Themes: Business Environment
Period : 1990s-2002
Organization : Hero Honda, TVS
Pub Date : 2002
Countries : India
Industry : Automobile & Automotive
The Motorcycle Story Contd...
As a result of these break-ups, Indian companies were forced to invest heavily in research and development for manufacturing indigenously developed models. Analysts remarked that this was just the beginning of a turbulent phase for Indian motorcycle manufacturers.
The FutureAlthough 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. |
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.
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.
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.