Indian Two Wheeler Industry –

An Overview1

• Indian Two-Wheeler Industry

• Key Players in Industry

• Recent News – Feb 2015

• Motorcycles

• Scooter Segment & Mopeds

• Growth Determinants

• Conclusion

Agenda

2

• Largest two-wheeler market globally, at a CAGR of 14.9% in sales

• Overall growth - 9.8% by volume YoY between Jan-Oct

• Revenue estimated about 810 billion in 2013-2014₹

• Three major segments : Motorcycles, Scooters and Mopeds

Indian Two-Wheeler Industry

3Motorcycle Scooter Moped

0.00%5.00%

10.00%15.00%20.00%25.00%30.00%

12.40%

25.80%

10.70%

CAGR

CAGR2008-09 2013-14

01020304050607080

78.770.8

2.4 4.415.5

24.3

Change in domestic market share

Motorcycles Mopeds Scooter

4

Key Players in Industry

• Hero - new two wheelers in 2015

• Filed 15 patents and registered 77

designs – FY 2013-14

• HMSI, domestic market share of 29%

• Bajaj Auto – technology upgrades in

Pulsar line-up

Recent News – Feb 2015

5

62008-09 2009-10 2010-11 2011-12 2012-13 2013-14

0

20

40

60

80

100

120

4.8 5.7 6.6 6.8 7.6 8.613.7 12.7 13.2 14.9 18.9 2415.3 14.5 15 14.1

12.8 11.817.3 19.1 20.5 19.1 17.9 14.2

49 48 44.8 45.1 42.9 41.3

(In percent ) Player-wise share in domestic sales – Two Wheeler

Other HMSI TVS Motor Bajaj Auto Hero MotoCorp

• Three sub-segments

• Economy – (Priced at 30000-45000)₹

• Executive – (Priced at 45000-60000) ₹

• Premium – (Priced at 60000 and above)₹

2014 Data :

Motorcycles

7

Sub-segments 2013-2014 2008-2009

Economy 23.4% 28.6%

Executive 58.4% 57.2%

Premium 18.2% 14.2%

Economy Executive Premium

Hero MotoCorp– CD Dawn Dlx Hero MotoCorp - Passion Bajaj Auto - Pulsar

Bajaj Auto - Platina HMSI – Shine, Dream Series HMSI – Unicorn

TVS Motor - Star Bajaj Auto - Discover Yamaha & Royal Enfield – Enfield

• In the year 2014,

• HMSI – holding 52.8% share in domestic market

• Hero MotoCorp captured 19.2% market share

• TVS Motors hold 12.7% market share

• Moped sales declines in South India due to weak industrial activity

Scooter Segment & Mopeds

8

9

• Raw material cost have an impact on the

operating margins

• Increase in Steel and Aluminium price

• Intensified competition due to new

entrants

• Owning R&D centers

• Declining demand due to increase in

consumer’s salaries

Growth Determinants

10

112008-09 2009-10 2010-11 2011-12 2012-13 2013-140%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

73.7 69.4 73.1 74 73.7 71.6

43.7

3.4 3.3 3.7 45.1

4.84.2 3.5 3.9 4.3

4.95 4.3 3.6 4.2 4.6

12.317.1 15 15.9 14.7 15.7

Trend in Cost Structure

Raw Mtrl Cost as % of sales Employee Costs Other Manuf. ExpSelling Exp Operating Margins

122008-09 2009-10 2010-11 2011-12 2012-13 2013-140

2

4

6

8

10

12

14

16

18

0

2

4

6

8

10

12

12.3

17.115

15.9

14.7

15.7

Raw Material cost Vs Operating Margins

Operating Margins

Cost Prediction for 2015 – In percentage (Increase ↑/Decrease ↓)

Steel Decrease

Aluminium Increase by 5%

Plastic Decrease by 4-5%

Raw Material Cost Increase by 1%

132008-09 2009-10 2010-11 2011-12 2012-13 2013-14

75

80

85

90

95

100

105

99.298.3

95.8 96.194.2 93.6

97.6 96.4 95.4 95.695.4 95.787.8

89.8 8987.4

86.2 85.5

97 9695 95

94

93

Trend in Raw Material Localisation

Hero MotoCorp Bajaj Auto TVS Motors Industry Indigenisation

In percent

Productive capacity

Hero Moto Cop - 7.6 million

• HMSI - 4.6 M

• Bajaj Auto - 5M

• TVS Motors - 2.5M

• Royal Enfield - 1,50,000

Two Wheeler manufacturing plants in india1.Hero moto corp

I. DHARUHERA (HARYANA)69 Km. Stone, Delhi-Jaipur Highway

II. GURGAON (HARYANA) 37 Km. Stone, Delhi-Jaipur Highway

III. NEEMRANAPlot No 101-103, 108 & 109RIICO Industrial Area, Phase - IIDelhi- Jaipur Highway

2. HMSI1. Manesar Factory Honda Motorcycle & Scooter India Pvt. Ltd. Plot No. 1, Sector 3, IMT Manesar, Distt. Gurgaon11 Tapukara Factory Plot No. SPL-2(D), 2(E), 2(F), 2(G),

Tapukara Industrial Area, Distt. Alwar, Rajasthan

III. Narsapura Factory Plot Nos 109 to 142, KIADB, Narsapura Industrial Area,

Karinayakanahalli Village, Kasba Hobli, Malur Taluk,

3. BAJAJ AUTO

IV. Waluj,

Bajaj Nagar, Waluj, Aurangabad 431 136

II. Chakan

MIDC, Plot No A1, Mahalunge Village, Chakan 410 501 Dist. Pune

III. Pant Nagar

Plot No. 2, Sector 10 Phase -II - E, Pant Nagar, Sidcul, Rudrapur Dist. Udhamsingh Nagar Uttranchal

4 .TVSIV. Hosur

TVS Motor Company, Post Box No. 4Harita,Hosur - 635 109

II. Mysore

Post Box No.1, Byathahalli Village, Kadakola Post

III. Himachal Pradesh

Village Bhatian, Bharatgarh Road,Teh. Nalagarh, Dist. Solan

5. SUZUKII. Guragaon Village Kherki Dhaula, Badshahapur,

N.H.-8, Link Road,

6.YAMAHAII. Uttar Pradesh India Yamaha Motor Pvt. Ltd.

A-3, Ind. Area, Noida-Dadri Road, Surajpur, Gautam Budh Nagar 7 . ROYAL ENFIELDIII. Tiruvottiyur High Road,Tiruvottiyur,Chennai - 600 019II. Oragadam Oragadam near Chennai

1. HONDA Honda Motorcycle & Scooter India Pvt. Ltd.Plot No. 1, Sector 3 IMT Manesar, Distt. Gurgaon,Haryana 2. HERO MOTO CORP Hero Centre of Global Innovation and Research & Design (R&D)’ at Kukas, near Jaipur in Rajasthan

3. Bajaj Bajaj Auto Ltd., Akurdi, Pune 411035, India 4. SUZUKI R&D centre inside its headquarters in Hamamatsu, JAPAN5. Mahindra & Mahindra Mahindra Two Wheelers Limited has a Research and Development unit located at Chinchwand,pune

R & D CENTERS OF TWO WHEELERS IN INDIA

• 6.Royal EnfieldEicher will invest Rs 500 crore in product development and setting up two technology centres in Chennai and UK

7. YAMAHA YMRI, Surajpur in Uttar Pradesh 8. TVS TVS Motor Company, Jayalakshmi Estates V Floor

8, Haddows Road Chennai – 600006

1.HERO MOTO CORP STRATEGY- Hero MotoCorp’s key strategies are to build a robust product portfolio across categories, explore growth

opportunities globally, continuously improve its operational efficiency, aggressively expand its reach to customers, continue to invest in brand building activities and ensure customer and shareholder delight.

50 mn+ Sales (cumulative sales since inception); world’s fastest two-wheeler company to achieve this

2. HONDA Additional capacity of 6 lakhs units to be operational before the end of 2016 in the first half of 2016, this expansion will increase HMSI’s overall annual production capacity to 6.4 million units. “Honda is strengthening its ‘Make in India’ resolve through steady and strategic investments with a long term objective of

creating 39% additional capacity within 3.5 years

Future Milestones of Two Wheeler Companies

3. BAJAJ As a testimony to the Company’s strategy – global presence, sharp brands and variable cost structure, Bajaj

Auto improves its operating EBITDA margin from 20.2% in H1 / FY15 to an industry best margin of 21.1% in Q3 / FY15.

Pulsar “ Adventure Sports ” and “ Super Sports ” models will be launched by end of Q4 / FY15 Focus on motor cycles without focusing in scooter segment dominant" global share in bikes from 10% today to 30% or even 40%, 4. TVS 10 percent share in the fast growing scooter market in India,from five percent, 2015 with our new launches and innovative customers connect programs 5.Royal enfield with the competition getting intense,india,s oldest motor cycle manufacturing motor cycle company

exploring newer segments with the idea of bigger engines and diesel varients The company is adding more orders each month than dispatches, leading target is 450,000 bikes next year,

a big jump from the 78,000 it sold in 2012. to delivery time of 6-12 months

6. Mahindra & Mahindra Mahindra Two wheelers , Paytm tie up to sell bike, scooters online, Mahindra Two wheelers eyes 500 dealership by FY16 end . Mahindra 2 Wheelers To Launch 150 CC Motorcycle By 2015

7. SUZUKI Suzuki Motorcycle India Pvt Ltd (SMIPL) is planning to increase its market presence in India to sell around 1

million (10 lakh) two wheelers by next three years from the last years' sales of four lakh units.

Composition of Input Cost

2000-01 2001-02 2002-2003 2003-2004 2004-2005 2005-20060%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Material ConsumedCost of CapitalServices ConsumedEmolumentspower & Fuel

24

• Globalization has affected the sector in all segments

• Significant contribution to the Indian economy

• Challenges posed by global market to be tackled by

• Technological advancement

• Customer care feedback system

• Appropriate marketing strategies

Conclusion

Thank You !

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