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By: Nikhil Gupta 10FN-121 Saurabh Thadani 10FN-102 Sharun Alipuria 10DM-147 Srikanth Konduri 10FN-109 Tushar Gupta 10DM-168 Tushar Gupta 10FN-115 Vinayak Saksena 10HR-046
Current scenario
Since January this year, the demand for models like Hero Hondas Karizma and Hunk, Bajaj Autos 100cc Discover DTS-Si and Pulsar 135 LS and Yamahas R15 has more than doubled. Bajaj Auto has a waiting list of three weeks for their top- selling product Pulsar, pushing demand for these bikes up to 80,000 units per month from 55,000 units. Honda Motorcycle & Scooter India (HMSI) has a waiting period of four weeks for their scooters Activa and Deo. This year, the motorcycle segment has grown by more than a quarter with 94 lakh bikes sold across the country. This is the highest number of bikes ever sold in the local market, with most consumers picking premium and deluxe models with capacity of 150cc. The whole of last year saw 74.3 lakh bikes sold, according to Society of Indian Automobile Manufacturers (SIAM). Two-wheeler majors clearly did not expect this surge in demand. Since January, demand has surged by 20%. Companies are streamlining operations, opening new manufacturing facilities, strengthening distribution and improving logistic operations.India Yamaha Motors has increased the number of shifts to cater to the rising demand. The company has a waiting time of 26 weeks for bikes like YZF-R15, FZ series and Fazer. The upsurge is now reflected in the sales figures. In March, India Yamaha sold 27,460 bikes, a threefold growth over last year. Honda Motorcycle & Scooter India (HMSI) is investing Rs 4.7 billion to set up a second production plant in India, with an annual capacity of 6 lakh units. The new assembly line will be operational by second half of 2011. It is also increasing capacity at its existing plant to 1.6
million units by next year. The company sold 65,888 bikes in March this year, compared with sale of 40,360 units in the same period last year. While Hero Honda, which controls nearly half of the domestic two-wheeler market, is in talks with various state governments, including Tamil Nadu, Karnataka and Gujarat, to set up a new factory. The company sold 414,638 bikes in March 2010, as compared to 3,53,342 bikes sold during the same period a year ago. At present, the Indian two-wheeler market is dominated by Hero Honda, which controls nearly half the $8 million market. Bajaj Auto is the second-largest two wheeler maker with nearly a fifth of the market.
Owing to the decline in the motorcycle, the two wheeler industry has witnessed a decline in the motorcycle segment, the two wheeler industry has witnessed a decline in sales about
5% in early 2008. Irrespective of this decline, experts are of the opinion that the two wheeler industry is on an upswing.
Table 6.03 Product variations in two-wheelers Type Motorcycles Scooters Mopeds Share (%) 66 22 11
Table 6.04 Leading players in the two wheeler industry Company Hero Honda Bajaj Auto TVS motors Yamaha Honda Motors LML Kinetic Engineering Majestic Auto Royal Enfield Share (%) 36 23 21 5 5 4 4 4 0.5
2. Suppose Hero Honda has implemented a quality improvement programme. The company believes that the major complaints are Poisson distributed at an average rate of 10 complaints/ 10,000 motor cycles sold in the first month of the sales. To verify the result, the company collects the data about the sales of the first 10,000 motorcycles sold. It obtains the information that 35 customers have major complaints about the motorcycles that they have purchased. The management is very particular about the quality of its product. Use Poisson distribution and examine whether the average rate of complaints has increased or whether these complaints are by chance. X = Number of Complaints = 10 per 10,000 motorcycles P(X = 35) = e- x/x! = e-10*1035 / 35! = 4.4 * 10-10 The interpretation which can be made from above analysis is that since the probability is very low we can infer that the complaints have happened by chance. 3. Suppose Hero Honda has 120 dealers distributed all over the country. The company wants to conduct a dealer satisfaction survey. The company wants to select five dealers from the whole list of dealers. It has 12 dealers in Madhya Pradesh. What is the probability that one or more randomly selected dealer is located in Madhya Pradesh? X = Selecting a dealer in Madhya Pradesh P(X=1) = 12/120 = 0.1 P(X1) = 1 P(X=0) = 1 5C0 * (0.1)0 * (0.9)5 = 0.41 The probability that one or more out of a group of 5 dealers to be selected from the entire list 0f 120 dealers is located in Madhya Pradesh is 41%.