Introduction to Two wheeler Industry
Two-wheelers are one of the most versatile forms of transportation. The adaptive ability of a motorised two-wheeler can be characterised by its usage. Its use could vary from being used just for commute from point A to Point B. Quickly transport small packages of goods through the cramped bazaar streets. A fast ride to catch the school/college bus, or even a brief trip to purchase vegetables. The sheer pleasure of riding a motorbike with the wind blowing on your face, while on a pleasure ride is one of the most compelling reason to own a two-wheeler.
In India, the three top reasons for ownership of a two-wheeler are:
- low cost of ownership and maintenance
- compact size and
- ease of learning and use
Under the provisions of the Motor Vehicle Act, 19881 , the eligibility for a Learners’ License for a motor vehicle of 50 cc of engine capacity without gear is 16 years, and Permanent License is 18 years and above. In India, one can witness commuters across all age groups using motorised two-wheelers. Owing to the growing population and ever increasing traffic congestion in the urban cities, two-wheelers are the most popular and convenient choice for transport.
History of Two wheeler industry in India
The Indian two-wheeler industry since its beginning, has evolved many folds in technology and, in the numbers being manufactured and produced. It has seen tremendous growth in about half a century, in comparison to other countries where two-wheelers are a major component of transportation. The inception of the industry dates to 1955, when the first ‘350 cc Bullet’2 bikes were commissioned by the Indian army. The rough terrains and harsh conditions with narrow passage-ways needed strong motorcycles for the Western and Northernmost regions of India. These bikes were manufactured by the ‘Royal Enfield’ company of the United Kingdom and assembled in Chennai.
Journey of Two Wheeler Industry in India
The three segments of motorised two-wheelers are Motorcycles, Scooters and Mopeds. The journey of the Indian Two-wheeler industry can be described briefly based on the advancements in these segments.
With such humble beginnings, during the decade that led up to 1970, the two-wheeler industry received encouragement for foreign Collaborations. The production was controlled by the government with licensing, to meter the number of units being produced in the plants. The table3 shows the major players in the industry during this time-frame.
Period of Entry 1955-1969
The decade between 1970-80, perceived an increase in the overall growth of the industry, on an average of about 15% per annum. Between 1974-79, sales of two-wheelers increased by 60%, while that of cars declined by 21% and jeeps grew only by 11%4. The main contributing factor to this increase was a steep hike in the oil prices in 1974. The price hike, converted most of the car and jeep owners or prospective users of this segment to two-wheeler buyers/users. This was due to better fuel efficiency of two-wheelers over cars or jeeps. Thus the two-wheeler became a popular mode of personal transport.
Period of Entry 1970-1980
The 70’s saw a surge in the number of local players of manufacturing units. Between the 1980-90’s, the policies again saw a shift towards allowing foreign collaboration for below 100cc. This brought a whole new realm into the industry, through foreign companies that had advanced technologies, mainly for the motorcycle segment. Fuel-efficiency improved by (60-100) % in the new vehicles. In the seventies, motorcycle mileage was on an average between 25 to 50 kmpl (kilometre per litre), which had now improved to 50 to 80 kmpl. One major occurrence of this decade was that several existing but weaker players died out giving way to new entrants and superior products.
Period of Entry 1981-1990
The decade leading upto the end of the millennium, i.e., 1990’s saw a complete liberalisation of the economy. The industry was deregulated, with several reforms to make Indian exports competitive. There was an increase in the number of brands and thus the models and higher competition. This also led to reduction in the sales for each individual brand. The recession of 1993-945, gave way for a decline in the sales numbers. 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. The market improved and made tremendous progress towards the end of the millennium, nearing the year 2000.
Period of Entry 1991-2000
As an overview, the increase in sales volume of this industry is proof of its high growth. In 1971, sales were around 0.1 million units per annum. But by 1998, this figure had risen to 3 million units per annum. Similarly, capacities of production have also increased from about 0.2 million units of annual capacity in the seventies to more than 4 million units in the late nineties.
Indian Two-Wheeler Industry in the Global Scenario
The global market for two-wheelers has witnessed a steady growth in past few years and is expected to grow at a higher pace during 2014-2019. The major contributors to the demand of two wheelers are the countries in Asia-Pacific region which will continue to dominate the worldwide demand in future. The region is the home to the top six markets in the world.
China6 is the largest national market of two wheeler industry and will continue to remain at the top followed by India and Indonesia in future. The demand for two wheelers is highly dependent on the economic stability and the average income levels of the country. In emerging economies like China & India, two wheelers are an affordable alternative to walking, riding bicycle and public transit systems etc. The rising fuel prices can also be a growth driver for two-wheelers due to their higher fuel efficiency.
Since the post economic liberalisation, with reforms and policies allowing Foreign Direct Investments into India, two wheeler industry has seen drastic increase in domestic sales within the country. Today, India is the second largest producer and manufacturer of two wheelers in the world, and stands next only to China in terms of the number of two-wheelers produced and domestic sales respectively.
Major players in this market are Honda, Yamaha, Hero Moto Corp., Bajaj Auto, and Suzuki.
Two wheeler industry trends in India (Graph)7
Popular Two Wheeler Brands in India
- Royal Enfield
- Piaggio, Vespa, Moto Guzzi and Aprilia
- MV Augusta
- Harley Davidson
- Mahindra Bikes
4. sales figures are from various issues of ACMA, capacity figures from various Five Year Plan documents