Auto 2 Wheeler Industry India

 

There have been unexpected growth in the demand. * Chinese two wheeler had great competition with the Japanese two wheeler. * The two wheeler industry was significantly impacted by the economic crises that severely restricted disposable income as well as low-interest credit. * The world market experienced a decline in growth rate to 6. 6% in 2008, from a healthy 10. 6% pace witnessed in 2007. * The situation worsened in 2009, with a sharp fall in the market demand by a substantial 6. 7% and it continue for 2010 as well. This recession had more impact on developed countries than the developing countries.

Domestic scenario * India is the second largest manufacturer and producer of two-wheelers in the world. Next to Japan and China in terms of the number of two wheelers produced and domestic sales respectively. The reasons for being largest are like restrictive policy followed by the Government of India towards the passenger car industry, rising demand for personal transport, inefficiency in the public transportation system etc. * The Indian two-wheeler industry made a small beginning in the early 50s when * Automobile Products of India (API) started manufacturing scooters in the country.

Until 1958, API and Enfield were the sole producers. * In 1955, Government wants sturdy motorbike for its army and police to patrol which can run on rugged border highways. With a view to this, the first batch of bullet 350cc from Royal Enfield company were received and assembled it in Chennai. * In 1948, Bajaj Auto began trading in imported Vespa scooters and three-wheelers. Finally, in 1960, it set up a shop to manufacture them in technical collaboration with Piaggio of Italy. The agreement expired in 1971. * In the initial stages, the scooter segment was dominated by API, it was later overtaken by Bajaj Auto.

Although various government and private enterprises entered the fray for scooters, the only new player that has lasted till today is LML. * The motorcycles segment was no different, with only three manufacturers viz Enfield, Ideal Jawa and Escorts. While Enfield bullet was a four-stroke bike, Jawa and the Rajdoot were two-stroke bikes. The motorcycle segment was initially dominated by Enfield 350cc bikes and Escorts 175cc bike. * The two-wheeler market was opened to foreign competition in the mid-80s. * The market leaders Escorts and Enfield were caught unaware by the onslaught of the 100cc bikes of the four Indo-Japanese joint ventures.

With the availability of fuel efficient low power bikes, demand swelled, resulting in Hero Honda – then the only producer of four stroke bikes (100cc category), gaining a top slot. * The first Japanese motorcycles were introduced in the early eighties. TVS Suzuki and Hero Honda brought in the first two-stroke and four-stroke engine motorcycles respectively. These two players initially started with assembly of CKD kits, and later on progressed to indigenous manufacturing. In the 90s the major growth for motorcycle segment was brought in by Japanese motorcycles, which grew at a rate of nearly 25% CAGR in the last five years. The industry had a smooth ride in the 50s, 60s and 70s when the Government prohibited new entries and strictly controlled capacity expansion. The industry saw a sudden growth in the 80s. * The entry of Kinetic Honda in mid-eighties with a variometric scooter. It helped to the scooter owners with providing ease of ride. This helped in inducing youngsters and working women, towards buying scooters, who were earlier, inclined towards moped purchases. In the 90s, this trend was reversed with the introduction of scooterettes. * In 1990, the entire automobile industry saw a drastic fall in demand.

Hero Honda showed a marginal decline in 1992. The reasons for recession in the sector were the incessant rise in fuel prices, high input costs and reduced purchasing power due to significant rise in general price level and credit crunch in consumer financing. * India is one of the very few countries manufacturing three-wheelers in the world. It is the world’s largest manufacturer and seller of three-wheelers. Bajaj Auto commands a monopoly in the domestic market with a market share of above 80%, the rest is shared by Bajaj Tempo, Greaves Ltd and Scooters India.

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