Industry profile of motorcycle

Bikes having four strokes -engines are thought to be more fuel efficient motor bikes they are the main reason for the growth of motor bike segment in India. The two-wheeler industry in India has been in existence since 1955. It consists of three segments o Scooters o Motorcycles o Mopeds The Increase In sales volume of this Industry Is proof of Its high growth. In 1971, sales were around 0. 1 million units per annum. But by 1998, this figure had risen to 3 million units per annum. Similarly, spectacles of production have also Increased from units in the late nineties.

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The two-wheeler industry in India began operations within he framework of the national industrial policy as espoused by the Industrial Policy Resolution of 1956. This resolution divided the entire industrial sector into three groups, of which one contained industries whose development was the exclusive responsibility of the State, another included those industries in which both the State and the private sector could participate and the last set of industries that could be developed exclusively under private initiative within the guidelines and objectives laid out by the Five Year Plans.

Private Investment was channeled and regulated through the extensive use of sensing Glenn the State comprehensive control over the direction and pattern of investment. Entry of firms. Capacity expansion, choice of product and capacity mix and technology, were all effectively controlled by the State in a bid to prevent the concentration of economic power-due to lapses in the system, fresh policies were brought in at the end of the sixties. These consisted of MART of 1969 and FEAR of 1973, which were aimed at regulating monopoly and foreign investment respectively.

Firms that came under the purview of these acts were allowed to invest only in a select set of industries. This net of controls on the economy in the seventies caused several firms to Operate below the minimum scale of efficiency Under-utilize capacity and Use outdated technology. While operating below the minimum scale of efficiency resulted from the fact that several Incentives were given to smaller firms, the capacity under-utilization was the result of the capacity mix being determined Independent of the market demand.

The policy of distributing imports based on capacity, causing firms to expand beyond technology resulted from the restrictions placed on import of technology through the revisions of FEAR. Recognition of the deleterious effects of these policies led to the initiation of reforms. In 1975 which took on a more pronounced shape and acquired wider scope under the New Economic Policy (NEAP) in 1985. As part of these reforms, several groups of industries were relined and ‘broad banding was permitted in select industries.

Controls over capacity expansion were relaxed through the specification of the operate below the minimum scale of efficiency of production for several industries. Foreign investment was allowed in select industries and norms under the MART Act were relaxed. These reforms led to a rise in the trend rate of growth of real GAP from 3. 7% in the seventies to 5. 4% in the eighties. However the major set of reforms came in 1991 in response to a series of macroeconomic crises that hit the Indian economy in 1990-91.

Several industries were deregulated, the Indian rupee was devalued and made convertible on the current account and tariffs replaced quantitative restrictions in the area of trade. The initiation of reforms led to a drop in the growth of real GAP between 1990 – 1992, but this averaged at about 5. 5% per annum after 1992. The decline in GAP in the years after reforms was the outcome of devaluation and the contraction fiscal and monetary policies taken in 1991 to address the foreign exchange crisis.

Thus the Industrial Policy in India moved from a position of regulation and tight control in the sixties and seventies, to a more liberalized one in the eighties and nineties. The two-wheeler industry in India has to a great extent been shaped by the evolution of the industrial policy of the country. Regulatory policies like FEAR and MART caused the growth of some segments in the industry like motorcycles to stagnate. These were later able to grow (both in terms of verbal sales volumes and number of players) once foreign investments were allowed in 1981.

The reforms in the eighties like “broad banding’ caused the entry of several new firms and products which caused the existing technologically outdated products to lose sales volume and/or exit the market. Finally, with liberalizing in the nineties, the industry witnessed a proliferation in brands. India is the second largest producer of two wheelers in the world. Indian’s prefer the two-wheelers because of their small manageable size, low maintenance and easy loan payments. Motorized two wheelers are seen as a symbol of status by populace. Majority of the Indians especially the youngsters prefer motor bikes rather than cars.

Bikes are considered to be the favorite among the youngsters as they help to day to day easy transportation. Indian bikes market share is about 81. 5% of the total two wheeler market in India. India is the manufacturer of the some of the best bikes in the world. Hero Motorcar, Kinetic Motors and LAM India are some of iconic bikes manufacturer in India. Large variety of two wheelers is available in the market, known their latest technology and enhanced mileage. Indian bikes, scooters, and mopeds represent style and class for both men and women in India. The domestic two wheeler industry recorded sales volume of 13. Million within the period of 2012-2013. It is the growth of 2. 9% over the previous year. The domestic two-wheeler industry is expected to report moderate volume growth of around 4-5 per cent in 2012-13, as demand slowdown as well as base effect catches up with the industry, says a recent CIRCA report on the industry. The two wheeler industry, however, has clocked a compounded annual growth rate (CRAG) of term, the two-wheeler industry is expected to report a volume CRAG of 8-9 per cent, to reach a size of 22-23 million units (combining domestic and exports) by 2016-17.

Our longer-term growth forecast remains at 9-11 per cent , as we believe the various structural positives associated with the domestic two-wheeler industry including favorable demographic profile, moderate two-wheeler penetration levels (in relation to several other emerging markets), under developed public transport system, growing arbitration, strong replacement demand and moderate share of financed purchases remain intact; as also the large opportunity available to grow presence in overseas markets, mainly Africa and Latin America,” the report says. With domestic volume growth of 3. Re cent year-on-year (you) and exports volume dip of 1. 1 per cent you in 11 months of 2012-13, the Indian two-wheeler is currently amidst a slowdown phase last experienced in 2007-08 / 2008-09. Several factors including high inflation, firm interest rates, rising petrol prices, besides weak monsoons have been dampening demand in the domestic market over last several quarters. At the same time, overseas sales have been adversely impacted by increase in interest rates in several target countries, increase in import duty in Sir Lankan, trade restrictions imposed by Argentina and dollar sales embargo with Iran.

This apart, the reduction n incentives available to two-wheeler exporters, twice over the last 18 months, has persuaded Indian original equipment manufacturers (Memos) to partially hike product prices in overseas markets, adding to the pressure on export volumes. The report highlights that based on calendar year 2012 volumes, however, India is now the largest two-wheeler market in the world, with sales volumes of 13. 8 million units (domestic). It has overtaken China at 12. 6 million units. In fact, while two wheeler sales volumes in India grew by 5. Per cent during 2012 calendar year over the previous year, the domestic demand both in China and Indonesia second and hired largest two-wheeler markets, respectively) shrunk by 10. 0 per cent and 9. 2 per cent, respectively. Several industry participants have announced Greenfield capacity expansion plans in recent periods. Hero Motorcar plans to invest RSI 1,500 core over the next two years towards establishing facilities in Restaurants and Gujarat; Honda is in the process of setting-up its third manufacturing facility in Karate; Yamaha too is setting-up a new plant in Tamil Undue at an investment of RSI 1,500 core.