Market Share Analysis of the Two-Wheeler Market in India

After having covered the market share trends in the three-wheeler, passenger and commercial vehicles industries in India, I now turn my attention to the two wheeler industry. While I have discussed the segmentation of two-wheelers in my broad post on the Indian automobile industry, in the graphic comparison of market share over the past three years shown below, the previous years' trends are shown only for the segment as a whole. Where not explicitly mentioned, the reference is to the two-wheeler market as a whole and not to scooters or motorcycles. 

It can be seen that the two wheeler market as a whole is an oligopoly with the top four players having 90% of the market between them. Further, the top two players have over 60% of the market between them. Market dominance is even more concentrated when we start looking at the scooters and the motorcycles segments. In both of these, the market leader sells more units than all the others combined. While in scooters, Honda has dominance, the leader in the motorcycles segment is Hero. Coming to the market sizing for motorcycles and scooters, in CY 2015, while 48,80,117 scooters were sold in India, the motorcycle sales was 1,05,23,909, i.e., over twice the scooter sales. Hence, having leadership in the motorcycle segment gives Hero the edge in the segment as a whole, where it enjoys a 36% market share, as opposed to Honda which has only a 27% market share. 

TVS and Bajaj are the other major players in the industry. While TVS has only a 14% market share in scooters and less than 8% in the motorcycles, it edges out Bajaj to claim third place with a 14% market share in the two wheelers segment. This is despite Bajaj having third place in the motorcycles industry with an 18% market share, since it does not compete in the scooters market.      

Hero Motocorp Market Share Trends 

Hero has been steadily losing market share in the past three years as can be seen from the market share trend graphic. While it was above 40% in CY14, it decreased to below 37% in Apr-Nov 2016. A variety of factors are blamed for this drop. In FY 2015, the drop in rural incomes due to low agricultural output and a decrease in Government income schemes was blamed for the drop in Hero's sales volume, given that rural demand was a major source of Hero's sales. This is partly because Hero competes predominantly in the smaller commuter bike segments whose buyers are skewed more towards the rural areas. Hero has also missed out on the growth of the premium bike segment, and despite having seven products in the above 150 cc category, had a market share of only 6% in that category as of March 2015. 

On the product front, technology has been called the "chink in the armour" of Hero. Its products have apparently undergone only minor changes since they were launched. It is well aware of this and has tried in many ways to improve in this regard. It invested ₹ 850 crores in an R&D facility in Jaipur that was inaugurated in 2016 to develop "consumer oriented and market relevant products". The former head of BMW Motorcycles has been roped in to make the brand and the vehicles more "modern and contemporary". Earlier, it had bought a 49.2% stake in an U.S. based R&D firm Erik Buell Racing (EBR) with the aim to have EBR develop a series of bikes and technologies for Hero. This, however, backfired as EBR went bankrupt leaving Hero with an impairment loss of ₹ 155 crore.

Honda India Market Share Trends 

Honda Motorcycles and Scooters India (HMSI) has been steadily gaining market share in the period represented in the graphical analysis. Its growth is facilitated by the market leadership position it enjoys in the scooter segment, which has been showing a high growth rate, for instance it grew by 20% in Apr-Nov 2016 on a year on year basis. This leadership is facilitated by its evergreen and blockbuster product, the Activa.  According to analysts, Honda plugged the gap in the scooter market created due to the exit of Bajaj Auto. Its dependence on the scooter market can be gauged from the fact that in early 2016, it opened the largest scooter only factory. 

Its growth has also been aided by the sales of its 125 cc motorcycle CB Shine, which crossed  the one lakh sales milestone within nine months of its launch, and was the best-selling non-Hero motorcycle in November 2016. Another successful launch in 2016 was the Navi, a small bike with an automatic transmission that can be called a crossover between a scooter and a bike, which sold over 50,000 units in six months since launch.

TVS Motor Market Share Trends

Like Honda, TVS too can be seen to be stronger in scooters. It has a nearly 14% market share in scooter whereas its share in the motorcycle market is only roughly half that much. In November 2016, it had two scooters in the top ten best-selling scooters with its Jupiter being the second best-selling model, whereas in the motorcycle segment, its best-selling model the Apache was only the tenth best-selling. However, its best-selling model is neither a scooter nor a motorcycle, but a moped, the XL Super, which was the fourth best-selling two-wheeler in November 2016.

The company expects increasing demand for its scooter Jupiter and motorcycle Victor to drive market share growth to 15% in FY17, and increase it to 18% in two years. It also wants to enter the 125 cc category of scooters in the first few months of CY17. 

Bajaj Auto Market Share Trends

Bajaj Auto has not had a significant change in its market share, having lost some and gained it back, in the period depicted in the graphics. The relevant market share for it is only in the motorcycle segment where it competes with a market share of around 18%. It had three brands in the top ten best-selling motorcycles list for November 2016, the sports bike Pulsar and the entry level commuter category bikes Platina and CT, both of which have around 100 cc engine capacity. It is in the 125 cc category that Bajaj is under-performing with its Discover brand sales in that category not up to scratch. 

The commuter segment is an important segment which contributes to 80% of the units sold in the motorcycle market. Above it lie the value segment which are the more powerful commuter bikes and entry level sports bikes and beyond them the premium sports bikes. In the premium category, Bajaj had an enviable 47% market share around mid-2016, due to the good sales of their Avenger brand. With the good reception that its new value segment 150 cc bike V has received, and with the big expectation surrounding its premium 373 cc bike the Dominar, which they hope will sell 2 lakh units a year going ahead, the company hopes to garner 22-23% market share in the motorcyles segment in FY17. 

Yamaha India Market Share Trends  

Yamaha Motor India Limited has seen a healthy increase in its market share, to the tune of one percentage point, in the period shown in the graphics. It currently has a little under a 5% market share. AS of mid-2016, there was an even split between motorcycles and scooters when it came to Yamaha's sales. It had a 7% market share in scooters at that time and was looking to increase it to 10% by end of FY17. It aims to target both the style conscious and the utility conscious customers with multiple offerings within the scooter segment. Its focus is on urban consumers, and products tailored to them will be offered to rural consumers as well, since the company believes that urban tastes dictate success in both urban as well as rural markets. While in the premium motorcycle category, it has the R15 and in the sports category the FZ series, its commuter range was augmented with the Saluto RX, which was hoped to be saleable in rural pockets as well. It targets sales of one million units of two wheelers in CY 2017 , and wants to increase market share to 10% in 2017-18.

Royal Enfield Market Share Trends

Royal Enfield has seen the best market share gains among all the players in the graphical analysis, at around 1.5 percentage point market share gain in the time period under consideration. The more relevant metric is, however, the 80% market share it has among motorcycles priced between one and two lakh rupees, a niche that is expected to sell one million units in CY17. This is believed to be on account of the management's right decision to remain in a niche segment and cultivate that segment through marketing. In early 2016, it overtook Yamaha's motorcycle sales to become the fifth largest motorcycle seller in India. It has been refreshing its portfolio through launch of new models as well as colour options.

Suzuki India Market Share Trends

Suzuki India has experienced marginal reductions in market share over the course of the time period analysed. The highlight of 2016 for the company was that it turned profitable for the first time since the start of its operations ten years ago. Going ahead, it wants to launch one product per year in the country in the premium space. 

Mahindra Market Share Trends

Mahindra Two Wheelers Limited can be seen to have a market share of 0.33% in the Apr-Nov 2016 period. It can also be seen to be losing market share in the period depicted in the graphics. Various factors have been blamed for the company's under-performance, such as a lack of focus on cost-reduction and weakness in marketing.

The remaining small players don't command any significant market share between them and can be ignored. I now proceed to the summary of this blog post.

Summary

To sum up:

1. There are clear-cut leaders with a large margin of dominance in both the scooter and the motorcycle segments. While in the former it is Honda, in the latter it is Hero.
2. Hero, however, has been losing market share, which is blamed on its inability to excel in R&D on its own, without Honda, its erstwhile technology partner. Various steps have been taken by Hero to alleviate this and their results are awaited.
3. Honda, on the other hand, is gaining market share on the strength of its existing products in the scooter segment, where it is strong, and new launches in the motorcycle segment, where it is yet finding its footing post demerger with Hero.
4. TVS, whose best-selling two wheeler is a moped, is hoping that its new launches in the motorcycle and scooter segments will help it continue the increase in its market share.
5. Bajaj's market share gains have been capped by its weakness in the 125 cc commuter category where its Discover range has under-performed.  It's betting on its new offerings in the value segment and the premium segment to help it race ahead in the times ahead.
6. Among the smaller players, Yamaha and Royal Enfield have been growing their market shares well, through performing well in the non-commuter categories that they inhabit. Both have introduced promising new offerings in 2016.
7. Suzuki and Mahindra have been struggling to find their footing amidst the entrenched competitors and the hyper-competition. Both claimed to have made improvements recently and are optimistic about the future.