A COMPARISON STUDY ON THE TOP THREE TWO WHEELER COMPANIES IN INDIA

DISSERTATION SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION

BY PRASANTH ALOYSIUS (08PG0329)

UNDER THE GUIDANCE OF PROF. VEDA BALAJI FACULTY GUIDE- CUIM

CHRIST UNIVERSITY INSTITUTE OF MANAGEMENT BANGALORE-560029

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DECLARATION
This is to certify that this research project titled A COMPARISON STUDY ON THE TOP THREE TWO WHEELER COMPANIES IN INDIA is an original work carried out in the 5th and 6th trimester of my MBA(2008-2010) under the guidance of Prof. Veda Balaji. This project is made exclusively as a part of my curriculum and will not be submitted in future to any other university or institution. PRASANTH ALOYSIUS 08PG0329 Date :

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CERTIFICATE
This is to certify that Prasanth Aloysius, student of Christ University of Management, Bangalore, has completed this research project titled A COMPARISON STUDY ON THE TOP THREE TWO WHEELER COMPANIES IN INDIA under my guidance from in partial fulfillment of the Masters of Business Administration degree.

PROF. VEDA BALAJI PROFESSOR ,MARKETING DEPT. CHRIST UNIVERSITY INSTITUTE OF MANAGEMENT BANGALORE

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ACKNOWLEDGEMENT
It is with immense satisfaction and pride that, I am completing my Dissertation Project report. I therefore, would like to stop for a few moments and thank Christ University Institute of Management, Bangalore and Prof. Veda Balaji for allowing me to take up my Dissertation Project on comparison study of two wheeler companies in India . I am also very thankful for his extensive support, timely guidance and regular monitoring our progress and providing valuable inputs from time to time. A sincere thanks to all the respondents, for parting their valuable time and being so patient in sharing the relevant information. I also express my overriding debts and thanks to my friends, without whose help it would have been impossible to complete my project. Last but not the least, I would like to thank all those concerned people who have directly or indirectly contributed in the completion of this entire dissertation report.

PRASANTH ALOYSIUS

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Contents
DECLARATION................................................................................ CERTIFICATE....................................................................... ....................... . 2 .3 ..................................

ACKNOWLEDGEMENT.................................................................................. Contents...............................................................................................................

.......... .4 .. 5 .11

1.1 Introduction to Indian Two-wheeler Sector:................. ............................

1.2 Evo lution of Two-wheeler Industry in India:....................... ........................ .12 1.3 Profil e Change in Indian Two-Whee ler Industry...... .................................. 1.4 Key Earnings Drivers........................................................................... 2.1 COMPANY PROFILE ....................................................................... 2.2 Hero Honda Motors Limited......................................... .14

...... . 15

................ . 17 . 18

..............................

2.3 Corporate Profil e:........................................................................... 2.4 Mission statement:................................................................................ 2.5 HERO HONDA'S MANDATE:................................................

............ .18 .... .20

....................... . 20 ........ . 21 . 21

2.6 S.W.O.T ANALYSIS:........................................................................... STRENGTHS:........................................................................

............................

WEEKNESS:.....................................................................................

................. . 21 ... .22 ..24

2.7 HERO HONDAS CORE VALUES.............................................................. 2.8 Product range of HERO HONDA................................................................ 2.9 BAJAJ auto ltd........................................................................

................... .27

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2.11 BAJAJ AUTOS MISSION:............................................................ 2.12 SWOT Analys is.................................................................... 2.13 The Inevitable Change.......................................................

............... .29 .................... .29 ..................... .31 ..32 .. 35 .35

2.14 Product range of Bajaj............................................................................ 2.15 Curr ent Situation.................................................................................... Curr ent Performance...................................................... 2.16 ..............................

The Industry Analys is - Five Forces Analys is-BAL.......................... ........ .36 ...................... .36 .......... .37

Ext ernal Environment.............................................................

2.17 Product & Adv ertising Strategies OF BAL...................................... 2.18 Strategies & Implementation............................................... FMCG Business Model....................................................................

................... .39 ............... .39 .... .39 ........ .40 . 41 . 42

2.19 Other Strategic Issues......................................................................... 2.20 Strategies for the Overseas Markets............................................... 2.21 R&D...................................................................... 2.22 The Future..............................................................

.................................. ................................

2.23 New Strategies adopted by Bajaj...........................................

................. .43

2.24 HONDA MOTORCYCLE & SCOOTER INDIA (Pvt .) Ltd. (HMSI)................ ..... .44 2.25 About Honda Motorcycle & Scoo ter India Pvt . Ltd.............................. 2.26 CORPORATE PROFILE........................................................... 2.27 Mission St atemen t..................................................... ..... .45

................... .45 . 46

.............................

2.28 SWOT Analys is.................................................................... 2.29 PRODUCT RANGE:...................................................................

.................... .46 ................ .48 ............. .51 ......... .52

2.30 Market growth and market size (HMSI)...................................... 2.31 Strategy of rivals Vs HMSI.............................................................. 2.32 Strategy of HMSI...................................................................

.................. .53

2.34 Strategy adopted by TVS & Bajaj for increasing sales and coun tering growth of HMSI.............................................................. .................................. . 54 2.35 Review of strategies adopted by Honda.................. ............................... .54

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3.1 RESEARCH DESIGN....................................................................................... 3.2 STATEMENT OF PROBLEM..................................................

. 58

....................... .58 ...... . 59

3.3 HYPOTHESIS........................................................................................ 3.4 AIMS AND OBJECTIVES.........................................................

..................... . 60 ........... .60 .. 60

3.5 SAMPLING TECHNI QUE................................................................... 3.6 SAMPLE UNIT............................................................................................ 3.7 SAMPLE SIZE............................................................................

................. .60 .. .61

3.8 STATISTICAL DESIGN............................................................................... 3.9 PRIMARY DATA............................................................................ 3.10 SECONDARY DATA.........................................................

.............. .61

......................... .62 ..... .62

3.11 LIMITATIONS OF STUDY...................................................................... 4.1 RESPONDENTS PROFILE......................................................... 4.2 SEX............................................................................ 4.3 MARITAL STATUS.....................................................

..................... .64 . 64 .65

............................... .................................

4.4 OCCUPATION........................................................................................ 4.5 AGE........................................................................................... 4.6 INCOME........................................................................................ 5.1 DATA ANALYSIS................................................................................. 5.2 OWNERSHIP OF TWO WHEELER.........................................

..... .66

................ . 67 ............. . 74 .......... .76

..................... .76 .77

5.3 MOST VIEWED ADS........................................................

...........................

5.4 MOST INFLUENTIAL ADS .................................................................... 5.5 BEST RECALLED ADS.............................................

..... .78 .79 ..80

..................................

5.6 MOST COMMON SOURCE OF ADS.............................................................

5.7 SOURCE OF RELIABLE INFORMATION FOR PURCHASE DECISIONS............ .81 5.8 FACTORS WHICH MOTIVATE PURCHASING DECISION............................... 5.9 PREFERRED PRICE RANGE(in 000 s)..................................................... ..83

..... .84

5.10 RATING FOR VARIOUS FACTORS(1 LEAST PREFERRED AND 7 MOST PREFERRED)............................................................................................... ...... . 86

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5.11 IS CROSSCHECKING DONE?.....................................

.............................. .......................... ............................. ...............................

. 88 .90 .91 . 91

6.1 DEMAND AND GROWTH DRIVERS.................................. Personal Income.............................................................. Demography and Inspiration.........................................

Penetration Level................................................................................ Other Factors.................................................................................. 7.1 FIN DIN GS..................................................................... 8.1 HYPOTHESIS TESTING........................................................

.......... . 91 .............. .91

............................ . 92 ....................... .94 ....... . 96 ............. .97 .............. .97 .................. .97 ... .97 . 98

9.1 RECOMMENDATIONS.......................................................................... Scaling Up Service Centers.............................................................. Focus on Easy Credit Lending......................................................... Investment in Research and Development.................................

Focus on Exp orts and Global Market.......................................................... 10.1 LEARNINGS.............................................................. 11.1 BIBLIOGRAPHY.............................................................. ...............................

........................ .100 . 103

12.1 QUESTIONN AIRE....................................................................................

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1.1 Introduction to Indian Two-wheeler Sector: The Indian automotive industry consists of five segments: commercial vehicles; multi-utility vehicles & passenger cars; two-wheelers; three-wheelers; and tractors. With 7,822,963 units sold in the domestic market and 753,591 units exported during the first nine months of FY2007, the industry (excluding tractors) marked a growth of 43% over the corresponding previous. The two-wheeler sales have witnessed a spectacular growth trend since the mid nineties. India is the second largest producer and manufacturer of two-wheelers in the world. Indian two-wheeler industry has got spectacular growth in the last few years. Indian two-wheeler industry had a small beginning in the early 50's. The Automobile Products of India (API) started manufacturing scooters in the country. Bikes are a major segment of Indian two wheeler industry, the other two being scooters and mopeds. Indian companies are among the largest two-wheeler manufacturers in the world. Hero Honda and Bajaj Auto are two of the Indian companies that top the list of world companies manufacturing two-wheelers. The two-wheeler market was opened to foreign companies in the mid 1980s. The openness of Indian market to foreign companies lead to the arrival of new models of two-wheelers into India. Easy availability of loans from the banks, relatively low rate of interest and the discount of prices offered by the dealers and manufacturers lead to the increasing demand for two-wheeler vehicles in India. This lead to the strong growth of Indian automobile industry.

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Evolution of Two-wheeler Industry in India:

Two-wheeler segment is one of the most important components of the automobile sector that has undergone significant changes due to shift in policy environment. The twowheeler industry has been in existence in the country since 1955. It consists of three segments viz. scooters, motorcycles and mopeds. In India there are some MNCs and Indian company dealing in automobile sector. The main key players who are dealing in this sector are Hero Honda, Bajaj, Yamaha, Honda, and TVS. Hero Honda is the biggest player in this sector in India as well as in the world and playing a very important role in two wheeler automobile sector. Hero Honda, Bajaj and TVS are the Indian companies and Yamaha & Honda are international automobile brand.

Bajaj is the first Indian two wheeler automobile company in the market since 1945 with the name M/s Bacharj trading corporation private limited. In 1959 M/s Bacharj trading corporation private limited change its name as Bajaj Auto Ltd. Bajaj Auto obtains license from the Government of India to manufacture two- and three-wheelers vehicles in 1959.

Hero Honda Motors Limited was established in 1984, as a joint venture between India's Hero Group (world's largest bicycle manufacturers) and Japan's Honda Motor Company. And created the world's single largest two wheeler company and also one of the most successful joint ventures worldwide. During the 80s, Hero Honda became the first company in India. Over 19 million Hero Honda two wheelers running on Indian roads today.

TVS Motors is the third largest company in the two-wheeler industry with a market share of 16%. Infect, it is the only Indian company without a foreign collaboration in the two-wheeler industry. When the company opted out of the collaboration with Suzuki in 2002, many believed that TVS was headed towards extinction. But the company proved the doomsayers wrong and came out with a very successful `TVS Victor'. TVS Motors Ltd. originally incorporated in 1982 to manufacture two-wheelers in collaboration with Suzuki Motors of Japan, TVS was one of the leaders in two-wheeler industry.

Yamaha Motor Corporation is the auto mobile company of Japan (1953) which works in India since 1955 and providing latest technology in India from last two decades. Yamaha Motor India was incorporated in august 2001 as a 100% subsidiary of Yamaha motor corporation, Japan

Honda motors of Japan is not a new name in the two wheeler scenario in the country, they were in a tie up with the Firodias owned Kinetic group. However in the late 90s they parted ways after problems arose over issues like introduction of new models, advertising expenditure, marketing strategies and other related issues. In the mid 80 Honda motors of Japan joined hands with the largest bicycle maker of India the Hero cycles to create Hero Honda which in a couple of decades or so have gone on to become the single largest motorcycle company in the world. Though Honda has come on its own on the Indian market yet it will be providing technological support to Hero Honda for the next ten years. Thus presenting a unique situation in which the company will be in direct competition with the company which it has been associated for nearly two decades. Honda Motorcycles and Scooters India limited, a 100% subsidiary of Honda motor company Japan eventually entered the Indian market with Honda Unicorn in 2004.

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1.3 Profile Change in Indian Two-Wheeler Industry

The demand shift from scooters to motorcycles in the 1990s was without parallel in any comparable product category in India. This was mainly attributed to the change in customers' preference towards fuel-efficient and aesthetically appealing models, which scooter manufacturers failed to provide. The delayed launch of new, advanced scooter models, fear of four-stroke scooters being prone to increased skidding risks and vibrations, and the difficulty of maintenance also contributed to this shift.

Interestingly, the growth in the motorcycle segment was mainly driven by the demand from rural and semi-urban consumers. An estimated 60% of the demand for motorcycles came from rural and semi-urban customers. The rise in their disposable incomes on account of good monsoons in the 1990s provided the normally conservative rural and semi-urban customers with extra money that induced them to experiment with new, innovative products.

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Shift from Scooter to Motorcycle Scooter No. 709.73 840.17 1,033.52 1,223.43 1,301.05 1,262.70 1,325.87 901.88 Motorcyc le No. % 379.06 25.2 472.58 26.7 652.01 29.5 809.53 30.4 978.68 33.0 1,131.31 37.2 1,395.66 41.0 2,156.03 58.0 Moped No. % 414.57 27.6 457.47 25.8 523.70 23.7 627.08 23.6 683.76 23.1 648.84 21.3 681.90 20.0 687.64 18.0

Year 1993 1994 1995 1996 1997 1998 1999 2000

Total In '000 1,503.36 1,770.22 2,209.23 2,660.04 2,963.49 3,042.85 3,403.43 3,745.55

Overall Growth -6.40 17.75 24.80 20.41 11.41 2.68 11.85 -0.80

% 47.2 47.5 46.8 46.0 43.9 41.5 39.0 24.0

Source: (SIAM). No. Number of Units (in '000)

Advanced technology, larger wheelbase, higher ground clearance and the ability to ride on bad roads with less effort and less danger of skidding and decreased maintenance cost were the other factors that encouraged customers to choose motorbikes over other two-wheelers.

1.4 Key Earnings Drivers

Below are the key factors, which strongly affect the auto industry: Government policy impact on petrol prices: Petrol prices determine the running cost of two/three wheelers expressed in Rupees per kilometer. Petrol prices are the highest in India as GOI subsidizes kerosene and diesel. But with the recent change in GOI policy to reduce the subsidy, the prices of petrol will remain constant at the current prices. This will have a positive effect on purchases of two/three wheelers. Improvement in disposable income: With the increase in salary levels, due to entry of multinationals following liberalization process and fifth pay commission, the disposable income has improved exponentially over the years. This will have multiplier effect on demand for consumer durables including two-wheelers. Changes in prices of second-hand cars: The second hand car prices of small cars have come down sharply in the recent past. This will shift the demand from higher-end twowheelers to cars and affect the demand for two-wheelers negatively. A further drop in second-hand car prices will lead to pressure on the two-wheeler majors who plan to release higher-end scooters and motorcycles. Implementation of mass transport system: Many states have planned to implement mass

transport systems in state capitals in the future. This will have negative impact on demand for two-wheelers in the long run. But taking into account the delays involved in implementation of such large infrastructure projects the demand to be affected only five to seven years down the line. Availability of credit for vehicle purchase: The availability and cost of finance affects the demand for two- and three-wheelers as the trend for increased credit purchases for consumer durables have increased over the years. Therefore, any change with respect to any of these two parameters as a result of change in RBI policy has to be closely watched to assess the demand for two- and three-wheelers.

COMPANY PROFILE
Hero Honda Motors Limited
Hero Honda Motors Limited was established in 1984, as a joint venture between India's Hero Group (world's largest bicycle manufacturers) and Japan's Honda Motor Company. In 1985 production began with the launch of its first motorcycle, the CD100, which gave 80 km to the liter. In 1987 the engine plant was started and in 1989 the Company produced its 3,00,000th motorcycle. In 2001 Hero Honda manufactured its 50,00,000th motorbike. Hero Honda has a reputation of being the most fuel-efficient and the world's single largest two wheeler Company. Shri Brijmohan Lall Munjal is the chairman and managing director of this Company.

As early as in 1960s very few Indian bicycle manufacturers were interested in exports. However, the hero groups foray into the overseas markets in 1963 pioneered Indian exports in the bicycle segment. It was more prompted essentially by the need to remain attuned to the global marketplace. While initial exports were restricted to Africa and the middle east, today more than 50% of the exports from Hero Cycles Ltd. Meet the demands of sophisticated markets in Europe and America. This is primarily because of appropriate product development and excellent quality that hero offers..

Hero Honda has grown like no other company in the auto business. Several times in the path, savvy observers have insisted that it has grown just too big and that no company its size can continue to show growth rates. But Hero Honda has ignored that opinion and continued growing at the place it has set many years ago. Hero Honda today faces more competitor than it has ever in the history. Now that is the undisputed two wheeler Numero Uno in the country. Every single two wheeler manufacturer in India if looking market share away from it. More over for the first time there are so many four- stroke challengers in the market. And Hero Hondas best selling products are ageing.

2.3 Corporate Profile:

The joint venture between India's Hero Group and Honda Motor Company, Japan has not only created the world's single largest two wheeler company but also one of the most successful joint ventures worldwide.

During the 80s, Hero Honda became the first company in India to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. A legendary 'Fill it Shut it - Forget it' campaign captured the imagination of commuters across India, and Hero Honda sold millions of bikes purely on the commitment of increased mileage

Over 19 million Hero Honda two wheelers tread Indian roads today. These are almost as many as the number of people in Finland, Ireland and Sweden put together! Hero Honda has consistently grown at double digits since inception; and today, every second motorcycle sold in the country is a Hero Honda. Every 30 seconds, someone in India buys Hero Honda's top -selling motorcycle Splendor. This festive season, the company sold half a million two wheelers in a single montha feat unparalleled in global automotive history.

Hero Honda bikes currently roll out from two globally benchmarked manufacturing facilities based at Dharuhera and Gurgaon in Haryana. These plants together are capable of churning out 3.9 million bikes per year. A third state of the art manufacturing facility at Hardwar in Uttranchal will soon be commissioned to cope with sustained customer demand.

Hero Honda's extensive sales and service network now spans over 3000 customer touch points. These comprise a mix of dealerships, service and spare points, spare parts stockiest and authorized representatives of dealers located across different geographies. Hero Honda values its relationship with customers. Its unique CRM initiative - Hero Honda Passport Program, one of the largest programs of this kind in the world, has over 3 million members on its roster. The program has not only helped Hero Honda understand its customers and deliver value at different price points, but has also created a loyal community of

brand ambassadors.

Having reached an unassailable pole position in the Indian two wheeler market, Hero Honda is constantly working towards consolidating its position in the market place. The company believes that changing demographic profile of India, increasing urbanization and the empowerment of rural India will add millions of new families to the economic mainstream. This would provide the growth ballast that would sustain Hero Honda in the years to come. As Brijmohan Lall Munjal, the Chairman, Hero Honda Motors succinctly points out, "We pioneered Indias motorcycle industry, and it's our responsibility now to take the industry to the next level. We'll do all it takes to reach there.''

2.4 Mission statement:

Hero Hondas mission is to strive for synergy between technology, systems and human resources, to produce products and services that meet the quality, performance and price aspirations of its customers. At the same time maintain the highest standards of ethics and social responsibilities.

This mission is what drives Hero Honda to new heights in excellence and helps the organization forge a unique and mutually beneficial relationship with all its stake holder

2.5 HERO HONDA'S MANDATE:

Hero Honda is a world leader because of its excellent manpower, proven management, extensive dealer network, efficient supply chain and world-class products with cutting edge technology from Honda Motor Company, Japan. The teamwork and commitment are manifested in the highest level of customer satisfaction, and this goes a long way towards reinforcing its leadership status

2.6 S.W.O.T ANALYSIS:

STRENGTHS: Hero Honda introduced First stroke bike in the Indian market. Hero Honda gives 80 Km/Liter Avg. Huge sale network (3500 Dealers). Better sale service. It has the highest share in automobile sector. It has a good brand image. It gives better service for customers. Best customer preference. Debt equity ratio is only 0.1. The company has clarified about its intention of setting a third plant in addition to its existing two plants. The company has embarked upon a green field expansion plan and has earmarked Rs 2 bn for the same. It should be noted that the company has a strong cash flow position; it generated Rs 9 bn from operation in FY04 and is virtually a debt free company. WEEKNESS: Suppose to be very sophisticated. Not fit for ruler India. They have big gap between cubic capacities of its products. Its market share is reducing from last few years. Spare parts are too costly.

OPPOURTUNITIES:

 Hero Hondas the first manufacture to launch eco friendly bikes with 4-stroke engines. They have attained a stronger good will and popularity in the industry and the consumers. They should go in new segments of bikes. There is large no. of young consumers in the market. Company has to focus on them. They have big opportunities in heavy bike segments. As government polices are amended against pollution in metro cities, Hero Honda being 4 stroke bike manufacture have great opportunities to explore its new innovations and technologies.

THREATS:

Main threats to Hero Honda are their competitors like:o Bajaj Auto Ltd. o TVS motors Ltd. o Yamaha Motors India. o Honda motorcycle and scooter India. The cost of the product is very high in comparison to other companies. Decreasing market share.

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2.7 HERO HONDAS CORE VALUES

Respect for Human Beings. Is a responsive organization? Is a boundary less organization? Is striving for excellence. Provide fearless, enjoyable working environment. Is self-reliant. Providing learning environment. Is a caring organization? Enables relationship buildings. Prompts transparency & trust. Is creativity promoting. Is performance oriented?

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2.8 Product range of HERO HONDA

Scooters HeroHonda Pleasure Hero Honda Pleasure

Manufacturer Hero Honda motorcycle Ltd. Production Price Engine 2005 -present Rs. 37990 102 cc, 7bhp@ 7000 rpm, torque 0.78 kg- m @5000 rpm

Motorcycles CD Dawn CD Deluxe Splendour + Splendour NXG Passion pro Passion plus Super Splendour

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Glamour Glamour PGM F1 Achiever CBZ XTREME HUNK Karizma Karizma ZMR Features of a few bikes from above mentioned list from HERO HONDA are as follows.. CD Dawn Manufacturer Hero Honda motorcycle Ltd. Production Price Engine 2003-present Rs. 37990 97.2 cc, 7.7 ps@ 7500 rpm, torque0.77 kg -m @6000 rpm CD Dawn

CD Deluxe

CD Deluxe

Manufacturer Hero Honda motorcycle Ltd. Production Price Engine 2007-present Rs. 40,000 97.2 cc, 7.7 ps@ 7500 rpm,

torque0.77 kg -m @6000 rpm

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Splendor +

Splendor +

Manufacturer Hero Honda motorcycle Ltd. Production Price Engine 2003-present Rs. 40,400 97.2 cc, 7.7 ps@ 8000 torque7.95 N-m @5000 rpm Hunk rpm,

Hunk

Manufacturer Hero Honda motorcycle Ltd. Production Price Engine 2007-present Rs. 63,000 150 cc, 14.4 ps@ 8500 rpm, torque12 .8 N-m @6500 rpm

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Karizma ZMR

Manufacturer Hero Honda motorcycle Ltd. Production Price Engine 2009-present Rs. 91,000 223 cc, 17.6bhp@ 7000 rpm, torque18.35 N-m @6000 rpm

Karizma ZMR

2.9 BAJAJ auto ltd

Since 1986, there is a technical tie-up of Bajaj Auto Ltd. with Kawasaki Heavy Industries of Japan to manufacture state-of-art range of latest two-wheelers in India. The JV has already given the Indian market the KB series, 4S and 4S Champion, Boxer, the Caliber series, and Wind125

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Kawasaki Heavy Industries is a Fortune 500 company with a turnover of USD 10 billion (Rs. 45,840 crore). It has crafted new technologies for more than hundred years. The technologies of KHI have redefined space systems, aircrafts, jet engines, ships, locomotive, energy plants, automation system, construction machinery, and of course high reliability twowheelers

KHI has given the world its legendary series of 600-1200cc Ninja and 1600 Vulcan bikes. Straight from its design boards, the Kawasaki Bajaj Eliminator, India's first real cruiser bike, redefines the pleasure of "biking" in looks as well as performance.

2.10 Corporate Profile

'Inspiring Confidence,' the tagline, has build up confidence, through excitement engineering, not only to domestic consumers but also internationally. Established just eight decades back in 1926 by Jamnalal Bajaj, the company has been vested with India's largest exporter of two and three wheelers, 196,710 units in 2004-05, a great 26 per cent jump over the previous year.

Bajaj Auto Ltd. sales have increased by approximately 21 per cent in the year 200405, which exceeds Rs 65.4 billion, a record in the history of the company. The gross operating profit stands at Rs. 9.3 billion, again a record. The profits after tax of the BAL are close to Rs. 7.7 billion, and the pre-tax return on operating capital is at an impressive 80 per cent.

The strength of the company is its quality products, excellence in engineering and design, and its ability to delight the customers. The Pulsar, introduced in November 2004, is continually dominating the premium segment of the motorcycle market, helping to maintain the market superiority. Discover DTSi, one more successful bike on Indian roads, is in the

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'value' segment of the motorcycle market. It incorporates a high degree of power with fuel efficiency of a 100 cc motorcycle.

BAL is committed to prevention of pollution, continual improvement of environment performance and compliance with all environmental legislation and regulations. They always believe in providing the customer 'value for money' and keep an special eye upon quality, safety, productivity, cost and delivery.

2.11 BAJAJ AUTOS MISSION:

We at Bajaj Auto continue to firmly believe in providing the customer Value for money, for years through our products and services. This we shall maintain and improve,

In our decision making, quality, safety and service will be given as much consideration as productivity, cost and delivery.

Quality shall be built into every aspect of our work life and business operations. Quality improvements and customer satisfaction shall be the responsibility of every employee.

2.12 SWOT Analysis

Let's analyze the position of Bajaj in the current market set-up, evaluating its strengths, weaknesses, threats and opportunities available.

Strengths

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 Highly experienced management. Product design and development capabilities. Extensive R & D focus. Widespread distribution network. High performance products across all categories. High export to domestic sales ratio. Great financial support network (For financing the automobile) High economies of scale. High economies of scope.

Weaknesses

Hasn't employed the excess cash for long. Still has no established brand to match Hero Honda's Splendor in commuter segment. Not a global player in spite of huge volumes. Not a globally recognizable brand (unlike the JV partner Kawasaki)

Opportunities

Double-digit growth in two-wheeler market. Untapped market above 180 cc in motorcycles. More maturity and movement towards higher-end motorcycles.

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 The growing gearless trendy scooters and scooterette market. Growing world demand for entry-level motorcycles especially in emerging markets

Threats

The competition catches-up any new innovation in no time. Threat of cheap imported motorcycles from China. Margins getting squeezed from both the directions (Price as well as Cost)

2.13 The Inevitable Change

Bajaj on internal analysis found that it lacked

1. The technical expertise to deliver competitive goods.

2. The design know-how.

3. And the immediate inability to support the onslaught of competitors.

All these forced Bajaj to look for an international partner who could bring in technology and also offer some basic platforms to be manufactured and marketed in India. Kawasaki of Japan is a world-renowned manufacturer of high performance bikes. Bajaj entered into a strategic tie-up with Kawasaki in late 1990s to enhance its product line and knowledge up-gradation to support long-term strategies.

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This served the purpose of sustaining the market competition for a while. From 1996 to 2000, Bajaj invested hugely in infrastructure while simultaneously developing product design and innovation capabilities, which is the prime reason behind the energetic Bajaj of 21st century. Bajaj introduced a slew of products right from entry-level motorcycle to the high premium segment right from 2001 onwards, and since then its raining success all the way for Bajaj.

Last quarter, Bajaj had impressive performance growing at a rate of 20%+ when the largest manufacturer grew at just 6%. This stands a testimony to the various important strategic decisions over the past decade.

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PULSAR 135 LS PULSAR 150 DTS-i PULSAR 180 DTS-i PULSAR 220 DTS-i DISCOVER 135 DTS-i DISCOVER DTS-i PLATINA 125 PLATINA 100 AVENGER 200 DTS-i KAWAZAKI NINJA 250R

Bajaj Pulsar 220 DTS-i

Features of a few bikes from above mentioned list from BAJAJ are as follows.. PULSAR

Manufacturer Bajaj Auto Production Price Engine 2008-present Rs. 78,200 220 cc ,21.04 @ 8500 (Ps @ RPM)
19.12 @ 7000 (Nm @ RPM)

220 DTS-i

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Bajaj Discover DTS-i

DISCOVER 135 DTS-i

Manufacturer Bajaj Auto Production Price Engine 2005-present Rs.47000-49200

135 CC ,9.64kw (13.10 ps) @ 8500rpm ,11 .88 nm @ 6500 rpm /1.21 kgm

Bajaj Platina

PLATINA 125 cc
Manufacturer Bajaj Auto Production Price Engine 2006-present Rs. 38621 125CC,8.5PS

@7000rpm,10N

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Bajaj Avenger DTS-i

AVENGER 200 DTS-i

Manufactur Bajaj Auto er Production Price Engine 2005-present Rs. 64,524 200cc, 17.51 PS @ 8000 rpm
16.78 Nm @ 6000 rpm

2.15 Current Situation

Current Performance. BAL is currently outperforming the industry growth rate in two-wheeler segment with 32% growth in year 2004-05 v/s industry growth of 19%.

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 Market share in Motorcycles is improving with every passing year. It has also increased from 28% in 2004-05 to 31% in 2005-06. Annual turnover for the year 2005-06 is Rs. 81.06 billion v/s Rs. 63.23 billion a year before - an increase of 28% which is very healthy. BAL has significant presence in all the three basic segments - Price Segment, Value Segment and Performance Segment - and has been showing increased sales in all the segments over years. Besides this, BAL is a market leader in two-wheeler exports and it consists a great chunk of there overall revenues. Currently, BAL is selling over 1 lac motorcycles annually in Sri Lanka, further, they are commanding 50% market share in Central America.

2.16 The Industry Analysis - Five Forces Analysis-BAL

External Environment Industry: Automobiles: Two Wheelers Segments: Presence in all segments Entry Barriers: Entry barriers are high. The market runs on high economies of scale and on high economies of scope. The need for technical expertise is high. Owning a strong distribution network is important and is very costly. All these make the barrier high enough to be a deterrent for new entrants. Supplier Bargaining Power: Suppliers of auto components are fragmented and are extremely critical for this industry since most of the component work is outsourced. Proper supply chain management is a costly yet critical need.

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Buyer's Bargaining Power: Buyers in automobile market have more choice to choose from and the increasing competition is driving the bargaining power of customers uphill. With more models to choose from in almost all categories, the market forces have empowered the buyers to a large extent. Industry Rivalry: The industry rivalry is extremely high with any product being matched in a few months by competitor. This instinct of the industry is primarily driven by the technical capabilities acquired over years of gestation under the technical collaboration with international players. Substitutes: There is no perfect substitute to this industry. Also, if there is any substitute to a two-wheeler, Bajaj has presence in it. Cars, which again are a mode of transport, do never directly compete or come in consideration while selecting a two-wheeler, cycles do never even compete with the low entry level moped for even this choice comes at a comparatively higher economic potential. Summarizing the industry analysis, it can be said that the two-wheeler market is attractive as it scores well on three out of five categories

2.17 Product & Advertising Strategies OF BAL

The focus of BAL off late has been on providing the best of the class models at competitive prices. Most of the Bajaj models come loaded with the latest features within the price band acceptable by the market. BAL has been the pioneer in stretching competition into providing latest features in the price segment by updating the low price bikes with the latest features like disk-brakes, anti-skid technology and dual suspension, etc.

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BAL adopted different marketing strategies for different models, few of them are discussed below: Kawasaki 4S - First attempt by bajaj to make a mark in the motorcycle segment. The target customer was the father in the family but the target audience of the commercial was the son in the family. The time at which Kawasaki 4S was launched Hero Honda was the market leader in fuel-efficient bikes and Yamaha in the performance bikes. The commercial of Kawasaki 4S had the punch line "Kyun Hero" means "now what hero" which reflected the aggressiveness in the marketing front by the company. Boxer - It took the reins from where the Kawasaki 4S left. Target was the rural population and the price sensitive customer. Boxer marketed as a value for money bike with great mileage. Larger wheelbase, high ground clearance and high mileage were the selling factors and it was in direct competition to Hero Honda Dawn and Suzuki MX100. Caliber - The focus for the Caliber 115 was youth. And though Bajaj made the bike look bigger and feel more powerful than its predecessor (characteristics that will attract the average, 25-plus, executive segment bike buyer), its approach towards advertising is even more radically different this time around. Bajaj gave the mandate for the ad campaign to Lowe, picking them from the clique of three agencies that do promos for the company (the other two being Leo Burnett and O&M). Going by the initial market response, the campaign was clearly a hit in the 5-10 years age bracket. So, the teaser campaign and the emphasis on the Caliber 115 being a `Hoodibabaa' bike placed it as a trendy motorcycle for the collegegoers and the 25 plus executives both at the same time. Pulsar - Pulsar was launched in direct competition to the Hero Honda's 'CBZ' model in 150 cc plus segment. The campaign beared innovative punch line of "Definitely Male" positioning Pulsar to be a masculine-looking model with an appeal to the performance sensitive customers. The Pulsar went one step ahead of Hero Honda's 'CBZ' and launched a twin variant of Pulsar with the 180 cc model. The model was a great success and has already crossed 1 million mark in sales.

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Discover - The same DTSI technology of Pulsar extended to 125 cc Discover was a great success. With this, Bajaj could realize its success riding on the back of technological innovation rather than the joint venture way followed by competitors to gain market share.

2.18 Strategies & Implementation

FMCG Business Model BAL now is taking a leaf out of the FMCG business model to take the company to greater heights. Bajaj has kicked off a project to completely restructure the company's retail network and create multiple sales channels. Over the next few months, the company will set-up separate sales channels for every segment of its business and consumers. Bajaj Auto's entire product portfolio, from the entry-level to the premium, is being sold by the same dealers. The restructuring will involve separate dealer networks catering to the urban and rural markets as well as its three-wheeler and premium bikes segments. Bajaj Auto also plans to set-up an independent network of dealers for the rural areas. The needs of financing, selling, distribution and even after-sales service are completely different in the rural areas and do not makes sense for city dealers to control this. The company also plans to set-up exclusive dealerships for its three-wheeler products instead of having them sold through an estimated 300 of its existing dealers.

2.19 Other Strategic Issues

Cash is strength: Bajaj Auto has been sitting on a cash pile for over five years now. Over the next couple of years, competition in the two-wheeler market is set to intensify. TVS Motors and Hero Honda are on a product expansion binge. To fight this battle and retain its hard- earned market share in the motorcycle segment, Bajaj Auto will need its cash muscle. A look at its own story over the past five years provides valuable insight.

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Delisting worry: What is worrying is that there is an idea to delist the investment company (also an indirect indication that it would be listed initially). This would be closing the valve of equitable ownership distribution. There is a hint of a buyback of shares of the investment company as this is the only way it can be delisted. The company would not be short of cash to put through such a buyback. Factors such as low valuation, low trading interest and the need to provide shareholders may be cited as plausible reasons for the buyback. Stake for Kawasaki: Bajaj Auto's attempt to vest the surplus cash in a separate company may be a prelude to offering a stake to Kawasaki of Japan in the equity of the automobile company. The latter has been playing an increasingly active role in Bajaj's recent models, and its brand name is also more visible in Bajaj bikes than in the past. Better value proposition: Shareholder interests may be better served if the cash is retained to pursue growth in a tough market. This would also obviate the need to fork-out fancy sums as stamp duty to the government for the de-merger. A combination of a large one-time dividend and a regular buyback program through the tender route may offer better value. A strategic stake for Kawasaki would only positively influence the stock's valuation.

2.20 Strategies for the Overseas Markets

Bajaj Auto looks at external markets primarily with three strategies: 1) A market where all BAL need to do is distribute through CKD or CBU routes. 2) Markets where BAL need to create new products. 3) Markets where BAL need to enter with existing products and probably with a good distributor or a production facility or a joint venture.

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Earlier, most of the products that Bajaj exported were scooters and some motorcycles. However, in its target markets, like in India, the shift was towards motorcycles. With the expansion in Bajaj's own range to almost five-six platforms of motorcycles, it had a better offering to export, also the reason for its stronger showing. For the last fiscal, 60 per cent of its exports were two-wheelers and the rest three-wheelers. Of the two-wheeler exports, close to 90 per cent were motorcycles. Bajaj has identified certain key markets, which hold potential. Its first overseas office established at the Jebel Ali free trade zone has been the focal point for exports to middle Africa and the Saharan nations. Egypt and Iran also continue to be strong markets for Bajaj. The other market, which would be a focus area, is South America, where the company feels it is fairly well represented in most countries, except in Brazil, the largest market. The company recently participated in a large auto exhibition in Brazil and found good consumer acceptance to products like Pulsar and Wind 125. The other focus area is the ASEAN nations, which constitute the third biggest consumer of two-wheelers. The biggest among them is Indonesia, where Bajaj distributors are looking to introduce eco-friendly four-stroke auto rickshaws. But two-wheeler market requires great deal of effort from BAL. Everybody is there with Honda leading the show. There's Suzuki, Kawasaki and some Korean and Chinese models. BAL should look at the right product mix for two-wheelers. Bajaj's Pulsar model has taken off well there. It also wants to develop a new step-through model for the Indonesian market, but for now it will create a base there with its motorcycle models. Bajaj has also made a beginning by selling bikes in the Philippines branded in the name of its technical partner, Kawasaki. The two signed an MoU in February. Kawasaki, a large multiproduct conglomerate, only makes high-end bikes and does not have sub-200cc models. Kawasaki is marketing the new model, Wind 125, developed by both companies, in the Philippines. The Bajaj-developed models, Caliber and Byk, which is a fuel-efficient bike, are also being distributed by Kawasaki. This is a good beginning strategically for Kawasaki to evince interest in Bajaj products for markets which can still buy less than 150 cc.

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Bajaj Auto has a huge, extensive and very well-equipped Research and Development wing geared to meet two critical organizational goals: development of exciting new products that anticipate and meet emerging customer needs in India and abroad, and development of ecofriendly automobile technologies. While the manpower strength of the R&D represents a cross-section of in-depth design and engineering expertise, the company has also been investing heavily in the latest, sophisticated technologies to scale down product development lifecycles and enhance testing capabilities Bajaj Auto R&D also enjoys access to the specialized expertise of leading international design and automobile engineering companies working in specific areas. Based on their own brand of globalization, they have built their distribution network over 60 countries worldwide and multiplied the exports from 1% of total turnover in Fiscal 1989-90 to over 5% in Fiscal 1996-97. The countries where their products have a large market are USA, Argentina, Colombia, Peru, Bangladesh, Sri Lanka, Italy, Sweden, Germany, Iran and Egypt. Bajaj leads Colombia with 65% of the scooter market, in Uruguay with 30% of the motorcycle market and in Bangladesh with 95% of the three-wheeler market. Several new models are being developed specifically for global markets and with these the company will progressively endeavor to establish its presence in Europe too.

2.22 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 costcuts, technology enhancements and up-gradations and styling. Their margins came under pressure as marketing costs escalated.

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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 favorable 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 scooters and mopeds. Considering the fast growing scooter 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. 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.

2.23 New Strategies adopted by Bajaj pg.

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Major emphasis to be on new product launches. Have a new scooter market under development will be launched early 2010. Plan to launch a three-wheeled motorcycle, to cater to a niche segment. Bajaj expects stronger growth in the first quarter of FY'10 powered by the continuing success of the XCD 135 DTS-Si as also the launch of product upgrades off the Pulsar platform As a result of the recent stake hike by Bajaj Auto, KTM now has Rajiv Bajaj on its board and the cooperation agreement between the two companies covers product development, technology, vendor sourcing and distribution. Existing Products Bajaj Kristal DTSi Pulsar Discover 135 DTSi Platina 100, 125 DTSi New Launch's in 2009 XCD 135 DTSi XCD Sprint Discover 100 DTS-Si Kawasaki Ninja 250R

Bajaj

2.24 HONDA MOTORCYCLE & SCOOTER INDIA (Pvt.) Ltd.(HMSI)

Honda is the world's largest manufacturer of 2-wheelers. Its symbol, the Wings, represents the company's unwavering dedication in achieving goals that are unique and above all, conforming to international norms. These wings are now in India as Honda Motorcycle & Scooter India Pvt. Ltd. (HMSI), a wholly owned subsidiary of Honda Motor Company Ltd.,

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Japan. These wings are here to initiate a change and make a difference in the Indian 2wheeler industry. Honda's dream for India is to not only manufacture 2-wheelers of global quality, but also meet and exceed the expectations of Indian customers with outstanding after sales support.

2.25 About Honda Motorcycle & Scooter India Pvt. Ltd.

Official Name Established Place Investment Representative Factory Location Production Capacity

Honda Motorcycle & Scooter India Pvt. Ltd. 20th Aug, 1999 Manesar, District Gurgaon, Haryana, India Rs. 300 Crore Mr. Shinji Aoyama, President & CEO Manesar, District Gurgaon, Haryana, India 10,000,00 Units per Year

Honda's dream for India is to not only manufacture 2-wheelers of global quality; but also meet and exceed the expectations of Indian customers with outstanding after sales support. They aim to produce technologically superior, efficient and reasonably priced 2- wheelers, with Honda tested technology, backed up with after sales service of Honda's global standard.

2.26 CORPORATE PROFILE

Honda Motor Co., Ltd., operates under the basic principles of "Respect for the Individual" and "The Three Joys"-commonly expressed as The Joy of Buying, The Joy of

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Selling and The Joy of Creating. Respect for the Individual" reflects our desire to respect the unique character and ability of each individual person, trusting each other as equal partners in order to do our best in every situation. Based on this foundation of Respect for the Individual, "The Three Joys" expresses our belief and desire that each person working in, or coming into contact with our company, directly or through our products, should share a sense of joy through that experience.

In line with these basic principles, since its establishment in 1948, Honda Motor Co., Ltd., has remained on the leading edge by creating new value by providing products of the highest quality at a reasonable price, for worldwide customer satisfaction. In addition, the Company has conducted its activities with a commitment to protecting the environment and enhancing safety in a mobile society.

The Company has grown to become the world's largest motorcycle manufacturer and one of the leading automakers. With a global network of 454* subsidiaries and affiliates accounted for under the equity method, Honda develops, manufactures and markets a wide variety of products ranging from small general-purpose engines and scooters to specialty sports cars, to earn the Company an outstanding reputation from customers worldwide.

2.27 Mission Statement

Maintaining a global viewpoint, we are dedicated to supplying products of the highest quality at a reasonable price for worldwide customer satisfaction.

2.28 SWOT Analysis

Strength

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 Reliable brand name Affordable price Honda have a big share of market in scootreats segment Honda is the first company who introduced the technology of central shock absorption in India Honda having high tech engines HMSI is the subsidiary company of Honda Motors Ltd. Which is the largest company in the proposed sector

Weakness

Less number of service center Market share very less as compare to there competitor Spares parts are not easily available Low product range Maintenance cost is very high

Opportunity

Increase in product range Untapped market above 180 cc in motorcycles. More maturity and movement towards higher-end motorcycles Honda can be use brand image of Hero Honda

Threats

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 There is high competition in the market Threat of cheap imported motorcycles and components from China

2.29 PRODUCT RANGE:

SCOOTERS: DIO ACTIVA AVIATOR MOTORCYCLES: CB TWISTER SHINE CBF STUNNER UNICORN CBF STUNNER PGM FI CB1000R CBR1000RR

Features of a few bikes from above mentioned list from HONDA are as follows..

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Activa

ACTIVA

Manufacturer Honda Motors Ltd. Production Price Engine 2004-present Rs. 40661 4-stroke, air cooled,7 bhp @ 7000 rpm,102 cc

CB Twister

CB TWISTER

Manufacturer Honda Motors Ltd. Production Price Engine 2010 ONWARDS Rs 48,000 110cc,9bhp@8000 rpm,9Nm@6000rpm

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CBF STUNNER PGM FI

CBF STUNNER PGM FI

Manufacturer Honda Motors Ltd. Production Price Engine 2010 ONWARDS Rs 48,000 125cc,11.6bhp@8000 rpm,11.2Nm@6250rpm

UNICORN

UNICORN

Manufacturer Honda Motors Ltd. Production Price Engine 2005-present Rs 63,000 150cc,13.3bhp@8000 m@5500rpm. rpm,12.8N-

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2.30 Market growth and market size (HMSI)

The automobile industry has seen an overwhelming growth in liberal India. Almost every big manufacturer has made its presence felt in the country. After the foreign direct investment regulations were removed, many manufacturers saw India as a potential market. Most of the auto manufacturers were in collaboration with the Indian companies after 91 till 99, when the rules were changed; some of them still enjoy that. With many foreign manufacturers eyeing India as the market, the giants were no exception and most of them are already having their manufacturing or assembling facilities in India. Honda was into the Indian two-wheeler industry from 1983, when it joined hands with Hero to start Hero Honda and with Kinetic to start Kinetic Honda. Honda broke the ties with Kinetic in 99 and set up its own 100% subsidiary called Honda Motorcycle and Scooter India (HMSI) Pvt. Ltd. HMSI laid its foundation stone in Manesar, Haryana in the same year and also signed an agreement with Hero that it wont manufacture motorcycles for the next five years i.e. till 2004 as Hero Honda was not into the scooter segment at that time. This gave Honda a license to manufacture scooters at will and it did that by rolling out its first scooter, Activa in 2001 and followed it with Dio in the same year. Honda now enjoys a large chunk of market share in the scooter segment with Activa, Dio and now Aviator as its products. Honda introduced its first motorcycle, Unicorn in 2004 in the 150cc segment which was followed by Shine in the 125cc segment in 2006 followed by Stunner in the same segment in 2008. All these motorcycles were highly appreciated and instant hits in the growing Indian market which over these years was mainly dominated by Hero Honda and Bajaj Auto Ltd.

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The main rivals HMSI is countering are BAL, Hero Honda and TVS in the motorcycle segment and TVS, Hero Honda and Mahindra Kinetic in the scooter segment. HMSI is the market leader in the scooter segment and is yet to have a major share in the motorcycle segment even though it is growing at 32.24% on a monthly basis. The bike segment has a market growth rate of 43% with HMSI having a share of 18% The biggest rival in this segment is HMSIs sister concern Hero Honda with a share of 55%. The scooter segment is having a growth rate of 32.24% and HMSI having a market share of 57.7%. The nearest rival in this segment is TVS motors with a share of 18.7%.

2.31 Strategy of rivals Vs HMSI

In 2007, out of every 100 two-wheelers sold in the country - only 12 were scooters. That number went up to 16 in the past financial year and is projected to zoom to almost 20 this year. Theres more: the scooter market grew in double digits last fiscal, outperforming the two-wheeler market, which grew 2.6 per cent in the same period. The golden days of the early 80s, when scooters had a 64 per cent market share, are still far away. But the revival signals are strong.

Scooter manufacturers said the 1.14 million-strong domestic market was expected to cross 2 million units in the next four years. That explains the entry of a host of newer players in the segment, such as Mahindra-Kinetic and Yamaha. Sensing competition, the established players Honda, TVS Motors, Bajaj Auto, Hero Honda and Suzuki have hit the drawing board once again, to pull out flashy, high-powered and un-geared scooters.

Scooter production stands at roughly 20% of the overall two-wheeler production Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Two Wheelers Production (Bikes + scooters) 5,076,221 5,622,741 6,529,829 7,608,697 8,466,666 8,026,681 8,418,626

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7.1 FINDIN

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The major findings during the data collection and analysis time can be summed up as follows: Interest rates are one of the prime reasons for the sharp fall in demand. Many banks have increased interest rates which make two wheelers costlier. Difficulty in availing loans, rising defaults, tightening of loan recovery laws and various other factors have dissuaded consumers from availing loans and led to further problems in credit lending. Increasing oil prices have deterred many lower middle class families from buying two wheelers. Introduction of low priced cars will directly affect the market. The family segment would want to gradually move from two wheelers to four wheelers. The major impact of this phenomenon would be experienced in the 100-125 cc two wheelers whereas the performance segment i.e. > 125cc will continue to grow strongly. With the introduction of the Bharat-4 norms, it will be more challenging to meet these stringent norms whilst simultaneously offering competitive prices.

In spite of these factors, demand drivers are present for the foreseeable future and are favourable for the two wheeler industry. However, to capture this growth, any player will have to correctly position itself to appeal to the consumer.

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11.1 BIBLIOGRA HY

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www.google.co.in www.wikipedia.com www.slideshare.com www.economywatch.com London Business School-digital library AUTO MAGAZINES Hero Honda ,Bajaj, Honda dealers

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