63002817 2 Wheeler Industry

7/27/2019 63002817 2 Wheeler Industry

1/23

2 Wheeler Industry2nd largest producer in the world

2 wheeler industry clocks a sale of 38,000crores

The industry has grown at a rate of 15% in last8 years.

In 2010 the volume of this industry surged by

21%


2/23

Factors leading to Growthshortage of public transportation.

no cost-effective solutions to the dailycommuting.

Lower price tag of Rs 35k-50k

Low operating cost due to better fuel efficiency

Flexibility in maneuvering the congestion in

city traffic


3/23

International 2-Wheeler

Penetration (In Nos)


4/23

CURRENT SCENARIOYoungsters prefer bikes instead of cars.

Urban market are almost saturated.

Demand mainly is coming from rural areas.

Income of an average Indian is relatively low.

High demand for entry level segment bikes inrural areas(Rs 35,000-40,000)


5/23

Rural India - a major

demand driverLower penetration

Trickle down impact of various rural focusedschemes of the government (Bharat

Nirman, National Rural Employment GuaranteeSchemes etc.)

Growth in agriculture and related activities.

Rise in the service sector


6/23

Base correction2004-2007 excellent growth1.Low intrest rate.

2.Easy availability of loans3.aggressive schemes-zero down payment.

2007-2009-slowing down of growt

1.Default of bike loans

2.Rise in intrest rates

3.

4.


7/23

Categories in 2 wheelerScooter -2%Motorbike-80%

Moped-18%


8/23


9/23

Type of marketOligopolyTop players of the industry

1.Hero Honda2.Honda motors

3.Bajaj Auto

4.Tvs motors

5.Others


10/23


11/23

Motorcycle By Price

RangeENTRY LEVEL(RS 40,000) Dominated mainly by Hero Honda CD

Deluxe and Bajaj Platina

MID LEVEL (RS 40,000- RS60,000) Dominated by Hero Honda Splendor and

Passion

TOP LEVEL (RS60,000+)Market Leader is Bajaj pulsar


12/23

ren n a es x(Volumes) of Motorcycle

Models by Price Range


13/23

Entry price market has been falling in lastcouple of months because of

1.Economic uncertainity

2.Credit crunch

3.Loan easily not available

Mid price market is rising on account of

increasing purchase power of IndiansPremium price market has remained constant.


14/23

Market categorised based

on Engine capacity75-125cc bike-Hero Honda splendor (70%) bajaj discover(18%)

tvs star city(7%) others(5%)

125-250cc bike-Hero Honda CBZ,Bajaj Pulsar

250cc-500cc bike-Eicher motors Royal Enfeild


15/23

Trend in Motorcycle

Sales by engine capacity


16/23

LUXURY SEGMENTHaving Price More than 1.5 lacs (less then 0.5% of bikesegment)

SPORTS BIKEYamahaHondaDuccati

CRUISER BIKEHarley Davidson


17/23

Sports bike


18/23

CRUISER BIKE


19/23

HERO HONDALargest manufacturer in IndiaHas 18 models currently selling

Joint venture between Hero group and HondaMotors.(1984)

Hero group borrows technology from HondaMotors.

Recent Differences Between Munjals andHonda Motors.


20/23

FINANCIALS OF HERO

HONDA2006 2007 2008 2009 2010Net Sales , .8 719 21 , .9 905 95 , .10 345 01 , .12 325 38 , .15 775 77

Total

Expenses

, .7 352 20 , .8 707 19 , .8 963 10 , .10 594 45 , .13 102 26

OperatingProfit

, .1 381 98 , .1 201 96 , .1 367 77 , .1 753 02 , .2 661 97

Reported NetProfit

.971 34 .857 89 .967 88 , .1 281 76 , .2 231 83

Return OnCapitalEmployed(%)

60.31 43.48 41.57 43.33 79.61

Return On NetWorth(%)

48.34 34.73 32.41 33.72 64.41


21/23

BAJAJ AUTO STORY


22/23

FINANCIALS OF BAJAJ

AUTO2006 2007 2008 2009 2010Net Sales 7,572.13 9,420.24 8,827.15 8,700.17 11,813.25

Total

Expenses

6,341.36 8,089.45 7,809.79 7,582.97 9,373.16

OperatingProfit

1,279.78 1,329.89 1,085.21 1,092.71 2,487.69

Reported NetProfit

1,101.63 1,237.96 755.95 656.48 1,702.73

Return OnCapitalEmployed(%)

23.09 22.36 47.61 38.92 58.14

Return On NetWorth(%)

20.45 18.09 48.91 47.68 61.06


23/23

Impact of RecessionHigh input cost due to inflation.Impact on margins

Uncertainity in the environment

Loans not available easily

Lower exports

Forex losses

63002817 2 Wheeler Industry

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