Flooding the Indian Motorcycle Market

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Case Details:

Case Code : BSTR026
Case Length : 10 Pages
Period : 1990s-2002
Organization : Hero Honda, TVS
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Auto and Ancillaries

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Whatever happened to ignite the market for motorcycles in India is one of those mysteries which will never be explained satisfactorily."

- Business Line, January 2001.

A Spree of Launches

In 1999, Hero Honda, the leading motorcycle manufacturer in India, launched the CBZ 156-cc motorcycle - and the Indian motorcycle market was never the same again.

Following this, all major players went on a 'motorcycle launching spree.' Bajaj Auto, the second largest player, launched Bajaj Kawasaki (BK) Boxer AT and CT. This was followed by Machismo A350 and Lightning 535 from Royal Enfield, Brat (March 1999) and Kinetic Challenger (September 1999) from Kinetic Engineering Ltd. The launches continued unabated in 2000.

Hero Honda launched Joy, Passion and a remodeled Street. Bajaj launched KB Eliminator, KB Caliber Chroma, KB Aspire and KB Acer in October 2000. Lohia Motors Limited (LML), known for its scooters, launched two motorcycles Energy and Adreno in August 2000. Escorts Yamaha launched Crux and TVS group launched Fiero in 2000.

In August 2001, Yamaha Motors released Crux R. In September 2001, Kinetic Engineering launched the GF 125 and GF 150. In October 2001, Bajaj launched the Pulsar and TVS launched the TVS Victor 110-cc.

The unusual aspect about these launches was the frequency - just two years after CBZ, over 15 brands had been introduced. This was equal to the total number of brands launched in the 4-year period prior to 1999. While in 1992, only one out of every five vehicles sold in India was a motorcycle, in 2001, one out of every two vehicles sold was a motorcycle.

During 2001, motorcycle sales crossed the two million mark, leading the two-wheeler industry sales for the eighth consecutive year, recording a compound growth of 25% (1993-2001). The unprecedented hectic activity in the Indian motorcycle market between 1999-2001 had taken even auto analysts by surprise, with the players revealing plans to launch more bikes in the next few years.

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