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April 2000 update - May 20th, 2000 Table 1 : Two-wheeler Volume Sales   Apr-00 Apr-99 %yoy Apr-Mar-00 Apr-Mar-99 %yoy Scooters Bajaj Auto 45,829 41,699 9.9 576,611 644,572 (10.5) Maharashtra Scooters 10,264 12,914 (20.5) 146,671 152,551 (3.9) LML 19,243 25,299 (23.9) 282,901 328,900 (14.0) Kinetic Motor 10,076 7,860 28.2 120,232 98,773 21.7 TVS Suzuki 9,135 8,595 6.3 127,554 101,072 26.2 Total 94,547 96,367 (1.9) 1,253,969 1,325,868 (5.4) Motorcycles Hero Honda 79,681 52,612 51.5 761,700 530,607 43.6 Bajaj Auto 39,958 27,098 47.5 431,308 382,744 12.7 TVS Suzuki 30,984 26,374 17.5 326,357 268,099 21.7 Escorts Yamaha 13,043 19,219 (32.1) 251,865 189,275 33.1 Royal Enfield 2,131 1,938 10.0 25,504 24,932 2.3 LML 4 0 0.0 0 0 0.0 Total 165,801 127,241 30.3 1,796,734 1,395,657 28.7 Mopeds TVS Suzuki 31,760 30,039 5.7 381,850 333,895 14.4 Kinetic Engineering 12,711 10,300 23.4 162,507 162,349 0.1 Majestic Auto 7,362 7,877 (6.5) 112,449 127,620 (11.9) Bajaj Auto 4,771 3,678 29.7 69,197 47,827 44.7 Escorts Yamaha 0 72 (100.0) 72 10,211 (99.3) Total 56,604 51,966 8.9 726,075 681,902 6.5 Total 2-wheelers 316,952 275,574 15.0 3,776,778 3,403,427 11.0 Source: SIAM Sales of two-wheelers continue to do well in the month of April. The largest two-wheeler manufacturer Bajaj Auto did well during the month. Its sales of Japanese motorcycles and scooterettes continued to exhibit excellent growth rates. What has helped Bajaj is the fact that it has lately reduced its prices on its motorcycles (110cc Caliber's has been reduced by Rs2,000) and introduced new ones (Boxer AT and CT) at competitive prices. It's scooterette 'Spirit' has been well accepted by the market. However, sales of scooters continues to be a cause for concern. During the month, sales of its 'Chetak' and 'Super' models seem to have been affected. The company has recently launched its 'Saffire' model and the company would hope that it does better than some of its recent launches viz 'Legend' and 'Bravo'. In the scooter segment, LML has received a beating despite higher exports to the tune of 1,127 units as compared to 301 units in the corresponding period last year. Table 2: Sales Of Bajaj Auto Vehicles Apr-00 Apr-99 %yoy Scooters 56,325 54,613 3.1 Sunny/Spirit 4,719 3,685 28.1 Indian motorcycles 12,589 10,670 18.0 Japanese Motorcycles 27,170 16,421 65.5 Total 100,803 85,389 18.1 Source: Company website Motorcycle manufacturer Hero Honda continues on its dream run be posting a 51.5%yoy rise in sales during the month. Bajaj Auto also did not lag behind and it now seems that the market has come to accept its competitively priced Caliber and Bravo models. However, with pressure on margins continuing, the company has indicated that it may regularly revise its motorcycle prices during the current year. The only player in the segment to do badly was Escorts Yamaha, which apparently is being affected by the lack of product alternatives in the 4-stroke segment. LML has also made a debut in the market with sales of 4 units. Sales of two-wheeler manufacturer TVS Suzuki Ltd rose across all its product segments to 71,879 units as compared to 65,008 units in the same period last year. TVS has achieved this despite adverse marketing conditions in the three large provincial markets of Gujarat, Rajasthan and Andhra Pradesh, where the local economies have been affected by severe drought conditions. The company indicated that production would be low in May, as the factory will be under maintenance for a week from May 1-7. In the moped segment, sales of scooterettes (Scooty and Spirit/Sunny) continue to rise while that of mopeds continue to disappoint. Though Kinetic Engineering has posted a good growth, sales of Majestic Auto have declined despite exports rising to 3,371 units during the months as compared to 770 units in April 1999.  Table 3 : Three-wheeler Volume Sales Company Apr-00 Apr-99 %yoy Apr-Mar-00 Apr-Mar-99 %yoy Bajaj Auto 10,863 10,703 1.5 171,927 181,434 (5.2) Bajaj Tempo 1,014 1,236 (18.0) 17,878 13,625 31.2 M & M 0 0 0.0 55 0 0.0 Scooters India 996 1,125 (11.5) 15,378 15,161 1.4 Total 12,873 13,064 (1.5) 205,238 210,220 (2.4) The segment has posted negative sales growth mainly because the largest player Bajaj Auto hasn't been doing well. It has lost market share in the segment to new entrant Piaggio-Greaves and Bajaj Tempo. In order to retain its share in the market, Bajaj has decided to change with the times by phasing out all two-stroke models and replacing them with four-stroke ones. It plans to introduce a four-stroke version if its auto-rickshaw and a goods carrier in both petrol and diesel versions. Sales are targeted at 1,000 per month for the auto-rickshaw and 2,000 per month for the goods carrier. The company has also recently launched a CNG powered four-stroke three-wheeler in Delhi in deference to current emission regulations. FY2000 Update - May 6th, 2000 The story of the two-wheeler industry in FY2000 can be summed up in a few words. "Scooters continue to skid while motorcycles zoom ahead". The trend which started revealing itself in the mid 90's has continued to gain momentum. Just consider the bare facts. Table 1 : Sales Of Two-wheelers Year FY96 FY97 FY98 FY99 FY2000 CAGR (%) Scooters 1,222,649 1,301,051 1,262,699 1,325,868 1,253,969 0.63 Motorcycles 809,527 978,682 1,131,314 1,395,657 1,796,734 22.06 Mopeds 626,112 683,756 648,842 681,902 726,075 3.77 Total two-wheelers 2,658,288 2,963,489 3,042,855 3,403,427 3,776,778 9.18 In FY96, scooter sales constituted 46% of total two-wheeler sales. Come FY2000, this share has dropped to 33%. Last year itself, the fall in share has been to the tune of 6%. Thus, it is clear that scooter sales have been closely following the law of gravity. The vacuum created by the fall in scooter sales has been more than filled by motorcycles. Motorcycle sales had already whizzed past scooters in FY99 and the gap has only increased in FY2000. The reasons for this shift in dynamics is not far to seek. With two-wheelers becoming affordable in the mofussil areas of the country, thanks to rising income levels, motorcycles have come to be preferred on account of their rugged features and easier maneuverability. With road conditions in rural areas as they are, motorcycles have easily scored over scooters. In urban areas, the plethora of better designed and better looking models have caught the eye of the younger generation. And with petrol prices having moved up, motorcycles have come to be preferred on account of better mileage. The second big factor pushing up motorcycle sales had been the imminent application of the Euro II emission norms in the country from April 2000. With a larger number of motorcycle models in the 4-stroke category, the choice naturally fell on them. Manufacturers tried to stop the tide by introducing 4-stroke scooters but found that the response was, at best, lukewarm. Let's take a closer look at each of the two-wheeler segments. Table 2 : Two-wheeler Volume Sales   Mar-00 Mar-99 %yoy Apr-Mar-00 Apr-Mar-99 %yoy Scooters Bajaj Auto 55,066 79,117 (30.4) 576,611 644,572 (10.5) Maharashtra Scooters 6,578 5,160 27.5 146,671 152,551 (3.9) LML 21,243 27,874 (23.8) 282,901 328,900 (14.0) Kinetic Motor 12,184 8,200 48.6 120,232 98,773 21.7 TVS Suzuki 12,895 10,690 20.6 127,554 101,072 26.2 Total 107,966 131,041 (17.6) 1,253,969 1,325,868 (5.4) Motorcycles Hero Honda 84,144 52,454 60.4 761,700 530,607 43.6 Bajaj Auto 51,934 49,595 4.7 431,308 382,744 12.7 TVS Suzuki 30,993 27,431 13.0 326,357 268,099 21.7 Escorts Yamaha 34,913 28,217 23.7 251,865 189,275 33.1 Royal Enfield 3,150 2,628 19.9 25,504 24,932 2.3 Total 205,134 160,325 27.9 1,796,734 1,395,657 28.7 Mopeds TVS Suzuki 38,289 33,090 15.7 381,850 333,895 14.4 Kinetic Engg 23,674 13,500 75.4 162,507 162,349 0.1 Majestic Auto 10,780 10,587 1.8 112,449 127,620 (11.9) Bajaj Auto 5,276 5,070 4.1 69,197 47,827 44.7 Escorts Yamaha 0 1,009 (100.0) 72 10,211 (99.3) Total 78,019 63,256 23.3 726,075 681,902 6.5 Total 2-wheelers 391,119 354,622 10.3 3,776,778 3,403,427 11.0 Scooters Once the object of possession of many a middle-class family, scooters no longer occupy the pride of place they once did. Market leader Bajaj Auto and number two LML have both suffered as a result. Take Bajaj Auto, for instance. Its market share has dropped from a high of 66% in FY97 to 58% in FY2000. On the other hand, a player like TVS has increased its market share from 4% to 10% in the same period. Bajaj tried to reverse the tide by introducing stylish 2-stroke models named 'Bravo' and 'Classic SL' and a 4-stroke version called 'Legend'. However, with sales of only around 12,000 to 15,000 units (around 15% to 20% of total sales) per month, the response to these models has clearly been lower than expected. Interestingly, the old war-horse - the Bajaj Chetak - continues to be strong and still retains good brand loyalty. Table 3 : Regionwise Scooter Sales Company/Period North East West South Jan-Dec 1997 Bajaj Auto 337,197 49,573 236,265 145,356 LML 157,108 44,647 67,980 28,809 Kinetic Motors 16,958 2,562 40,450 52,964 TVS Suzuki 4,922 1,857 38,076 19,950 Total 516,185 98,639 382,771 247,079 %age regional share 41.47 7.92 30.75 19.85 Jul-Dec 1999 Bajaj Auto 163,140 29,896 107,786 53,776 LML 66,141 20,472 26,267 9,440 Kinetic Motors 11,799 1,917 21,878 24,645 TVS Suzuki 5,924 2,240 38,996 17,286 Total 247,004 54,525 194,927 105,147 %age regional share 41.06 9.06 32.40 17.48 If we compare regionwise sales figures in the second half of CY99 with that of CY97, we see that the picture has changed a bit. The northern market has tended to stagnate while the western and eastern regions have increased their respective shares. If we compare company wise share in the respective regions, we see that TVS Suzuki and Kinetic Motors have widened its reach in the country in the past two years. TVS's share has more than doubled its percentage share in all the four regions while Majestic has gradually penetrated in the western and southern regions of the country. TVS's performance can be explained by the fact that a majority of its sales have been of its 'Scooty' model which is more of a scooterette and has been the preferred choice of entry level customers, working women and students in large parts of the country. Its other model 'Spectra' continues to sell poorly inspite of a recent price cut. The model presently sells around 300 units per month. Motorcycles The motorcycle segment has remained in high gear throughout FY2000. Quite clearly, Hero Honda was the star performer among its peers. Its high growth rate was achieved without the help of any incentive scheme by way of discounts like its closest competitor Bajaj Auto. And its not the recently launched 'CBZ' which is doing the trick for the company. Its older models like 'Splendor' and the 'CD100' still claim to have a loyal following among many potential customers. On the other hand, Bajaj Auto is not finding the going too easy. Its Japanese range of 4-stroke models have done well with sales touching 255,464 units in FY2000, a growth of 28%yoy. Thus, sales of Japanese models constituted 59.2% of total motorcycle sales as compared to 52.5% in FY99. In fact, sales of Indian motorcycles have suffered and sales have dropped by 3%yoy during the year. Moreover, the company was forced to reduce prices of its 'Caliber' model during the year by around Rs2,200 in Delhi and Rs5,400 in Mumbai. It also launched its Boxer series of model at a competitive price range of around Rs36,000 to Rs40,000. However, one thing seems to be clear. The fulcrum of choice has shifted towards 4-stroke vehicles and all pointers indicate that this trend is likely to continue. Perhaps, this could be the reason for TVS Suzuki to grow at a rate which is below the market average. The company has done well to introduce its first ever 4-stroke bike, called the 'Fiero', in the latter half of the year. However, it will be up against established offerings from Hero Honda and Bajaj. Moreover, Kinetic Motors and LML are also ready with their respective launch of their motorcycles. Another player to have done well during the year is Escorts Yamaha. It's high growth rate of 33%yoy is partially due to the fact that last year production was affected due to a labor strike. Alike TVS, it has also added a 4-stroke offering in its portfolio.    Table 4 : Regionwise Motorcycle Sales Region North East West South Jan-Dec 99 288,709 182,729 695,030 440,651 Jan-Dec 98 203,845 136,900 549,744 359,439 Jan-Dec 97 165,910 98,034 437,196 330,181 Regionwise sales seem to have grown in areas which traditionally had lower population of motorcycles in the country. As is evident from the table above, sales have grown at more than 30%yoy in the last three years in the northern and eastern regions of the country. In contrast, the western region has shown a growth rate of 26%yoy and the southern market only 15.5%yoy.    Mopeds The smallest of the three segments - mopeds - has grown by just a 100,000 odd units in the past five years. After languishing for the last three years, the moped segment showed some activity by growing at 6.5%yoy in FY2000. This growth has come mainly from the expanding market base in the south and, to an extent, the west. As is evident from the table below, sales in other regions of the country have either fallen down or stagnated. Proportion of sales to the southern region (excluding government sales and exports) has in fact increased from 55.6% in CY97 to 59.1% in CY99.  Table 5 : Regionwise Moped Sales Region North East West South Jan-Dec 99 61,042 17,330 196,984 397,916 Jan-Dec 98 65,369 17,118 201,358 346,315 Jan-Dec 97 61,332 17,194 183,863 328,629 With sales of around 85% to the southern states, it is not surprising to find industry leader TVS Suzuki to have done well in FY2000. In the south, students and working women prefer this mode of transport giving them a balance between price, convenience and trendiness. The only other player to have done well in FY2000 has been Bajaj Auto. The company launched its 'Spirit' model in July-August 1999 and it's design immediately struck a chord in the marketplace. The figures tell their own story. Sales of Bajaj's mopeds in the first half of FY2000 stood at 5,340 units. This increased to 6,200 units for the later half of the year. The players to have suffered include Majestic Auto and Kinetic Engineering. A last minute push has just about saved Kinetic from posting negative sales growth for the year. Kinetic Engineering has gradually lost its hold in the dominant markets of the west and south. In 1997, sales of its models constituted 54% of total sales in the region. This has now come down to 43% in the second half of 1999. As far as the south is concerned, its market share of around 10% remains stagnant. To stem the fall in its fortunes, Majestic Auto has decided to push into the growing southern markets by introducing a bevy of models in the near future. One of them is the Hero 'Puch EZ' which is 4.5 bhp, 74cc moped and is positioned against TVS's Scooty. Exports Table 6 : Exports Of Two Wheelers FY96 FY97 FY98 FY99 FY2000 Scooters 23,106 26,236 30,267 28,753 20,188 Motorcycles 48,596 50,353 45,338 35,461 35,295 Mopeds 42,269 48,139 49,899 35,788 27,754 Total two wheelers 113,971 124,728 125,504 100,002 83,237 Exports of two-wheelers continue to fall for the third year running. While exports of motorcycles have more or less remained stagnant, that of scooters and mopeds have fallen drastically. Last year's largest exporter of scooter's - LML - saw numbers drop by  48%yoy to 5,744 units. Kinetic Motor emerged as the leading exporter with 7,556 units while Bajaj Auto also witnessed a 28%yoy fall in exports to 5,909 units. In the motorcycle segment, the biggest loser was once again Bajaj Auto which witnessed a drop of 34%yoy in exports to 5,604 units. Last year's largest exporter Escorts Yamaha performed well and posted a 20%yoy rise in exports to 15,125 units. TVS Suzuki has seen its motorcycle exports doubling to 3,176 units in the past three years. Exports of mopeds also continue to be lackluster. The drop in numbers will largely be attributed to the fact that Escorts Yamaha had stopped manufacturing mopeds in the previous fiscal. In FY99, as much as 60% of its sales or 6,092 units were exported. In FY2000, exports numbered a meager 72 units. On the other hand, TVS Suzuki's exports more than tripled during the year to 3,110 units. Outlook The two-wheeler segment will continue to exhibit a shift towards motorcycles at the expense of scooters. The motorcycle segment in itself is likely to get more fragmented with manufacturers striving to create a balance between looks, fuel-economy and power. The trend has been set by Hero Honda's CBZ with its right mix of more power, snazzy looks and all round performance. The others to follow are Bajaj Auto with the 175cc 'Eliminator' and the 125cc 'Prowler'. Kinetic Motors has also tied up with Hyosung of Korea to bring out the GF 125 and 150 series of bikes. The 'Bullet - the old work horse from the Royal Enfield stable - is also slated to undergo a facelift to appeal more towards urban sentiments. Royal Enfield has also lined up the Machismo and the 500cc and 535cc Lighting to increase its present range. A recent development is also a pointer of things to come. Escorts has decided to reduce its stake in its JV with Yamaha and try to give more leeway to its Japanese partner to improve upon the company's recent performance. The company has within its stable only a single 4-stroke model and the attempt will be to widen this range to stand against the likes of Hero Honda and Bajaj Auto.  Another emerging trend is the move towards scooterettes. The first time two-wheeler buyer who is looking for a personal means of transport due to lack of a suitable means of public transport will increasingly opt for a scooterette. Bajaj's Spirit and Kinetic's Style have been doing well while LML is also set to introduce an upgraded 'Trendy'. Mopeds will suffer as a result and demand for them will be replaced by more sturdy and powerful step-thru's. Some action can also be expected in the scooter segment. With Honda setting up a subsidiary in the country and Piaggio breaking away from LML, both could be expected to introduce top-of-the-line models in the country. To face them, Bajaj Auto also has some Cagiva inspired models like 'CRX Cagiva' and 'Fusion' up its sleeve. But it remains to be seen how far the segment succeeds in diverting customer choice from motorcycles. Three Wheelers Table 7 : Three-wheeler Volume Sales Company Mar-00 Mar-99 %yoy Apr-Mar-00 Apr-Mar-99 %yoy Bajaj Auto 15,540 19,575 (20.6) 171,927 181,434 (5.2) Bajaj Tempo 1,734 1,428 21.4 17,878 13,625 31.2 M & M 22 0 - 55 0 - Scooters India 1,744 1,686 3.4 15,378 15,161 1.4 Total 19,040 22,689 (16.1) 205,238 210,220 (2.4) The three-wheeler industry could not replicate the performance of the two-wheeler sector. The segment as a whole has been affected by the regime of Euro emission norms with some states restricting the issue of permits. The largest player Bajaj Auto has bored the brunt of the slowdown and with a market share of 84% this has meant a fall in industry volumes too. But all news is not bad news for the industry. The second largest player Bajaj Tempo has shown a significant rise in volumes thanks to the encouraging response its 'Minidor' model has received. The passenger carrier has proved to be a cheap and effective means of personal transport. During the year, Mahindra & Mahindra made an initial foray in the segment with its electric vehicle 'Bijlee'. However, in the recent Budget, excise duty on electric vehicles was hiked from 8% to 16%. With custom duty on components also at a high level, the affect on future sales remains to be seen. Scooters India has continued to do perform consistently with a modest rise in sales. The rise was due to higher exports of its 'Vikram' range of three-wheelers to countries like Nepal. The company exported 663 units as compared to 218 units in FY99.    Note: All industry data sourced from SIAM Other sector reports Previous chapter Next chapter

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