already has a sizable brand recall value in India, courtesy of its Comet 250 streetfighter and Aquila 250 cruiser that Kinetic brought here almost a decade back. More recently, it tied up with Garware Motors to launch the GT650 sportspike and ST7 cruiser in India.

Trust Bike India to keep you posted on further developments in this ongoing deal. For our full review on the GT650 sportsbike, pick up the March 2011 issue of Bike India magazine, on stands now.

Words: Saeed Akhtar

As Hero Honda, India’s leading two-wheeler manufacturers, gear up to detach the Honda name from their logo, we take a close look at their glorious past, dominant present and uncertain future

This has been a potboiler and one of the most dramatic splits the Indian automobile sector has witnessed to date. The end of the Hero and Honda joint venture was, perhaps, the most talked-about, rumoured and speculated news that dominated most part of the financial year 2010-11. It has been almost like a break-up of two Bollywood sweethearts replete with denials, ‘no comments’, ‘we’re very much together’ and then, when people actually began believing that the split might really be a rumour, they confirmed that they were parting ways, but would remain good friends… at least until 2014.

BIKE India tries to bring the split of this very successful partnership of 26 years under the microscope and give you a clear perspective of what to expect of India’s leading two-wheeler maker and the fastest growing Japanese two-wheeler company in the country. We roped in a professional analyst to shed some light on the business point of view and then we have our in-house industry experts who shed some light on things to come.

According to an analysis done by the Standard Chartered Bank, one of India’s leading banks, this could be the beginning of a new era. Following months of speculation the Munjal family of Hero Honda Motors (HH) finally signed an MoU to buy out the entire 26 per cent stake of Honda Motor, Japan, in the joint venture. The deal has been signed for an undisclosed amount (we reckon it to be to the tune of a whopping Rs 8,600 crore), but it is expected to be at a substantial discount to HH’s current market price. The report further suggests that although the market was expecting royalty payments to increase following the news, management has clarified that royalty payments on existing products will either be constant or lower than FY10 level of 2.6 per cent and will eventually stop after FY14. For the new models, as per management, royalty will be anywhere between three per cent and five per cent.
Going by the research, the split does not necessarily have a negative connotation for the Indian firm. It paid an astounding Rs 416.4 crore as royalty in FY10. When this figure goes down, it could result in long-term profitability for HH. But India’s leading two-wheeler manufacturer needs to take three very crucial steps to remain on top of the game.

1983

• Joint venture agreement with Honda Motor Company Limited (HML), Japan, signed whereby HML would furnish complete technical information and support to Hero Honda.

1984

• Hero Honda Motors Ltd. incorporated on January 19.
• The company to manufacture motorcycles upto 100 cc.

1985

• CD 100 introduced – the first four-stroke motorcycle to be rolled out in India in the 100-cc range, which is fuel-efficient and lightweight. Also equipped with an electronic ignition system, illuminated speedometer, four-speed gearbox, etc.
• Second phase of expansion takes place by increasing production capacity from 1,20,000 to 1,50,000 vehicles per annum.

1987

• 100,000th motorcycle produced.

1989

• The Sleek, a stylish new model, introduced in July.

1990

• Working on a new motorcycle, CD 100 SS, aimed at semi-rural conditions.
• Five lakh motorcycles produced.
• Company reported to have 46 per cent of the market share.

1994

• New motorcycle, the Splendor, introduced.
• Ten lakh motorcycles produced.
• HH proposes to expand capacity of existing plant to 2.4 lakh units per annum.
• Begins setting up of another plant at the Gurgaon Industrial Estate with a capacity of 1.5 lakh units per annum.
• Production increased to 1,83,490 motorcycles.

1995

• A new technical collaboration agreement signed with Honda Motor Co Ltd, Japan, for the period upto the year 2004, which includes technology to produce bigger capacity motorcycles and scooters.

1997

• The Street, a new motorcycle, introduced on January 24, making it India’s first auto clutch step-thru, designed for city use.
• Second manufacturing plant at Gurgaon inaugurated
• As part of their globalisation plan, set up a plant in Brazil.

1998

• Hero Honda consider entering scooter manufacture in collaboration with partners, Honda Motors, after the Japanese company decides to walk out of Kinetic Honda, their scooter venture with the Firodias.
• Twenty lakh motorcycles produced.

1999

• The company launches its fastest and most powerful bike, the CBZ, which changes the Indian two-wheeler buyer’s perception and raises the bar for the two-wheeler industry.

2000

• Forty lakh motorcycles produced.
• The bread-and-butter bike, Splendor, declared ‘World No 1’ largest selling single two-wheeler model.

2001

• A new 100-cc motorcycle, the Passion, launched. Hero Honda Motors Ltd. become the largest sellers of motorcycles among all Honda companies and venture in the world by selling one million motorcycles during the financial year.
• Fifty lakh motorcycles produced.

2002

• Ambition, featuring a 133-cc, 11 BHP, four-stroke engine, introduced.
• Honda Motor for the first time decide to source motorcycles from their Indian joint venture to sell under the ‘Honda’ brand-name in Vietnam.
• Royalty to the Japanese parent, Honda Motor Co, hiked to Rs 630 per vehicle as compared to the flat royalty of Rs 200 on existing models like the Splendor and the Passion.

2003

• The Eterno, a geared scooter, launched in May.

2004

• Ten lakh units produced.
• October witnesses the launch of the Unicorn, HMSI’s first motorcycle for India featuring mono-shock and a 150-cc engine.

2005

• New variants of the Activa and the Dio launched in October.
• New colours and graphics for the Eterno introduced in November.

2006

• Twenty lakh two-wheelers produced.
• The Shine, a 125-cc commuter motorcycle, launched in April.
• The Unicorn gets an upgrade in October.

2007

• The Manesar factory upgraded to produce 6,00,000 scooters and 4,00,000 motorcycles per annum.
• The entire range gets a facelift.
• Cast wheels introduced on the Unicorn and the Shine.

2008

• The production of the Eterno suspended.
• A new gearless scooter, the Aviator, launched in January.
• The CBF Stunner, a trendy 125-cc motorcycle, launched in June.

2009

• The CBF Stunner Fi launched in May.
• Fun biking theme. The CBR 1000RR and CB1000R superbikes introduced in February to heighten brand image.

2010

• The CB Twister, a 110-cc motorcycle, launched in January.
• Hero Honda and Honda officially part ways following a go-ahead given by the HH board.
• Foundation laid for a second factory at Tapukara, Rajasthan, with an annual capacity of six lakh units.
• Landmark of 60 lakh units reached.
• VFR 1200F super-cruiser introduced in July.
• Third factory proposed in Andhra Pradesh.
• New models aimed at the masses announced.

2014

• This is the year when the three decade old partnership between Honda Motors Ltd. Japan and Hero Group hits the end of the road. Where will the two independent companies stand then is the big question.

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Hero’s In-house R&D and finding new partners
Until now Hero had been solely dependent on Honda for all technical support. Although, HH will continue to get technical assistance from the Japanese firm until the financial year 2014 (FY14), they have roughly three years to develop their own R&D facilities and think about re-branding the company. Until that time the current popular models such as the Splendor and Passion will provide it enough momentum to occupy the top slot, but eventually it will need newer model and technology to maintain the leadership. The company is planning to set up its own R&D centre in Dharuhera. Apart from the large investment needed to build this facility, HH will also need to tie up with an established international company. Unfortunately, most major two-wheeler makers are already present in India or have a joint venture with an Indian counterpart and the independent product developers have not been able to impress Indian buyers with their models. However, if you look at history you will notice that Hero had signed the dotted line back in 2003 with Italian performance bike maker, Aprilia, with the intention of introducing scooters and high-end motorcycles in India. Interestingly, a year later HH announced a licensing agreement with Austria-based Bombardier-Rotax to produce 125-cc to 175-cc engines. But nothing was heard about it later on. So, is the Hero Aprilia venture on the backburner or has it been shelved altogether? We are sure the wait for this answer won’t be too long.

Focus and ramp-up of exports
HH has been a marginal player in the export market due to the restrictions imposed by Honda Motors and export constitutes just two per cent of their total volume. The Indian company was not allowed to export to countries where Honda Motors were already established. With the new MoU this restriction has also come to an end. HH would look at expanding in countries like South East Asia, Latin America, Africa and the Middle East. HH’s export limitation gave Bajaj Auto an upper hand to become the market leader in export with a 74 per cent market share. However, now HH are expected to catch up with Bajaj Auto. For the time being HH have the option to use the Hero Honda brand, but we feel that the company will re-brand their export products right from the beginning as it would make more business sense.
There is a rumour that the Hero Group is also very keen on developing a diesel powered two-wheeler in an attempt to create a completely new segment of buyers and will also be looking at exporting the vehicle. Going by the report, the bike will sport a 400-cc diesel motor, which is currently undergoing certification testing at the Automotive Research Association of India (ARAI). The two-wheeler giant is in talks with a South India-based firm for developing the diesel engine and the motorcycle would be assembled at HH’s Dharuhera plant, where they are also developing their own R&D facility.

Local parts to save cost
Until now HH sourced components only from approved vendors from India and abroad. In the next few years the Hero group will try to source spares from more cost-effective vendors in India. As of now HH import six per cent of ancillaries (as a per cent of raw material), which make the company susceptible to the risk of the fluctuating international currency rates. But we see this as a double-edged sword. On the one hand, this step would make the bike more affordable, but then there could be questions about the product quality. Currently the name Hero Honda spells reliability and low maintenance because the company has the most evolved vendor base in the country. With new suppliers coming into the picture we hope Hero do not cut corners and compromise on quality to keep the cost down.

Apart from the steps mentioned above, HH have already started working on their new branding strategy to ensure that the customer goodwill stays intact even after ‘Honda’ is no longer a part of their name. They have put their advertising firm, JWT, to work for a new media campaign which will gradually be put to play towards 2014. The company will be planning a completely new corporate identity and a brand-new logo. It is obvious that the focus of the advertising campaign would be on promoting individual motorcycle models such as the iconic Splendor and Passion. This is the new beginning.

Honda on the offensive
Honda Motorcycle and Scooter India (HMSI), the cent per cent Japanese subsidiary of Honda Motors Japan, is expected to get into the top gear and switch on their aggressive mode in India. Currently they are a marginal player in the two-wheeler segment with a market share of about 12 cent. Though technologically stronger, the Japanese company is far behind HH in terms of deep reach across India. Over the years Hero have built an extremely strong and well-penetrated network which HMSI will take some time to match. Currently HH have about 4,500 outlets that include authorised dealerships, service centres and authorised representative dealerships. HMSI, on the other hand, have just about 1,150 outlets as of now. HMSI now command the fourth position in the two-wheeler market behind HH, Bajaj Auto and TVS Motor, which is something the Japanese firm would like to improve on.

Trouble for all
Now, what’s interesting is that when the Munjals pay almost Rs 8,600 crore to Honda Motors for the latter’s 26 per cent share in Hero Honda, Honda would inject a good portion of this amount into their Indian arm, which would work like a steroid to beef up their operations in the country. The current line-up of bikes such as the Twister and Stunner were deliberately aimed at avoiding disruption of HH’s domain and hence did not generate great volumes. Now HMSI can focus on volumes and will target the entry-level segment, which has been the main reason for Hero’s success. Expect a slew of entry-level models from HMSI, similar to the Splendor and Passion, only that it will feature new-age technology, top-notch quality and will also be priced very competitively. Honda will now hit hard and that too where it hurts the most. The disposable income, plus Honda’s aggression make a volatile combination and this will cause trouble not just for HH but for other major players as well. Recently Rahul Bajaj, Bajaj Group chairman, was quoted as saying that post the Hero Honda disintegration, the market may get hyper competitive, but by hindsight, it would be good for customers. Most two-wheeler makers will now keep a keen eye on Honda’s moves and, at the same time, work hard to keep their individual product lines as competitive and attractive as possible. Obviously, we are not complaining.

Hurdles
Ramping up production and distribution is easier said than done. The Japanese auto major has to overcome certain hurdles such as constraints from suppliers, manpower and quality components. Shinji Aoyama, President and CEO, HMSI, recently said that while expanding their product line-up, it was equally important to grow the dealer and vendor network and ensure that there was no shortage of manpower. Aoyama said that Honda may be able to invest in any number of plants, but these other issues were far more important and not immediately within the company’s control. He further stated that while the leadership position of the Activa in the gearless scooter segment was a cause for cheer, HMSI was equally upbeat on motorcycles where it currently produced over 60,000 units a month. Bajaj and TVS are strong players with a longer history than HMSI. There are also many things to learn from them on producing at competitive costs. However, he is not unduly worried because of the Honda belief of providing the best quality products to customers at reasonable prices.

Another hurdle that HMSI have been working hard to overcome is the waiting period for their products. At the moment the two-wheeler maker is struggling to meet the order backlog of over 2.2 lakh motorcycles and scooters. It does have a plan in place and is investing in two new plants, apart from the one in Manesar, Haryana. The second plant in Rajasthan will be operational by June this year and will have an initial capacity of six lakh units, which would solve the waiting period issue for the time being. HMSI expect to roll out over two million two-wheelers from these two facilities per annum. They also propose to set up a third manufacturing facility in the country very soon with a total investment of Rs 1,000 crore. This could be the company’s first plant in the south (reportedly in Andhra Pradesh) and would be spread over an area of 100 acres. The new plant will have a capacity of 2,000 units per month, which the company plans to increase gradually.

HMSI will be introducing the CBR 250R in India next month, which is one of the most anticipated bikes for the country’s enthusiasts. As a brand building exercise the company has gradually launched its international range of superbikes such as the CBR 1000RR, the sports cruiser VFR 1200F and practical street fighter CB 1000R that have captured the attention of Indian performance bike buyers. But it will now enter the all-important mass 100-cc segment that will translate into greater volumes and, in turn, larger profits.
Words: Sarmad Kadiri

The Indian electric vehicle manufacturer plans on introducing Europe-Only bikes

 

 

Hero Electric, one of India’s leading electric two wheeler manufacturer is all set to enter the European market by 2012. For this, Hero is developing electric bikes that utilize Hero’s in house technical expertise along with technology support from a Taiwanese Firm. The company plans on manufacturing the bikes in India and then exporting them to Europe. These bikes will only be available in the European market and not in the domestic market. The launch is expected to happen within a years time and apparently the company is in talks with distributors in Europe. After which the bikes will be sent for homologation process to various countries in Europe. Pricing and other specification of the bike have not been revealed yet. The company is excited about entering a new and big market however, theyare also expecting low sales initially.