For the following discussion Iam considering the holistic view and avoiding the ongoing skyrocketing inflation, crude prices & even the other political factors which might affect the subsequent reasoning.
In the earlier article, I have indicated that the two wheeler market slowdown /stability might not be a temporary phenomenon. To justify that observation, data from a single financial year is not enough. What we have to look for some empirical evidence .
To illustrate the gradual decline, Iam taking the example of a developed economy, Japan .As it is clearly visible , two wheeler sales in Japan have declined from 1.7 million units in 1989-90 to a mere 0.7 million units in 2007-08.
In the same vein, If we can include the data for other major Motorcycle selling countries like Indonesia (3rd largest consumer of two wheelers in world after China & India ) . Overall sales have declined from 3.5 million units to 3.2 million units in 2008.
Lets consider the world’s two wheeler market . Approximately the market is in the tune of 55-60 million units per year. Out of the pie , almost 3/4th sale comes through 4 major Asian countries .
Apart from China & India , the two wheeler sales growth has plateaud in almost all the other countries . The apparent reason is the population of the mentioned countries and the still-developing stage of growth these countries are in .
Time for a little micro-analysis . Motor cycles mainly have grown in the executive segment ( 100-125 cc) in China & India . This segment doesn’t even exist in most of the countries . This segment of bikes owes their popularity to their extraordinary mileage & easy mobility in traffic . But their sales have stabilized a bit over a past few years after witnessing tremendous growth .
So what next ?
What we have not seen in India is a sub 75 cc bike segment ( eg : Honda Cubs ) especially active in other Asian countries like China & Japan . They could be clutter breaking as they can be more fuel saving & possess better mobility But I guess India has passed through an era of mopeds ( Luna , Hero Puch etc.) & it would take a lot to bring them back there.
There remains the 150 cc + segment which is growing at a good pace but with limited volumes the future doesn’t augur well . Yes , the scooter/scooterette market has revitalized & a certain draw for most companies . But for the Big Three ( Hero Honda , Bajaj & TVS) the testing times have come . And they are already looking through diversification initiatives .
There are several posts/ripostes to the above analysis & the first one comes from me only . I’ve discounted the petrol prices initially , but can I ? Also the shoddy infrastructure of the country which would hinder the 4-wheeler growth which in turn benefits two-wheeler sales atleast for next 5-10 years . Next debatable topic is Mass transport & its evolution in India . What are the impacts of these factors over 2-wheeler sales in future ? .
This merits another discussion & my next post will be dedicated to the same . Your suggestions/queries/brickbats are welcome .
