The Hindu Business Line : Bike owners' upgrade to drive compact car sales

COMPACT cars are likely to remain the dominant segment in India as two-wheeler owners upgrade to automobiles, taking advantage of the attractive finance schemes and declining prices of passenger cars.

According to a study conducted by market research agency TNS, nearly one-fifth of the motorcycle owners surveyed indicate a preference for upgrading to cars within the next three years.

Among those intending to purchase a new car in the near future, the budget ranges between Rs 2 lakh and Rs 4 lakh.

This partly explains the success of Maruti Udyog's positioning of `Maruti 800 for Rs 2,599' targeted at two-wheeler owners. The scheme launched in mid-March 2004 in a tie-up with the State Bank of India allows a consumer to purchase a Maruti 800 at an EMI of Rs 2,599 for a seven-year loan.

According to a Maruti official, the response has been overwhelming and subsequently several other banks have also started offering the scheme.

The study also finds that there has been an increase in owners purchasing additional/replacement motorcycles. Among the owners who purchased a new bike in 2004, 26 per cent bought it as an additional/replacement to another two-wheeler.

This represents an eight-percentage point increase compared to those who purchased a new bike in 2001, the study points out.

This was one of the findings of the 2004 Motorcycle Total Customer Satisfaction (MTCS) study conducted by TNS specialist division, TNS Automotive. There is also a note of caution for motorcycle manufacturers as the survey finds a strong preference for makes currently not available in the market. According to the study, Honda, which is set to launch its motorcycles in the Indian market in October-November this year, finds a strong preference. The preference is significant among the owners of executive and premium bikes, particularly from those owning Yamaha and Hero Honda, the study states.

On the other hand, there was a weak preference for Chinese bikes with over 70 per cent owners either unaware or rejecting the brand. Interestingly, Chinese bike maker Lifan is making substantial investments in the country to roll out its bikes next year in India.

"The trends are indicative of a shift in the market composition and its impact on future car sales. Small car manufacturers will certainly benefit from the rapidly growing base of motorcycle owners, while Honda's entry into the motorcycle market will pose a stiff challenge to its competitors," Mr Rajeev Lochan, General Manager (Asia-Pacific) of TNS Automotive, said.

Meanwhile, the customer satisfaction study has found that the newly launched TVS Centra ranks highest among the `executive' bikes. Further, Hero Honda continues to dominate the volume segments, while Royal Enfield enjoys a strong lead in the niche cruiser market.

The study represented the responses of more than six-and-a-half thousand new-motorcycle buyers towards the performance of over 30 models in the key areas of sales satisfaction, product quality, motorcycle performance and design, after-sales service, brand image and cost-of-ownership.

More Stories on : Marketing Research | Cars | Two/Three Wheelers

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