Flooding the Indian Motorcycle Market

THE MOTORCYCLE STORY

In the early 1980s, the motorcycle segment reported a sharp decline in growth on account of factors such as high running and maintenance costs, perception that motorcycles were more suitable for the rural roads, high price of motorcycles in comparison with scooters or mopeds and the availability of fairly new models of scooters. With the de-licensing of the automobile sector in the mid-1980s, the motorcycle sales registered a healthy growth during the late 1980s.

In 1990, due to the 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, the industry witnessed a recession. Added to that, factors like increased production in 1992 due to the entry of new players resulted in companies either reporting losses or a fall in profits.

In 1993, the recession began to ease off and the growth in the motorcycles segment began. The two-wheeler industry saw large-scale structural changes. With the launch of lighter, 100-cc motorcycles, a significant inter-segment shift began to take place and motorcycles sales began to grow. The popularity of Hero Honda motorcycles during this period accelerated the demand for motorcycles.

Soon, the motorcycle segment garnered the largest share of the total two-wheeler sales. The two-wheeler industry grew at a CAGR of 14.6% between 1993 and 99, aided largely by the above average performance of the motorcycle segment, which grew at a CAGR of 24.3% compared to 11% and 8.6% for scooters and mopeds respectively. Until 1997, all three segments grew in size, however from the fiscal 1999, motorcycles started directly eating into scooter sales (Refer Table IV & V)

TABLE IV
MOTORCYCLE SALES GROWTH

Year	1993	1994	1995	1996	1997	1998	1999	2000
Sales (mln Nos.)	0.38	0.47	0.65	0.81	0.98	1.13	1.4	1.8
Yoy growth (%)	-11.6	23.2	39	24.2	20.9	15.7	23.5	28.7