Two-wheelers

Summary

Faster increase in sales in rural

areas is expected to drive
Annual Review May 2010
motorcycle growth until 2014-15.
Player focus and preference for
scooter as a family vehicle will
drive relatively high growth in
scooter volumes until 2014-15.
The growth in exports is likely to
be moderate until 2014-15,
following the shift in
manufacturing facilities for
Contents
exports to other countries. The
Part A: Increase in addressable households in rural areas to drive two-wheeler volume
two-wheeler industry is likely to growth over the long run
continue its growth momentum Executive summary A-1
in 2010-11 and post a growth of Demand review and outlook A-3
Profitability – Review and outlook A-15
10-11 per cent. Also, operating
margins of players are expected
Part B: State of the industry
to decline in 2010-11 with Player profile B-1
significant increase in input Demand and market position B-13
cost. Costs B-21
Supply B-25
Global coverage B-29
Government policy B-43

Part C: Industry statistics

Industry statistics C-1

This document has been prepared by Sagar Chauhan, Rohit Garg, Hetal Gandhi and Manoj Mohta (Head of
Research). For any queries please get in touch with our client servicing desk. (clientservicing@crisil.com. Ph -
022-33423561)
 Opinion
Sections

Executive summary A-1

1.0 Demand – Review and outlook A-3
2.0 Profitability – Review and outlook A-15

Chart

1.0 Demand – Review and outlook

01 Demand forecast methodology for motorcycles A-5
02 Factors affecting rural incomes (direct and indirect) A-6

Figures

1.0 Demand - Review and outlook

01 Domestic sales trend A-3
02 Two-wheeler - segmental growth trend A-3
03 Two-wheeler - demand trend A-4
04 Two-wheeler - segmental share A-4
05 Growth in rural income will lead to high addition in rural addressable
households A-5
06 Motorcycle - demand trend A-8
07 Share of urban and rural to total motorcycle demand A-8
08 Scooters - demand trend A-9
09 Mopeds - demand trend A-10
10 Trend in two-wheeler exports A-10
11 Segment-wise export sales A-10
12 Increase in market share in all major geographies A-11
13 Global market volumes A-11
14 Increasing share of India in total two-wheeler exports from
top producing nations A-11
15 Export - Growth to moderate at 10-12 per cent A-12
16 Two-wheeler export volumes in 2009-10 A-13
17 Expected slowdown in major export countries A-13

2.0 Profitability – Review and outlook

01 Operating profit trend A-15
02 Favourable product mix increasing net realisation A-15
03 Net sales realisations trend A-16
04 Impact of various factors on net realisation A-16

Continued…

CRISIL RESEARCH TWO-WHEELERS ANNUAL REVIEW A-i

…continued

05 Effective excise duty A-17

06 Comparison of raw material/unit with operating margins A-17
07 Steel - Price trend A-18
08 Aluminium - Price trend A-18
09 Selling and distribution cost (per cent of operating income) A-19
10 Selling and distribution cost (Rs per unit sold) A-19
11 Two-wheeler industry - RoCE trend A-19

Tables

1.0 Demand – Review and outlook

01 Two-wheeler demand growth A-4

2.0 Profitability – Review and outlook

01 Trend in profitability A-16
02 Trends in per vehicle raw material cost A-18

A-ii CRISIL RESEARCH TWO-WHEELERS ANNUAL REVIEW

 State of the Industry
Sections

1.0 Player profile B-1

- Bajaj Auto Ltd B-1
- Hero Honda Motors Ltd B-3
- TVS Motor Company B-5
- Honda Motorcycles and Scooters India (HMSI) B-7
- Yamaha Motor India B-9
- Suzuki Motorcycles India Pvt. Ltd B-10
- Mahindra & Mahindra Ltd B-11
2.0 Demand and market position B-13
3.0 Costs B-21
4.0 Supply B-25
5.0 Global coverage B-29
- Global two-wheeler market B-29
- Global markets B-30
6.0 Government policy B-43
- Introduction B-43
- Investment policy B-43
- Import policy B-43
- Fiscal regulations B-44
- Excise duty B-45
- Other levies B-45
- Emission norms B-45
- Emission control laws B-46
- Safety laws B-46

Figures

1.0 Player profile

01 Bajaj Auto – Estimated market share in motorcycles sub-segment B-2
02 Hero Honda – Estimated market share in motorcycles sub-segment B-4
03 TVS Motor Company: Estimated market share in motorcycles sub-segment B-6
04 HMSI - Segment-wise market share B-8
05 Yamaha: Estimated market share in motorcycles sub-segment B-9

Continued…

CRISIL RESEARCH TWO-WHEELERS ANNUAL REVIEW B-i

…continued

Figures

2.0 Demand and market position

01 Competitive position of players B-14
02 Two-wheelers – Player-wise share in domestic sales B-14
03 Two-wheelers – Player-wise growth rates B-14
04 Motorcycle – Player-wise share in domestic sales B-15
05 Economy – Player-wise share in domestic sales B-16
06 Economy segment – Major models B-16
07 Player-wise share in domestic sales B-16
08 Executive segment – Major models B-16
09 Player-wise share in domestic sales B-17
10 Premium segment – Major models B-17
11 Scooters – Player-wise share in domestic sales B-18
12 Growth rate in domestic sales - TVS Mopeds B-18

3.0 Costs
01 Two-wheeler industry – Cost structure B-21
02 Trends in steel and aluminium prices B-22
03 Raw material indigenisation (Two-wheeler industry) B-23
04 Selling and distribution expenses – Industry aggregates B-24
05 Player-wise selling and distribution expenses B-24

4.0 Supply
01 Trend in capacity utilisation (two-wheeler industry) B-25
02 Comparison of gross fixed asset turnover of two-wheeler OEM vis –a –vis
car OEM’s B-25

5.0 Global coverage

01 Global sales volume distribution (2007) B-29
02 Global motorcycle production B-29
03 China – Sales distribution by engine capacity (2007) B-30
04 Indonesia — Motorcycle sales B-31
05 Indonesia: Share of 4-stroke vs 2-stroke B-32
06 Thailand – Motorcycle sales B-33
07 Thailand player-wise capacity share (2008) B-33
08 Taiwan – Domestic motorcycle sales trend B-34
09 Taiwan – Player market share B-34
10 Japan domestic sales (2002-2008) B-35
11 South Korea - Domestic sales B-36
12 Europe – Motorcycle & moped production B-38
13 Europe two-wheeler sales B-38
14 Italy - Market share of different types of motorcycles (2008) B-39
15 Germany – Two-wheeler sales B-39

continued…

B-ii CRISIL RESEARCH TWO-WHEELERS ANNUAL REVIEW

…continued

Figures

5.0 Global coverage

16 US company-wise market share (2007) B-40
17 Canada – segment–wise sales (2008) B-41
18 Canada domestic motorcycle sales B-41

Tables

1.0 Player profile

01 Bajaj Auto Ltd B-1
02 Hero Honda Motors Ltd B-3
03 TVS Motors Ltd B-5
04 Honda Motorcycles and Scooters India Ltd B-7
05 Yamaha Motors Ltd B-9
06 Suzuki Motorcycle India Pvt. Ltd B-10
07 Mahindra & Mahindra Ltd B-11

2.0 Demand and market position

01 Two-wheelers: Player comparison (2009-10) B-19
02 Estimated two-wheeler distribution network B-19
03 Two-wheelers: Major models launched (April 2009 onwards) B-20

3.0 Costs
01 Two-wheelers: Trend in raw material costs B-22
02 Raw material: Company-wise raw material cost break-up (2008-09) B-23

4.0 Supply
01 Two-wheelers: Capacity and capacity utilisation of players (2009-10) B-26
02 Two-wheelers – Capacity addition plans B-27

5.0 Global coverage

01 Different types of motorcycles B-29
02 Segment-wise market share in 2007 B-34
03 Demand in Brazil B-37
04 Segment-wise market share (2008) B-39

6.0 Government policy

01 Two-wheelers - Basic custom duty structure (2010-11) B-44
02 Key raw materials - Import tariffs B-44
03 Excise duty - Two-wheelers and key raw materials B-45
04 Two-wheelers - Emission norms B-46

CRISIL RESEARCH TWO-WHEELERS ANNUAL REVIEW B-iii

 Industry statistics
Sections

1.0 Industry statistics C-1

Tables

1.0 Industry statistics

01: Two-wheelers - Player-wise sales volumes C-1
02: Two-wheelers - Segment-wise sales volumes C-2
03: Two-wheelers - Segment and player-wise sales volumes C-3
04: Two-wheelers - Segment and player-wise market share (per cent) C-4
05: Two-wheelers - Segment and player-wise export share (per cent) C-5
06: Two-wheelers - Player and segment-wise production C-6
07: Two-wheelers - Player-wise operating margin trends (standalone) C-7
08: Two-wheelers - Player-wise RoCE trends (standalone) C-7
09: Two-wheelers - Financials of key players (2008-09) C-7
10: Bajaj Auto Ltd - Unaudited results (standalone) C-8
11: Hero Honda - Unaudited results C-8
12: TVS Motors - Unaudited results (standalone) C-9
13: Two-wheelers - Profit and loss account (standalone) C-10
14: Two-wheelers - Aggregate industry balance sheet C-11

CRISIL RESEARCH TWO-WHEELERS ANNUAL REVIEW C-i