The middle-class customer never had it so good when it comes to four-wheeled toys... But will the two wheeler giants give up easy?!
“I wish I had a car for just a day like this,” Ramesh Pawar fretted
and fumed while running for the bus stand shade in the torrential rains. Pawar like various middle-class Indians has an aspiration to own a car but like others, he too has an income which is just about enough to cover his basic needs. Even though he has saved enough to be soon able to own a bike, Pawar still longs for a car; at least for his family. The want to own a car has never been so strong in India, especially when only 8 people out of 1,000 own a car here! The most hyped car of the season, the ultra cheap Tata Nano is also trying to persuade millions of motorcyclists to upgrade to their first car. Many have already taken the bait and are anxiously waiting for the affordable car to hit the market!
Enticed by the prospects, now Renault-Nissan, Toyota and even scooter giant Bajaj are all set to unleash their own versions. It is said that the stagnant growth in primary markets like US, Europe and Japan has forced major manufacturers to look at colossal opportunities available in the emerging markets. Here, even though lower real income (but a high aspiration value) calls for small affordable hatchbacks (which carry lower margins), anticipation of huge volumes are forcing many to rethink their strategies. According to Roland Berger Strategy Consultants, the under $10,000 vehicle market is likely to touch 18 million cars by 2010. The study also indicates that about 1.6 million motorcyclists will upgrade to a car over the next five years.
Higher standards of living might run in favour of these carmakers, but the rising fuel prices and interest rates may spoil the party in the long run. Playing on a different tune, players like Hero Honda and TVS for instance are taking the tried and tested route instead of diversifying. Hero Honda for instance, expanded 18% between April-July 2008-09 and sold 1,149,753 two-wheelers and is confident of the two-wheeler segment. “Interesting developments, but there is no competition from small cars.
This is because the cost of ownership of bikes is less than that of a car, which includes fuel cost, insurance cost, maintenance cost etc.,” explains Anil Dua, SVP, Hero Honda to B&E. TVS on the other hand is betting big on its progressive two-wheeler product range. “Our focus remains on two-wheelers even if Bajaj and the others are launching low-cost cars,” opines Venu Srinivasan, Chairman, TVS Motor on questions concerning threat from small cars. Like them, there are a number of players in the market for whom two wheels remain the mainstay despite the hoopla.
It is interesting to note that while many new patrons have been added to the car segment, many more are making their way into the motorbike segment! Last year, the two-wheeler segment alone recorded a growth of 38% with at least 700,000 two-wheelers being sold every year. According to Yezdi Nagporewalla, of KPMG, “In volumes the motorbike segment is 7 million units strong and the competition from Tata’s Nano and others will at best be around 1 million units.” Interestingly, even though both the sides (two-wheelers & ultra-cheap cars) have their own take on the possible outcome of the battle, neither has the consumer figured-out for sure. Maybe that’s why they say, ‘Consumer is King’!
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
“I wish I had a car for just a day like this,” Ramesh Pawar fretted
and fumed while running for the bus stand shade in the torrential rains. Pawar like various middle-class Indians has an aspiration to own a car but like others, he too has an income which is just about enough to cover his basic needs. Even though he has saved enough to be soon able to own a bike, Pawar still longs for a car; at least for his family. The want to own a car has never been so strong in India, especially when only 8 people out of 1,000 own a car here! The most hyped car of the season, the ultra cheap Tata Nano is also trying to persuade millions of motorcyclists to upgrade to their first car. Many have already taken the bait and are anxiously waiting for the affordable car to hit the market!Enticed by the prospects, now Renault-Nissan, Toyota and even scooter giant Bajaj are all set to unleash their own versions. It is said that the stagnant growth in primary markets like US, Europe and Japan has forced major manufacturers to look at colossal opportunities available in the emerging markets. Here, even though lower real income (but a high aspiration value) calls for small affordable hatchbacks (which carry lower margins), anticipation of huge volumes are forcing many to rethink their strategies. According to Roland Berger Strategy Consultants, the under $10,000 vehicle market is likely to touch 18 million cars by 2010. The study also indicates that about 1.6 million motorcyclists will upgrade to a car over the next five years.
Higher standards of living might run in favour of these carmakers, but the rising fuel prices and interest rates may spoil the party in the long run. Playing on a different tune, players like Hero Honda and TVS for instance are taking the tried and tested route instead of diversifying. Hero Honda for instance, expanded 18% between April-July 2008-09 and sold 1,149,753 two-wheelers and is confident of the two-wheeler segment. “Interesting developments, but there is no competition from small cars.
This is because the cost of ownership of bikes is less than that of a car, which includes fuel cost, insurance cost, maintenance cost etc.,” explains Anil Dua, SVP, Hero Honda to B&E. TVS on the other hand is betting big on its progressive two-wheeler product range. “Our focus remains on two-wheelers even if Bajaj and the others are launching low-cost cars,” opines Venu Srinivasan, Chairman, TVS Motor on questions concerning threat from small cars. Like them, there are a number of players in the market for whom two wheels remain the mainstay despite the hoopla.
It is interesting to note that while many new patrons have been added to the car segment, many more are making their way into the motorbike segment! Last year, the two-wheeler segment alone recorded a growth of 38% with at least 700,000 two-wheelers being sold every year. According to Yezdi Nagporewalla, of KPMG, “In volumes the motorbike segment is 7 million units strong and the competition from Tata’s Nano and others will at best be around 1 million units.” Interestingly, even though both the sides (two-wheelers & ultra-cheap cars) have their own take on the possible outcome of the battle, neither has the consumer figured-out for sure. Maybe that’s why they say, ‘Consumer is King’!
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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