PEST & Porter’s five force analysis on two wheeler industry

1. Two Wheeler Industry
(100cc - 150cc two wheelers)

2. Introduction
• India is the second largest producer of two wheelers in the
world. The country stands next to China and Japan in terms of
production and sales respectively.
• Majority of Indian especially youngsters prefer bike rather
than car.
• Capturing a large segment in two wheeler industry bike and
scooter cover a major segment.
• Indian two-wheeler industry had a small beginning in the
early 50's.

3. Major Players
Companies Products
Hero Motocorp Glamour, Passion, Splendor Plus,
Hunk
Honda Unicorn, Shine, Twister, Activa, Dio,
Aviator
Bajaj Auto Ltd. Discover, Pulsar, Platina, Avenger
TVS Motors Ltd. Victor, Flame, Jive, Star city, Spot,
Wego, Scooty pep, Scooty streak
Yamaha Motor India
(P) Ltd.
Crux, YBR 110, SS 125, Majesty, Vino,
Zuma

4. Company wise 2-wheeler Market Share
4%
2%
14%
12%
24%
44%
Hero
Honda
Bajaj
TVS
Yamaha
Others
Others : Suzuki, Mahindra, Piaggio
Data Source : SIAM (Society of Indian Automobile Manufacturers), CIRSIL, Other Industry sources

5. Annual 2 Wheeler Production in India
8.4
10.5
13.3
15.5 15.7
16.9
FY 09 FY 10 FY 11 FY 12 FY 13 FY 14
(figures in million units)
Data Source : SIAM (Society of Indian Automobile Manufacturers), CIRSIL, Other Industry sources

6. Annual 2 Wheeler Sales in India
14.8
13.7
13.4
2013 - 2014
2012 - 2013
2011 - 2012
(figures in million units)
Data Source : SIAM (Society of Indian Automobile Manufacturers), CIRSIL, Other Industry sources

7. PEST Analysis

8. Political
• Indian government auto policy aimed at
promoting an integrated, phase and
conductive growth of the Indian Automobile
industry.
• Allow automatic approval for foreign
investment, with no minimum investment
criteria.
• Assist development of vehicles propelled
by alternate energy sources.

10. Economic
• Low cost labour coupled with local availability of raw
material like steel, aluminium and natural rubber has
placed India amongst the low cost producing centers
of two wheelers.
• Many auto finance company laid easy installment
rules with less interest rate it makes more segment
people to go for it.

11. Social
• In numerous cultures, motorcycles are the
primary means of transport.
• Two wheelers gives a great advantage to the
specified designation where other cannot
enter.
• Indian customers are highly discerning,
educated and well informed. They are price
sensitive and put a lot of emphasis on value
for money.

12. Technological
• Two wheeler construction is the engineering,
manufacturing, and assembly of components
and systems for two wheelers which result in
performance, cost and aesthetics desired by
the designers.
• Best fuel economy of transport.
• New innovations.

13. Porter’s 5 Force Analysis

14. THREAT OF NEW ENTRANTS
• Entry barriers are high.
• Huge investment
• Capital investment is very huge in two wheeler industry.
• The biggest challenge is setting up sales & service center,
which is very hard for a new entrant.
• Well established players are already existing.
• Industry is consolidated.
Threat of new entrance is Very low.

15. THREAT OF SUBSTITUTE
• Faces direct competition from the automobile sector.
• Substitute products for two wheeler industries are:
– Bus, Auto, Cars and other public transports.
• Reasons for choosing substitutes may:
– Relative quality of substitutes is higher.
– Switching costs is lower.
Threat of substitute is High.

16. RIVALRY AMONG COMPETITORS
• Price, Quality of the products plays an important role for
rivalry among competitors.
• Methods adopted to attract customers - Discounts, availability
of loans, low rate of interest and long-term warranties to
attract customers.
• Each company in industry change the model on going basis to
show differentiation in their competitors.
Rivalry among sellers are High.

17. BARGAINING POWER OF SUPPLIERS
• Since they change their model on going basis they create
good relationship between their suppliers.
• Some of the components in two wheeler industry sellers have
bargaining power:
• Steel
• Batteries
• Tyres & Tube etc.
• The automobile supply business is quite fragmented.
Bargaining power of suppliers are Low.

18. BARGAINING POWER OF BUYERS
• There are 5 to 6 big popular brands of two- wheelers are
available.
• Nowadays people go to unique brands because of good
service they provide after purchase.
Bargaining power of buyers are High.

19. Thank You