AUTOMOBILE INDUSTRY

PRESENTED BY:

ARPIT SOOD 1020108ROHITBINUJITINRAM GAUTAMMd. SUFIYANNIKHIL GUPTAJOYDIP GUPTARAHUl JAIN 1020127

2 Wheeler Industry Two-wheeler companies are bullish on growth this

fiscal, with overall numbers expected to be in the range of 15 million units — a 20 per cent jump from 2010-11, according to a report in The Business Line.

The report quoted that Hero Honda and Bajaj Auto would together constitute major share of this output with around 10 million bikes and scooters.

TVS Motor Company and Honda Motorcycle & Scooter will take up a little over 4.5 million units, with Mahindra & Mahindra, Suzuki and Yamaha bringing the net tally to 15 million units.

CONTD… With petrol prices set to see another hike in the coming weeks,

mileage will be the top priority on everyone's minds and the commuter segment motorcycles in the 100-125cc range would get lot of attention.

It was also reported that this fiscal is also expected to see sharper growth in sales of gearless scooters, and monthly numbers could eventually reach two lakh units.

HMSI is the market leader with the Activa with TVS Motor in second place with the Scooty and Wego. Hero Honda's Pleasure has been doing good business, while M&M and Suzuki will look for bigger growth this year.

2 wheeler industry in India: a snapshot

The two-wheeler industry has been in existence in the country since 1955.

It consists of three segments viz. scooters, motorcycles and mopeds.

The growing middle class population, prosperous rural India and the paucity of reliablepublic transport system is leading to a large number of two wheelers added to the roadseveryday

Two-wheeler makes the daily travel both affordable and convenient. Easy availability ofauto finances has lead to an increase in demand for 2 wheelers

In 1991, the share of scooters was about 50 per cent of the total 2-wheeler demand in the Indian market. 

In 2003-04, the share of motorcycles increased to 78 per cent of the total two-wheelerswhile the shares of scooters and mopeds declined to the level of 16 and 6 per centrespectively.

Motorcycles make up 80% of the Indian 2 wheeler market.

Features of Rural Markets

Large no. of consumers

Occupied pattern – primary, secondary, tertiary

Scattered market

Seasonal rural income

Low standard of living

Features of Rural Markets (contd..)

Literacy level

Land distribution and use

Mass media

Urban orientation

Rural credit

Constraints of Rural Markets

Resources

Long term planning

Management support

Opportunity in long term only

BAJAJ

BAJAJ• Is a Direct competitor to the Hero Honda’s two wheeler market. is going at full throttle to challenge market leader Hero Honda in rural and semi-urban markets that account.

• There tactics are head to head pricing with Hero Honda in the 125cc market.

•Bajaj Auto holds a 27% share in the two-wheeler market, dominated by Hero Honda with 54%share. Hero Honda does almost two-thirds of its sales in rural areas, while Bajaj's most popular bike in rural areas, Discover , gets 45% of its sales from interior areas.

• They penetrated the rural market with Platina Model. • XCD 135 DTSI model is also a success in rural market.

Rural Market Initiative

The country's second largest two-wheeler maker has appointed 135 dealers in small towns and mini metros, where it had only 25 dealers, and will offer special finance scheme for rural customers even if they have no bank account.

New dealerships are operational from March . Six out of every 10 new dealers are in small towns such as Hingoli in Maharashtra's Nanded district, with the rest in mini metros such as Pune and Nagpur.

The company has opened 39 dealer outlets in the state of Gujrat . The sale of the Discover brand of bikes has so far crossed 1.75 lakh mark in Gujarat. At present, Bajaj Auto's market share in Ahmedabad is at 35 per cent and with the addition of this dealership it hopes to reach 40 per cent.

Cont… It is using Bajaj Auto Finance (BAF), the in-house financing

company, to get over the entry-level sales spike. It has a direct cash collection facility. That is, customers need not provide post-dated cheques to avail of finance ; they can pay the installments in cash.

Bajaj Auto is using a seasonal collection strategy for rural areas, This would mean that instead of monthly installments , rural customers can time their loan repayment to crop cycle, which is 2-3 months for rice and wheat.

Experts feel that the rural initiative will make an immediate impact on the company's business. Bajaj Auto will be able to improve its market share to more than 30% with the rural push. As Good rains, increasing crop productivity, high farm product prices have pushed disposable incomes up in rural India. So did the rural job guarantee scheme and development projects that also ensured improved accessibility.

New Developments The managing director of two-wheeler giant Bajaj Auto Ltd

(BAL) has recently thrown down a challenge to his research and development unit, to build a "Bharat Bike" with a 150-cc engine, which will cost Rs 40,000 and run on rugged rural roads.

Hero HondaRURAL MARKETING

Why did They go to Villages

Only 10% rural penetration

Maintain sales momentum in shrinking market

Flat sales growth in 2007-2008

company Apr-june 08-09

Apr-june 09-10

Growth% Market Share%

RuralMarket share%

Urban mkt share%

Hero Honda

877089 1,094,996

24.84 51.26 10% 25%

Bajaj Auto 391,100 331,731 -15.18 15.53

TVS Motors

292,530 315,785 7.94 14.78

Honda 226,068 284,890 26.01 13.33

Total 1,865,767 2,135,869 14.48 -----

4 As of Hero Honda

• Advertising• Campaign

s• Trade fair

• Good product quality and fuel efficient bikes

• Low cost motorbikes

• Extensive sales and service network

Availability

Affordability

Awareness

Acceptability

Brand Ambassadors used - Hrithik Roshan - Sourav Ganguly

Customers can travel over long distances to buy a motorcycle but not for service. A customer can take his motorcycle for servicing four or five times a year. Hero Honda has set up service centres across India.

PROMOTIONAL STRATEGIES

To ensure that the village customer doesn’t postpone buying a two wheeler just because there’s no cash in hand, Hero Honda has entered into numerous vehicle finance tie-ups with NBFCs, cooperative banks and regional rural banks.

Over 500 rural sales executives of Hero Honda dealers are now busy meeting the sarpanch, the headmaster and the anganwadi workers in villages all over the country.

CONTD..

They are also visiting potential customers at their homes, inviting them to drop in at the company’s dealerships which might be located a few kms away.

To strengthen its network in rural areas, the company started sales, servicing, and spare part outlets in several small towns and villages across the country. The company recruited local people as sales executives and trained them to market its products to rural consumers. 

CONTD..

Hero Honda followed a "Hub and Spoke System" in distributing its products in rural areas. The company gave a dealership to one dealer who would take care of a district...

CONTD….

The success of a brand in the Indian rural market is as unpredictable as rain. Ithas always been difficult to gauge the rural market.

Many brands, which should have been successful, have failed miserably. More often than not, people attribute rural market success to luck.

Therefore, marketers need to understand the social dynamics and attitude variations within each village though nationally it follows a consistent pattern.

While the rural market certainly offers a big attraction to marketers, it would be naive to think that any company can easily enter the market and walk away with sizable share. Actually the market bristles with variety of problems.

The main problems in rural marketing are: Physical Distribution Channel Management Promotion and Marketing

Communication

The CD 100 is the basic no-frills model with fuel efficiency and reliability as USP; the CD 100 SS is the upgraded durable model positioned in the rural market;

Hero Honda Initiatives

Product Related

CSR

Product Related“Har Gaon Har Aangan” Campaign

Sponsorship

Advertising

Easy credit facility

Timing of campaigns

CSR InitiativesRaman Munjal school, hospital and sports complex

Adult Literacy Program

Rural Health Care

Integrated Rural development Centre (IRDA)

Drive Safe!