CHAPTER -1

INTRODUCTION
An overview of two-wheeler industry
India, is the second largest producer of two-wheelers in the world. In the last few years, the Indian two-wheeler industry has seen spectacular growth. The country stands next to China and Japan in terms of production and sales respectively. Majority of Indians, especially the youngsters prefer motorbikes rather than cars. Capturing a large share in the two-wheeler industry, bikes andscooters cover a major segment. Bikes are considered to be the favorite among the youth generation, as they help in easy commutation. Large variety of two wheelers are available in the market, known for their latest technology and enhanced mileage. Indian bikes, scooters and mopeds represent style and class for both men and women in India.

Benefits of two wheelers

Two-wheelers are the most popular and highly sought out medium of transport in India. The trend of owning two-wheelers is due to itsEconomical price Safety Fuel-efficient Comfort level

Before the Foreign Motor Cycle Entrance in Market: There were three manufacturer in the motor cycle segment viz. Enfield, ideal Jawa and Escorts while Enfield bullet was a four stroke, Jawa and the Rajdoot were two stroke bikes. The motorcycle segments was initially dominated by Enfield 350CC bikes and Escorts 175CC bike. After the Foreign Motor Cycle Entrance in Market: The two-wheeler market was opened to foreign competitor in the mid 80s. And the then market leader Escort and Ensiled were caught unaware by the onslaught of the 100CC bikes of the four Indo-Japanese joint venture. With the availability of fuelefficient low power bikes, demand swelled, resulting in Hero Honda, then the only producer of four stroke bikes (1oocc category), gaining a top/ The first Japanese motor cycle were introduced in the early eighties. TVS Suzuki and Bajaj brought in the first two-stroke and four stroke engine motorcycle respectively. There two player initially started with assembly of (KD kits, and later on progressed to indigenous manufacturing. In the 90s the major growth for motorcycle segment was brought in by Japanese motorcycles, which grew at a rate of nearly 25% (AGR in the last five years). The industry had a smooth ride in the 50s, 60s and 70s when the government prohibited new entrees and strictly controlled capacity expansion the industry saw a sudden growth in the 80s. Te industry witnessed a steady growth of 14% leading to a peak volume of 1,9 mn vehicles in 1990. In 1990 the entire automobile industry saw a drastic fallen demand. This resulted in decline of 15% in 1991 and 8% in 1992 resulting in a production loss of 0.4 mn

vehicles. Baring Hero Honda, all the major producers suffered from recession in Fy. 93 and 94 Bajaj showed a marginal decline in 1992. The reasons for recession in the sector were the incessant rise in fuel prices, high input costs and reduced purchasing power due to significant rise in general price level and credit crunch in consumer financing factors like increased production in 1992, due to new entrants coupled with the recession in the industry resulted in companies either reporting losses or a fall profits. The domestic two wheeler sales of 3.778mn in Fy 2000 the motor cycle share represent 47.7% (41% in Fy 1999 (the motor cycle segment has gradually increased its presence from 27% in Fy 92 to 47.7% in Fy 2000. Mainly at the expense of the scooter and to some extent the moped segment. It is expected that Motor cycle segment will continue to grow at an average of 20% in Fy 01 this will increased demand for Motor cycle from 1.796 mn FY 2000 to 2.15 mn in FY 01 The supply of motor cycles as per the present trend will increase from 2.08mn in FY 2000 to 2.38 mn in FY 01. The segment will be witnessing several new entrants in FY 10, mainly in the four stroke sub segment this will lead to an over supply situation and increase the competition of the Japanese segment. Motor cycle segment has witnessed tremendous of growth over the past few year, the reason can be change in the buying behavious of the consumer and the change in the trends. In the last six years, the domestic two-wheeler industry has seen structural changes. This can be seen from the change in composition of two-wheeler sales, where the motorcycles have consistently gained market share of 41% of total two-wheeler sales.

This trend is expected to continue in the next two years till the four stroke scooters make their presence felt in the segment. The table below gives in idea about the strides made by the motorcycle segment in the last eight years.