Lovely Professional University

Mittal School of Business

M.Sc. Economics Department

Demand Function in the Indian Two-Wheeler Market

Teacher’s Name: Tushinder Preet Kaur

Prepared by: Amiya Abdul Khadar

Mohammad Haroon Ahmadi

Newton Kanyanta Mulenga

Reg No: 11806390, 11800505, 11814243

Roll No: 5, 3, and 17

Year: 2018

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 Contents
ACKNOWLEDGEMENT ...............................................................................................................a
Introduction ..................................................................................................................................... 1
Manufacturers of Two –wheelers in India ...................................................................................... 2
Evolution of Two-wheeler Industry in India: ................................................................................. 3
Objectives ....................................................................................................................................... 4
Review of Literature ....................................................................................................................... 4
Market Segmentation Aanalysis ..................................................................................................... 7
SWOT- Analysis of Two Wheeler Industry ................................................................................... 8
Market Demand Analysis ............................................................................................................... 8
Buying Behavior Analysis .......................................................................................................... 9
Factors affecting demanding ......................................................................................................... 10
Current Situations of Products & Sell in Two – wheeler Market ................................................. 11
Major factors that can affect the demand for two wheelers in India in future .............................. 14
1. Indian Oil price rise ............................................................................................................... 14
2.Increasing Middle Class ......................................................................................................... 15
3. Rural development ................................................................................................................ 17
4. Environmental issues............................................................................................................. 18
5. Electric Mobility ................................................................................................................... 18
Effective strategies ........................................................................................................................ 19
1. Government policy impact on petrol prices: ......................................................................... 19
2. Improvement in disposable income: ..................................................................................... 19
3. Availability of credit for vehicle purchase: ........................................................................... 19
4. Implementation of mass transport system: ............................................................................ 19
5. Electric Mobility: .................................................................................................................. 19
6. Promotion to youth: ............................................................................................................... 19
Conclusion .................................................................................................................................... 20
References ..................................................................................................................................... 21

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 ACKNOWLEDGEMENT

Having had the opportunity to work on an assignment bearing the title “Demand Function
in the Indian Two-Wheeler Market” We were able to understand about the demand and consumer
preference in Two wheeler market. The completion of this undertaking could not have been
possible without the Participation and assistance of so many people whose names may not all be
enumerated. Their Contributions are sincerely appreciated and gratefully acknowledged. However,
I would like to express our deep appreciation and indebtedness particularly to Dr. Tushinder Preet
Kaur for her endless support, kind and understanding spirit during our case presentation. To all
relatives, friends and others who in one way or another shared their support, morally, financially
and physically, thank you.
Above all, to the Great Almighty, the author of knowledge and wisdom, for his countless
love. We thank you

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 Introduction
Two-wheelers are one of the most flexible forms of transportation. People are trying to go from
one place to another place by using easiest way, and also they want to do their daily activities as soon as
possible because they do not want to waste their times in small factors, for these reasons they will prefer to
use two – wheelers than others. The places that three – wheelers cannot go we can use them easily. In the
early decades two wheelers design varies greatly to suit a range of different goals, such as long distance
travel, navigating urban traffic, cruising, sport, racing and off-road riding. Two – wheelers are cheaper and
more useful than three – wheelers, passenger vehicles and commercial vehicles.

India has ranked 1st in the world in case of producing two – wheelers. China and Indonesia are
ranked 2nd and 3rd respectively in the world. In the early 50s, Indian industries had started the first steps to
producing the two – wheelers, and in that time Automobile Products of India (API) started producing
scooters in India. Bajaj Company was the first company that started trading in importing of Vespa scooters
and three – wheelers in 1948. India’s two – wheeler industries have grown more in a half century.

Statistics show that around 20.019 million units of two – wheelers in FY 2018 have been sold by
the industries to domestic customers in India. Besides of that India exported two-wheelers around $2 billion
to 145 countries last year and Bangladesh alone accounted for 14 percent of the exports. Two - wheelers
have been exported by India to Bangladesh by the value of $277 million (Rs 19 billion) that it shows a jump
of 50 percent in export to that country in 2018, and this amount has made that country the biggest importer
of two – wheelers of India in the market, ahead of Sri Lanka. The value of export to second biggest market
Sri Lanka declined 3.5 percent to $216 million. Nepal, the third biggest market, saw a growth of just 3.7
percent to $186 million. In FY 2018, the two – wheelers market have made 81 percent shares in the domestic
automobile sales.

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 Nowadays India has many more manufactures of Two – Wheelers. The main key players in this
market are; Hero Honda, Bajaj, Yamaha, Honda and TVS. The competitive between these companies cause
that India become the first in the world, and this competition will help the economy of India to grow as fast
as possible. This is a role of market that demand will make its supply. In this market because of many more
demand on it, lots of companies have been opened. These companies brought lots of investment in this
section and this section will improve in near future. In FY 2017 they had been sold 17.58 million units of
two – wheelers vehicles in India, but in FY 2018 it shows an increasing of 13 percent in selling of them.
Selling of 20.019 million units of two – wheelers in India also show that demand in this section is much
more than other parts.

When people have ability to pay for a good and have willing to buy that good in various prices, we
can say that people have demand on that good. Some factors like; price, income, taste and preferences,
advertisement, population, estimation of price in the future will determine the demand of the two –
wheelers. For example, cars and bikes are two substitution goods. When the price of cars increase, the
demand for bikes will increase. In other hand, nowadays the prices of oils has been increased also, and this
increase may bring some changes in the markets. As we know when the prices oil increase the demand for
cars will decrease because they are complementary goods, in this time, people will prefer using bikes instead
of cars because they spend less oils than cars. The demand function for two – wheelers are different in states
of India. Uttar Pradesh is a state that has more demand on them.

Manufacturers of Two –wheelers in India

India as many manufacturers that some of them are as follow:

1) Hero Honda
2) Bajaj
3) Honda India
4) Yamaha
5) TVS
6) Suzuki
7) Harley – Davidson India
8) Piaggio Group
9) Mahindra two wheelers
10) Royal Enfield
11) Kawasaki India

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 12) Ducati India

Evolution of Two-wheeler Industry in India:

Twowheeler segment is one of the most important components of theautomobile sector th
at has undergone significant changes due to shift in policyenvironment. The two-wheeler
industry has been in existence in the country since 1955.It consists of three segments viz.
scooters, motorcycles and mopeds. In India there are some MNC’s and Indian company dealing
in automobile sector. The main key players who are dealing in this sector are Hero Honda, Bajaj,
Yamaha, Honda, and TVS. Hero Honda is the biggest player in this sector in India as well as in
the world and playing a very important role in two wheeler automobile sector. Hero Honda,
Bajaj and TVS are the Indian companies and Yamaha & Honda are international automobile
brand.

Bajaj is the first Indian two wheeler automobile company in the market since1945 with the
name M/s Bacharj trading corporation private limited. In 1959 M/s Bacharj trading corporation
private limited change its name as Bajaj Auto Ltd. Bajaj Auto obtains license from the Government
of India to manufacture two- and three-wheelers vehicles in 1959.

Hero Honda Motors Limited was established in 1984, as a joint venture between India's Hero
Group (world's largest bicycle manufacturers) and Japan's Honda Motor Company. And created
the world's single largest two wheeler company and also one of the most successful joint ventures

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worldwide. During the 80s, Hero Honda became the first company in India. Over 19 million Hero
Honda two wheelers running on Indian roads today

TVS Motors is the third largest company in the two-wheeler industry with a market share
of 16%. Infect, it is the only Indian company without a foreign collaboration in the two-wheeler
industry. When the company opted out of the collaboration with Suzuki in 2002, many believed
that TVS was headed towards extinction. But the company proved the doomsayers wrong and
came out with a very successful `TVS Victor'. TVS Motors Ltd. originally incorporated in 1982
to manufacture two-wheelers in collaboration with Suzuki Motors of Japan, TVS was one of the
leaders in two-wheeler industry.

Objectives
The main objectives are

 To analyze the demand function of two – wheelers in India Market and to find out the
various factors that will affect it in the future.
 To find out various solutions for improving the demand for Two wheelers in Indian market

Review of Literature
 Chintan Shah, (2005) Two Wheeler Industry in India: The Indian two wheeler industry
made a small beginning in the early 50s when Automobile Products of India (API) started
manufacturing scooters in the country. Under the regulated regime, foreign companies
were not allowed to operate in India.. The recent acceleration in motorcycle sales has led
to a serious rethinking in strategies in the two wheeler market. The two wheeler industry
is expected to undergo a period of transformation, which would involve lower margins and
profitability pressures.

 Dr. Sardar Gugloth & Margani Soma Sekhara (2012), Decision making process of
purchasing two wheelers: The growing middle class population, prosperous rural India and
the paucity of reliable public transport system is leading to a large number of two wheelers

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 added to the roads every day. Indian roads in most cities, villages and towns are narrow.
Two wheelers allow people to navigate such roads easily. Fuel efficiency is a huge
advantage. With the cost of petrol increasing steadily, two wheeler makes the daily travel
both affordable and convenient. Easy availability of auto finances at attractive schemes has
made a two-wheeler a must in most urban and rural homes.

 J.D. Singh (1981), a study of brand loyalty in India – 2W: The primary objective of this
study was to examine the state of art regarding brand loyalty among consumers in India.
Friends and neighbors’ form the most important source which is followed by one’s own
experience, family members, newspapers and observation.. The findings suggested that
differences did exist among individuals in terms of the appropriateness of various
preference models.

 Nikhil Jha, Management thesis on automobile industry in India: Two wheeler sales in the
country have sky rocketed in the recent years, and the annual sales of motorcycles in India
expected to cross the 10 million mark by 2010. The low penetration of two wheelers in the
country 31 two wheelers per 1000 citizens (2004) leaves immense scope for the growth of
the market. Overall the industry sales of two wheelers have grown by 15% from 6.57
million in 2004/2005 to 7.57 million in 2005/2006. The buoyant Indian economy with a
growth rate of around 8% per annum is further expected to fuel the growth of two wheelers
in the country.

 Anuj Kumar Kanojia (2011), analyzing the state of Indian two Wheeler industry: 2000-
2010: The Indian two wheeler industry has shown rapid rate of growth in last one decade.
A snapshot of the 2W manufacturers operating in India across time shows that while the
core that existed 10 years back continues to remain the same, there have been several
casualties along the way but at the same time there have been several new entrants. The
2W industry growth over the last two years has been supported strongly by various
underlying factors including India’s rising per capita GDP, increasing rural demand,
growing urbanization, swelling replacement demand, increasing proportion of cash sales
and the less measurable metric of improved consumer sentiment.

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 (2008) Study on Consumer Preference Regarding Two Wheeler: Understanding consumer
behavior in the present scenario is extremely important as it is no longer a simple task.
Now the consumer is considered to be the King. He is the price maker and not price taker.
. Earlier, there used to be a few two wheeler manufacturers who held a monopoly.
However, this situation has changed with the entry of other competitors, especially after
liberalization and globalization.

 Abhimanyu upadhyay (2013), case study on the sales of two wheelers in rural Indian: The
Indian rural market of two wheeler offers plethora of opportunities to manufactures and
service providers. The overall two wheeler market in India continues to be underpenetrated,
and most of the equipment manufacturers have also maintained focus on expanding sales
cum service outlets, particularly in semi urban and rural areas and setting up satellite
dealerships and service facilities in the neighboring smaller towns.

 Arun Aravindan (2013), Indian Two Wheeler Market Analysis: The Indian two wheeler
(2W) industry registered sales volume of 13.7 million units in 201213, a growth of 2.9%
over the previous year FY 201112. Market sentiments are negative due to high inflation,
fuel prices and interest rates – the 2.9% growth reduced by the 2W industry which is less
compared to last year growth of 14%. Feb 2013 data released by MSO, manufacturing
index also does not show confidence in this sector. Scooter segment has shown 14.4%
growth where Motorcycle has shown 0.1% growth only this year. Piaggio has launched its
Vespa model and also plan for export from India. Mahindra need to revive its brand
position and product value specially brand image in market.

 Biswajit Mahanty and Virupaxi Bagodi (2008) has mentioned that it is an era of customer
delight for the two wheeler industry and the conventional measures implemented by the
service organizations tend to be inadequate to attract customers persistently.

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  Philip Kotler (2012) has mentioned that Harley Davidson has a policy where in its dealer’s
staff ranging from the CEO to the sales representative upholds personalized relationships
with customers which include face to face and social media contact. This helps the
company to know its customers as individuals and helps the company to conduct ongoing
research to keep up with their changing expectations and experiences which is of use to
company in defining the customers’ needs better.

 V.G. Ramakrishnan (2003) quoted that the two-wheeler market has seen an explosive rise
in sales over the last few years which created an opportunity for various companies to enter
the after sales business of two wheeler, Castrol, a company well known for its lubricants,
has entered into the motorcycle servicing business with the roll out of its first workshop
'Castrol Prima Zona' and have plans to have pan India presence.

Market Segmentation Aanalysis

Marketers provide a range of product or services choices to meet diverse consumer
interests, consumers are satisfied and their overall happiness, satisfaction and quality of life are
ultimately enhanced. Hence market segmentation is a positive force for both consumers and
marketers alike.

The two-wheeler segment is the only one that has clocked positive growth at 12.9 per cent
YOY (year-on-year) to reach sales of nearly 13.5 million units by October 2015. This can be
attributed to the low cost of two wheelers in India.

 Largest two wheeler market globally, at a CAGR of 14.9% in sales.

 Overall growth - 12.9 % by volume YoY.
 Revenue estimated about Rs. 923 billion in 2014-2015.
 Three major segments: Motorcycles, Scooty and Mopeds

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SWOT- Analysis of Two Wheeler Industry
STRENGTH WEAKNESS

1. Significant contribution to Indian economy. 1. Rise in raw material cost.

2. Two wheeler market are expanding from 2. Due to competition, pricing reduces and
12% to 14% growth. affects to low quality of products and services.

3. A favorable industry to Asian economic

condition.

4. Most helpful for a developing country like

India in terms of transport feasibility.

OPPURTUNITIES THREATS

1. Reduced excise duty 1. Due to heavy competition of four wheeler,

low priced cars have emerged in market which
2. Steep fall in fuel prices
causes threat to two wheeler on the basis of
3. “Make in India” campaign invites Foreign price.
direct investments (FDI)

4. Rural market which possess potential has

been untapped by higher segment vehicles.

5. KTM plans to open its plant in

India

Market Demand Analysis

Indian Two Wheeler Product and Market Analysis is most detail report which covers all
segment, Brand, Market Dynamics, Trend, Product age, Product life cycle, Aftersales, Buying
behavior, Production forecast, Export analysis, Sales, Marketing Strategy, Sales Strategy, Dealer
Network, Role of Internet to buy vehicle, Model wise critical analysis and its mapping with
customers etc.

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 The Indian (2W) industry enrolled sales in volumes of ~ 20 million units in 2017-18, a
growth of 15% over the earlier year FY 2016-17 was noted. The 15% growth recorded by the 2W
business is comparatively less to the growth of expected that enlisted some time ago.

Buying Behavior Analysis

Age Segment Key factors

Up to 22 years Bike Power/Style

23-30 years Mid segment bike Mileage

30-40 years Mid segment bike Multi-purpose/aspiration

40-50 years Scooter Comfort/Brand

More than 50 years Scooter Comfort

The Scooter segment has demonstrated a 20% growth, though Motorcycles have
demonstrated 14% growth this year.

The Indian and foreign 2W organizations are concentrating more on exports particularly
from India, the Asia Pacific (Vietnam, Thailand, Indonesia, Middle East and Latin America and
so forth) and African nations where the 2W business sector exhibiting colossal potential. Piaggio
has as of late dispatched its Vespa model and furthermore plans to fare its units from India. Then
again, Mahindra needs to resuscitate its brand position, product value and in particular, its Brand
Image in the present business sector.

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 The revival in motorcycle demand has helped the country’s largest motorcycle player, Hero
Moto Corp, grow its domestic motorcycle sales by 13 per cent in April-January to 5.33 million
units. The company had seen a flat volume performance during FY16 and FY17. It enjoys a 50 per
cent share of motorcycle market. Like Hero, most players in the segment have seen a growth in
motorcycle volumes. Hero’s former partner Honda clocked a 23 per cent growth in motorcycle
sales to 1.63 million units.

Factors affecting demanding

 Increase in the infrastructure in rural areas.
 Increase in the number of female commuters.
 Easy Finance is available.
 Low Purchase cost as compared to other wheeler.

Today, the introduction of automatic transmission in scooters, increasing urbanization, better

roads and a growing number of women consumers are helping turn the wheels in favor of scooters.
In the past five years alone, the share of scooters in the overall two wheeler market in the country
has risen from 20% to 33%. Had the demand for scooters not increased, the overall two-wheeler
market would have witnessed negative growth. Scooter sales have reported a compounded annual

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growth rate. Analysts tracking the two-wheeler market in India say a prospective buyer would
choose a motorcycle over the scooter because of its high fuel efficiency, longer wheel-base to ride
over poor roads, and reliability. But with improving road infrastructure and an increase in the
number of women buyers, scooters have staged a major comeback. There exists a strong
correlation between urbanization and scooter purchase, says Aswin Kumar, programme manager
for automotive and transportation at Frost & Sullivan. This has been previously seen in highly
urbanized Southeast Asian economies, he says.

India is a big market for two-wheeler manufacturers in India and that is gauged by the fact
that the industry grew at 14.8 per cent year-on-year, during FY2018, which is the highest since
FY2011. A study by the Investment Information & Credit Rating Agency of India (ICRA) said
that there were multiple factors for the growth of two-wheeler sales in India during the fiscal that
just ended. ICRA says that a strong recovery in the rural market along with a solid demand for
scooters helped revive the two-wheeler market in India. The strong demand in scooters also rubbed
off a growth in the demand for entry-level motorcycles as well.

The scooter segment in particular saw a growth of almost 20 per cent in volumes during
FY2018. A major factor was the increased demand for scooters from rural and semi-urban areas.
People have started to look at scooters as a preferred mode of transport thanks to improved road
quality, a scooter's unisex appeal and the healthy growth in the number of working women in these
areas as well. Adding to it was the continuous activity happening in the scooter market wherein
the manufacturers targeted different segments. The last few months saw the launch of quite a few
125 cc scooters, most notably, the Honda Grazia, the TVS Ntorq and the Aprilia SR 125, which
again revived the interest in scooters from the urban market, where people are looking to buy
stylish, powerful and feature rich scooters.

Current Situations of Products & Sell in Two – wheeler Market

India is the largest producer of two – wheeler in the world. Around 2.01 Crore two-
wheelers sold in India by the companies, and the industry recovered well with a massive growth
of 14.80 percent. Overall the two-wheeler industry saw a total sales of over 2.01 crore units sold
in the Indian domestic market and exports from the country also shot up by over 20 percent. Within
the Two Wheelers segment, Scooters and Motorcycles grew by 19.90 percent and 13.69 percent

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respectively, while the sales of mopeds declined by 3.48 percent in recently concluded FY 2017-
18 when compared to sales in April-March 2017.
For further, motorcycles segment saw a total domestic sales of over 1.26 crore and scooters
contributed to 67.19 lakh units last year. As per SIAM report, India has 11 motorcycle
manufacturers and 7 scooter manufacturers. Motorcycles contributed to 62.4 percent of the total
sales, scooters increased their contribution to 33.27 percent and mopeds share declined to 4.25
percent.

Sales
Hero MotoCorp
0.48%
2.48% HMIS
3.96%
3.92% TVS motor Company

9.77% Bajaj Auto

36.56%
Yamah Motor India
14.24%
Suzuki Motorcycle India

28.6% Royal Enfield

Others (Harly - Davidson, Triumph,

Piaggio, Mahindra

Two-wheeler manufacturer market share

Source: Financial Express

Hero MotoCorp also the world’s largest two-wheeler manufacturer has continued to be the
leader in the Indian two-wheeler industry by selling over 73.82 lakh motorcycles in the Indian
market. This is about 14 percent more than what it sold last year. Hero Splendor has been India’s
top-selling motorcycle and launch of new products like Hero Glamour and HF-Deluxe continue to
allure buyers especially in the rural markets. Hero MotoCorp did lose out on its scooter sales to its
former Japanese partner Honda Motorcycles and Chennai based TVS Motor Company also

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overtook Hero in scooter sales. Hero also exported over 2 lakh motorcycles in India. Hero Motor
Corp commands a total of 36.56 percent market share in India.
Honda Motorcycles and Scooters India (HMSI) has grown at a massive 22.23 percent growth
in India and sold a total of over 57.75 lakh motorcycles and year-on-year is closing on the gap to
become the market leader. Scooters contributed to over 66 percent of Honda’s total two-wheeler
sales in India with over 38.21 lakh scooters sold. Honda Active is the country’s most sold scooter
and the company has also launched the Honda Grazia and Honda Cliq to cater to the younger
audience. HMSI’s market share stands at 28.60 percent.
TVS Motor Company often referred in the industry as one of the most sorted companies in
India has grown by over 15% last financial year and its new sports bikes in Apache series and also
commuters like TVS Victor along with major boost from TVS Jupiter has helped the company to
achieve a total sales of over 28.75 lakh, grabbing a market share of 14.24 percent.
Only motorcycle manufacturers Bajaj and Royal Enfield have reported a sales of 19.74 lakh units
and 8.01 lakh units respectively. While Bajaj Auto’s sales did drop by 1.3 percent YoY, Royal
Enfield grew by over 23 percent and recorded its most sales ever. Considering Royal Enfield only
makes premium motorcycles in India (350cc and above) this is a massive achievement by Sid Lal’s
lead, Chennai based motorcycle manufacturer. The company is coming months plan to launch two
new premium motorcycles in India, Royal Enfield Interceptor 650 and Royal Enfield Continental
GT 650 that were showcased at EICMA 2017.
Japanese two-wheeler manufacturers, Suzuki Motorcycle and Yamaha Motor India sold a
total of 5.01 lakh and 7.92 lakh units respectively. Both of these companies sell scooters,
commuters and premium motorcycles in India. Suzuki Motorcycle closed the financial year at a
market share of 2.48 percent and Yamaha’s market share in India is 3.92 percent.

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 Source: autocarpro

Major factors that can affect the demand for two wheelers in India in
future:

1. Indian Oil price rise

India is right to be worried about rising oil prices. Dharmendra Pradhan, oil minister of the
world’s thirdlargest energy consumer, has sought assurances from his counterpart in Saudi Arabia
that the Opec producers and Russia will ensure ready supply in the face of growing global
uncertainty. Unfortunately, the Saudis may have other ideas. Cheap oil has helped India to boom
in recent years. But upward pressure this year on oil prices, which have been bumped yet higher
by stalled Venezuelan production and uncertainty over US sanctions on Iran, threatens the
country’s storied economic miracle with the dual problem of increasing its budget deficit and
putting pressure on the rupee. Even as it scrambles to increase tax collection, Narendra Modi’s
government looks highly unlikely to meet its deficit target of 2 per cent of gross domestic product
this year.

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Source: freefincal.com/ India-petrol-diesel-historical-price-data/

So from this we can say that this increase in price of petrol and diesel will definitely affect the
demand for automobiles. Even though in some times we can say that oil price is inelastic to demand
for two wheelers but that will be short run phenomenon. In long run this will definitely affect the
demand for any automobiles which runs on petrol and diesel. The introduction of electric vehicles
by companies like Hyundai can be a fact that can back up this statement. We can expect the same
with two wheelers also.

2. Increasing Middle Class

The middle class in India is growing in a massive rate. Out of the 1.32 billion people in India
around 267 million are middle class according to NCAER (National council of applied economic
research) the average income of Indian household is around 1964 USD and this is expected to
increase in the future.

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 With inflation rate of 3.69% the income of an Indian citizen will increase but the disposable
income that an individual will spent is what really matters. Even though people will prefer car over
a scooter especially to travel as a family, facts have shown that the middle class family like to have
at least one two wheeler home. This is one of the reasons why demand for two wheelers has always
been better than other automobiles. The cheap rate of two wheelers as compared to cars will always
be a factor for demand for two wheelers. With increase in oil price and inflation the cheaper the
goods more demand for the same.

Even for the rich two wheelers are a sign of luxury. Today, some two wheelers are more
expensive than some luxury vehicles! With the healthy growth of the economy and a growing
population base with increasing disposable income, the Harley-Davidsons, Indians, Ducatis and
Triumphs of the world are focusing on India strongly.

Other factor is the women preference for Scooters. Many women especially college students
prefer to buy scooter because of its cheap price, easy accessibility. One of the major factor that has
made the two wheeler market growth positive is this

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 3. Rural development
Increasing rural development is also a factor for the increase in demand for two wheelers.

For about two years, demand for two-wheelers and passenger cars in rural areas has
outpaced that in urban areas. According to Antique Stock Broking Ltd, the share of eastern and
northern regions has increased by 570 basis points for two-wheelers and 280 basis points for
passenger vehicles, since fiscal year 2017 during the period, the share of states in the south and
west has declined. Hundred basis points make up one percentage point.
Typically, these two geographic zones have a larger contribution from the rural population
than the urban one. A more detailed analysis reveals that the states of Uttar Pradesh, Bihar, Madhya
Pradesh, West Bengal and Odisha have shown strong sales growth. However, Karnataka, Tamil
Nadu and Maharashtra, which have a higher urban mix in population, have been lagging in growth.

Another feature supporting the rural growth story is that motorcycle sales growth in these
two regions zoomed by 680 basis points, within overall two-wheelers. Even in passenger vehicles,
growth is higher in cars compared to utility vehicles, which is driven largely by urban sales.

According to Antique Stock Broking, the regional difference in growth rates is “due to
monsoon divergence, state-level developmental infrastructure push, growth moderation in highly
urbanized states and improved organized finance penetration”. All the above factors have pushed
rural households to spend on such discretionary items as automobiles, even as disposable income
increased on the back of a good monsoon for two years in a row. On the whole, the demand outlook

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for FY19 is strong with analysts having penciled in double-digit growth in passenger vehicles,
two-wheelers and even commercial vehicles, mainly backed by healthy demand from rural areas.

4. Environmental issues
Sustainable development has been in our bucket for some time now. India’s hope of achieving
sustainable development will surely affect the automobile industry. We can observe that the
emission of pollution by automobiles is causing huge problems in cities like Delhi, Mumbai etc.
So with this increase in pollution emission the government will surely takes action against it. Like
the odd even vehicle initiative in Delhi. Many people are not aware that the norms in India are one
of the strictest in the world so the manufacturers have to be careful about the strict environmental
policies adopted by the government. While making engines they will have to follow the
International standards via catalytic converters, lean burn engines etc

5. Electric Mobility
With the availability of natural resources decreasing and price going above 85 per ltr , automobile
electrification was not something surprising .Jayant Davar, founder, co-chairman and managing
director, Sandhar Technologies and former president, ACMA and ASDC said that “the four key
technology trends for the present day and future, Electrification, Shared Mobility, Autonomous
Driving, Connectivity and IoT are just not sweeping the four-wheeler space, but are set to
revolutionize the two-wheeler sector too.” Indicating the massive impact of shared mobility in a
market like the USA, he said that a recent study has forecast that the existing car ownership of 247
million will drop drastically to around 44 million by 2030. He said trillions of dollars will be wiped
away in the transition to new mobility.

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Effective strategies
1. Government policy impact on petrol prices:
Petrol prices determine the running cost of two wheelers expressed in rupees per kilometer.
Petrol prices are the highest in India as GOI subsidizes kerosene and diesel. But with the change
in the GOI policy to reduce the subsidy, the prices of petrol will remain constant at the current
prices. This will have a positive effect on two wheelers market. This trend would actually affect
positively the whole automotive industry.

2. Improvement in disposable income:

With the increase in salary levels due to entry of multinationals following liberalization
process the disposable income has improved exponentially over the years. This will have a
multiplier effect on demand for consumer durables including two wheelers. This is already
witnessed in improved demand two wheelers.

3. Availability of credit for vehicle purchase:

The availability and cost of finance affects the demand for two wheelers as the trend for
increased credit purchases for consumer durables have increased over the past few years.

4. Implementation of mass transport system:

Many states have planned to implement mass transport systems in state capitals in the future.
This will have a negative impact on demand for two wheelers in the long run. But taking into
account the delays involved in the implementation of such large infrastructure projects, we expect
the demand to be affected only five to seven years down the line.

5. Electric Mobility:
The electric mobility can be a good option for increasing demand for two wheelers in the Indian
economy. Two-wheelers are the easiest to go in for electrification, particularly from the cost
perspective so this electric mobility will be a huge drive for two wheeler automobiles. This will
also be a solution for pollution control.

6. Promotion to youth:
India’s average age of population is 25 to 27 years so with majority of population being youth
the promotion of two wheelers by advertisements etc. will be a good strategy for its market

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 Well to sum it up on the whole there are great times ahead for the bike lovers in India. With
the decision of companies like Honda to set up base in India, the consumers will have a wide range
of choice and also the freedom to choose something more exciting than the usual.

Conclusion

From the above analysis we can conclude that the Indian Two wheeler Market growth
depends on many factors. Its growth has rarely been negative. Many factors like rural development,
Women preference, low cost etc. are some factors that have influenced the two wheeler market.
The India’s growing trend has also affected the demand for two wheelers. Electric mobility for
example. Two wheelers are the easiest to electrify in the time of increasing crude oil price this will
be major factor in increasing demand for two wheelers.

India’s middle class population is expected to cross 500 million by 2025 this means more
and more disposable income. So many two wheelers automobile companies are looking forward
to Indian economy with the plan for investing more. We also found out that developing rural areas
can increase demand for two wheelers thus one can say that the future of the two wheeler industry
is promising as long as the rural income and middle class grows. Youth preference especially
college students towards scooter and bikes is also a major factor for the growth of two wheelers.
India’s average age of population is 27 years so this will definitely help the growth of two wheeler
market.

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