Flooding the Indian Motorcycle Market
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THE FUTURE
Although the avalanche of motorcycles offered Indian consumers a wide
variety of models to choose from, it also resulted in increased pressure on
the companies to concentrate on cost-cuts, technology enhancements and
upgradations and styling. Their margins came under pressure as marketing
costs escalated.
The companies were forced to reduce prices and offer
discounts to survive the competition. Moreover, analysts were skeptical
about the segment's ability to maintain the growth rate in the years to
come. One of the major assumptions underlying the motorcycles rush was that
if the market was considerably large and was growing at a constant pace,
there was room for a profitable existence for all brands.
In 2001, there were over 30
motorcycle brands in the market. However, with the top five brands
accounting for more than 60% of the market, only 40% of the market
was available for all other new brands put together. Despite the
launch of more vehicles, the survival prospects of many of the
individual brands were deemed to be rather bleak.
Further, the growth in the motorcycle segment was dependant on
continuing favourable market conditions. Analysts claimed that to
sustain this growth rate, the segment would have to completely
cannibalize the market for scooters and a considerable part of the
market for scooterettes2 and mopeds. |
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Considering the fast growing scooterettes segment, with
high demand from female customers, followed by the moderately growing moped
segment and the restructuring in the scooter segment with major national and
foreign players reinforcing their presence, it was unlikely that the entire
growth in the two-wheeler sector would be due to motorcycles.
Analysts also commented that as the two-wheeler industry had grown steadily
for eight years, stages in the product life cycle would apply to the field
sooner, rather than later and the decline stage would invariably come some
day.3 There was little differentiation between the brands being launched
apart from styling as most companies had introduced their four-stroke
vehicles.
With the failure of the joint ventures, the expected introduction of cheaper
Chinese brands, stringent emission norms and threat from major international
players, the survival of indigenous brands looked uncertain. Constrained
with the ruling price levels in the market place, limited infrastructure and
lack of technological innovations when compared to their foreign
counterparts, whether the Indian companies would succeed in generating the
kind of volumes needed to sustain in the competitive motorcycle market,
remains to be seen.
QUESTIONS FOR DISCUSSION
1. Analyze the growth of the Indian two-wheeler industry and comment on
the environmental factors that contributed to its growth?
2. Discuss the segmentation of the two-wheeler industry and identify the
reasons that accounted for the growth of the motorcycle segment?
3. Analyze the future of the motorcycle segment in terms of its ability to
sustain the growth rate and the possibility of Indian players maintaining
their marketshares in competitive conditions.
EXHIBIT I - KEY NATIONAL INCOME STATISTICS[2] Intermediary between
the scooter and a moped. For instance Scooty, Sunny and Kinetic Pride.
[3] Stages in a typical product life cycle (PLC) include development,
growth, maturity and decline.
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