End of entry-level bike segment?

End of entry-level bike segment?

Author | Source: The Economic Times | Saturday, Nov 18,2006 8:24 AM

End of entry-level bike segment?

As Hero Honda and Bajaj lock horns over the entry-level segment, John Sarkar speaks to the rest of the bike pack to get their verdict on the fate of the 100cc four-stroke bike

Top bike manufacturers in the country are sweating it out to establish the battleground of the future. The fight is over a mere 25cc. At present 65% of the Rs 33,000-crore Indian two-wheeler market is dominated by the sale of 100cc, four-stroke motorcycles. With market No 2 Bajaj, threatening to storm this bread and butter 100cc segment in the next two years with a different technology platform, the industry is anticipating a seismic shift.

The Bajaj portfolio will begin at a higher capacity, expected to be 125cc, for which it is developing a low-cost platform from scratch. Market leader Hero Honda, with 50% share in this segment, is courageously staying put adding new models and variants to the stable. But what have the other two-wheeler manufacturers got to say about the Great Indian Bike Battle over the 100 cc/four stroke?

Some are calling it strategy. Some are calling it mindplay. Whatever it is, the fight is interesting. Take a look at this. According to industry estimates the overall size of the 100cc segment decreased by almost 3.5% in the course of one year. In the 125-250cc segment, things are very different. The segment has expanded by 36%.

The only catch is the decrease in growth in the 100cc segment has been on a large base while the 36% increase in 125-250cc segment has taken place on a much smaller base in terms of volumes. But this development is significant nonetheless. So will the 125cc segment drive the volumes in the near future?

Sanjay Tripathi, GM-R&D of Yamaha agrees with Bajaj. He says, “The 125cc-150cc segment is the future of Indian motorcycling in terms of volumes. Today's youngsters don't want to be caught on a 100 cc bike because of peer pressure. A 125cc bike offers more style, more torque and meet stringent emission norms. And importantly the mileage is equivalent to a 100cc. The extra torque also helps in city riding.”

It is a natural phenomenon that people want to upgrade and with a buoyant economy helping things along, up gradation is imminent. So from now on will Yamaha concentrate only on the 125-150cc segment? “Not exactly, though we would try to incorporate technology into our entry-level bikes like the Crux to increase the performance factor, which is our forte,” replies Tripathy.

Kat Sumi Takata, joint MD, Suzuki Motors echoes the same views. “Our strategy is to make the 125 cc segment as the entry level segment for users so that the first time buyers should directly upgrade to 125 cc. Our research has shown that customers require more power, than what is available in the 100cc motorcycles for their daily riding condition. We feel that 125 cc motorcycles deliver better pick up and better torque without sacrificing on the mileage front,” he says. Suzuki does not have a presence in the 100cc segment as of now. Their 125cc model Zeus has done moderately well, clocking 9000 units the previous month.

TVS Motor's marketing head, Prasad Narsimhan, is more neutral in his opinion. “I feel there will be a bit of both. Some will move into the 125cc segment while others will stick to the 100cc because of its inherent strength, which is mileage. There are more brands in the market today. People want variety. They don't only look at individual features like mileage or performance. They look at a bike as a package.”

TVS has two 100cc motorcycle in its arsenal, the Centra and Star, while the 125cc is headed by three variants of its very popular Victor. Interestingly, compared to the Victor, the Star is doing extremely well.

Last month the Star has managed to clock over 100,000 units in retail sales while the Victor is doing around 14,000-15,000 units a month. And TVS is all set to invest and concentrate more on this segment at the moment.

Ajinkya Ferodia, VP-marketing, Kinetic Motors says, “In the next 10 years I don't see the 100cc segment vanishing. In India consumers are not in a hurry to reach anywhere. They don't require that much of speed. Also most customers of the 100cc motorcycles are usually based in rural India. They would require mileage. A 10 km difference in mileage matters a lot to them.” Kinetic has two 100cc bikes in its portfolio. The newly launched Stryker and the Shakti, which it has launched in select markets.

Honda Motorcycle & Scooter India (HMSI) is also an important player in the bike market. Interestingly HMSI had entered the market first with its 150cc Unicorn and then its 125cc Shine. Till date it has no signs of breaking into the 100cc segment.

Clearly the industry is divided in its verdict. But with the influx of technology into R&D, manufacturers are planning to turn the tables on one another. Whether it is offering 125cc motorcycles at the price of 100cc, or offering the advantages of a 125cc engine in a 100cc motorcycle, the consumer is all set to benefit. Pricing and technology will be the key determinants for companies to garner marketshare. But most importantly it would boil down to nerves. The one with the steadiest would finally decide the future of the Indian two-wheeler market.

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