Bike Cos get ready to face Rs 1 lakh car

Ratan Tata’s Dream the Rs 1-lakh car isn’t just making MNC auto majors like Renault rewrite their strategies, India’s two-wheeler majors are also changing there strategies. While some bike makers like Bajaj and Hero Honda have already shown their interest in entering the car market, others are planning to concentrate on performance bikes which, they think, won’t compete with cars.

Suzuki Motorcycles India sales & marketing veep Atul Gupta said, “The cheaper car would impact the entry level two-wheelers. So we would aggressively pursue the totally different 150cc to 200cc performance bike segments in India. Another category identified by us, which won’t be impacted by the Rs 1-lakh car, would be automatic scooters, whose market is consistently growing and many new launches are on the anvil.”

Suzuki’s Japanese compatriot Yamaha Motorcycles shares the same philosophy. “Of late, our strategy in the Indian market has been different. Knowing that mini cars planned by Tata and other players (Bajaj-Renault) would hit hard the commuter bike segment, we have finalised plans to de-risk our business. We want to have good presence in the performance segment, which would not compete with cars as they occupy a different space altogether. While the entry-level cars are meant for commuting, performance bikes are for lifestyle and thrill,” a senior Yamaha official said.

Yamaha, despite being a top two-wheeler player globally with over 25% market share has failed to charm Indian bike lovers so far and is re-inventing its gameplan in India with a clear focus on high-powered bikes. The new strategy is in keeping with the shift in customer preferences. Already, a healthy chunk of customers are moving directly to cars instead of first buying a two-wheeler. In the used car market, almost 30% customers move directly to cars while another 40% upgrade from two-wheelers.

Maruti-Suzuki India’s senior executive Ravi Bhatia said , “There is a great mismatch in the used car market. The demand simply outstrips supply. Increased incomes have changed the pyramid with cars, even the used ones, being preferred over two-wheelers” .

The overall two-wheeler market in India has shrunk to 17.42 lakh units in the April-June quarter, a fall of 9%. The anticipated slowdown is reflected in the way leading players — the Munjals of Hero group, Bajaj Auto and TVS Motors — are moving into new product lines. Bajaj Auto has started parleys with Renault while the Munjals are diversifying into three and four wheelers and Rs 15k - Rs 25k bike to hedge their business risks. India’s third largest two-wheeler manufacturer TVS Motors has already diversified into three-wheelers.

J D Power Asia Pacific’s India director Mohit Arora said, “The two-wheeler industry would be the first casualty of the Rs 1 lakh car. The performance bikes (over 150 cc) would sustain the impact, as they are an aspiration-driven market, but the commuter segment bikes (100 cc to 125 cc) would be replaced by the small car.”

The motorcycle market is witnessing a slowdown with negative growth in the past six months forcing all players to undertake remedial measures like production cuts and marketing aggression. The first quarter of the fiscal has been worst for the two-wheeler industry with a 15% dip at 13.78 lakh units.