Auto growth robust on demand revival

2010-11 was a record year for the auto industry, when the sector as a whole (inclusive of cars, bikes and commercial vehicles) witnessed a strong year-on-year volume growth of 26 per cent.

A revival in demand following the slowdown and easy availability of financing has been the key reason for this robust performance.

Although when considered individually, passenger car volumes grew by a slightly higher 29 per cent during this period, two-wheelers kept pace , moving up by the same 26 per cent.

Shift in trend

Among the various segments in the two-wheeler industry (scooters/scooterette, motorcycles and mopeds), growth in the scooters segment (42 per cent) has been higher than motorcycles growth (23 per cent). But motorcycles undisputedly remain the largest segment, bringing in about three-fourths of the total volumes.

However, the share of motor cycles in the total two-wheelers volumes has slowly moved down from about 79.5 per cent in 2007-08 to 76.5 per cent in 2010-11.

The share of scooters/scooterettes, on the other hand, has inched up to 17.5 per cent from 14.5 per cent three years ago.

The entry of Mahindra into this segment with products such as Rodeo, Duro, Flyte and Kine in the last two years, the successful launch of the Wego from TVS and the refurbished Dio from the Honda during this period might have been the reasons for the same.

Good run by majors

Among the two-wheeler makers, Bajaj Auto, TVS Motors and Honda have outpaced the two-wheeler industry volume growth this year, growing by 30-35 per cent. Bajaj, in fact, has been on a strong wicket since the turnaround of 2009 and had grown faster than the two-wheeler industry in 2009-10 too.

Hero Honda has lagged the industry in both these years, growing by 23 per cent in 2009-10 and 17 per cent in 2010-11. Be it the 75-125 cc segment , which is Hero Honda's forte or the 125-250 cc segment bikes, Hero Honda has felt the heat, with volume growth slowing.

This is because of the brand-centric strategy adopted by Bajaj Auto with a focus on the differentiation and positioning of the Discover and Pulsar brands at various price points. This helped the company create a new ‘middle of the market' segment between the executive and premium bikes as also the entry and executive bikes.

Consequently, Bajaj Auto's overall market share increased from 17.3 per cent in 2008-09 to 20.5 per cent in 2010-11.

Hero Honda's overall market share has fallen to 44.6 per cent at the end of 2010-11 from 49 per cent in 2008-09. Interestingly, TVS and Honda, two other bigger players have managed to retain their market shares at 15 per cent and 13 per cent respectively in this period.

But challenging times may not yet be over for Hero Honda. With Honda parting ways with the Hero Group, the company would also begin to face competitive pressures from Honda's aggressive plans for the India market beginning 2011-12.

From about 25,000 bikes in 2009-10, Honda has already seen its 75-125 cc segment sales volumes shoot up to about 1,65,800 bikes in 2010-11.

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