SRI SAIRAM COLLEGE OF ENGINEERING
ANEKAL, BENGALURU
INTERNSHIP PROJECT REPORT
ON
RESEARCH ON TWO WHEELER USAGE
INTERNAL GUIDE: EXTERNAL GUIDE: POOJA
G S DHANYA VICE PRESIDENT,
CAMPUS TECHNOLOGY
SWATHI S 1SB17EC053
SWATHI BALAN 1SB17EC052
SHARANYA 1SB17EC044
PAVAN KUMAR 1SB17EC031
ABHISHEK S 1SB17EC002
RASHMI K 1SB17EC036
MONISHA N 1SB17EC028
SAGAR GOWDA 1SB17EC040
SANJITHA P 1SB17EC042
SUPRIYA K 1SB17EC050
RESEARCH OF TWO WHEELER USAGE IN INDIA
This research highlights on Policy Environment and Evolution of Indian Auto
Industry, Policy Framework Surrounding the Indian Auto Sector, Emission and
Safety Standards, Evolution of Two-wheeler Industry in India, Demand forecast
for motorcycles and scooters for 2015 - 16, Two wheeler companies and their
Brands, Year wise production of Two-Wheelers in India, Domestic Sales of
Two-Wheelers in India, Motorcycle Majors’ Market Share (Domestic Sales, 2010-
11) and Segmental Classification and Characteristics.
According to United Nations Convention 1968:
Moped“- Any two-wheeled vehicle not exceeding 50 cc and a maximum
design speed not exceeding 50 km (30 miles) per hour.
"Motor cycle" means any two-wheeled vehicle, with or without a sidecar,
which is equipped with a propelling engine whose unladen mass does not
exceed 400kg.
There are two distinct sets of players in the Indian auto industry:
Automobile component manufacturers and the vehicle manufacturers,
which are also referred to as Original Equipment Manufacturers (OEMs).
While the former set is engaged in manufacturing parts, components,
bodies and chassis involved in automobile manufacturing, the latter is
engaged in assembling of all these components into an automobile. The
Indian automotive component manufacturing sector consists of 500 firms
in the organised sector and around 31,000 enterprises in the unorganised
sector. In the domestic market, the firms in this sector supply components
to vehicle manufacturers, other component suppliers, state transport
undertakings, defence establishments, railways and even replacement
market. A variety of components are exported to OEMs abroad and after-
markets worldwide. The automobile manufacturing sector, which involves
assembling the automobile components, comprises two-wheelers, three-
wheelers, four- wheelers, passenger cars, light commercial vehicles
(LCVs), heavy trucks and buses/coaches. In India, mopeds, scooters and
motorcycles constitute the two-wheeler industry, in the increasing order of
market share. In 2005-06, the Indian auto sector had produced over 7.6
million two wheelers and 1.3 million passenger cars and utility vehicles.
India is a global major in the two-wheeler industry producing motorcycles,
scooters and mopeds principally of engine capacities below 200 cc. It is
the second largest producer of two-wheelers and 13th largest producer
of passenger cars in the world. Tata figures among the ten largest global
manufacturers of LCVs, heavy trucks, buses and coaches, while it is
among the top 25 in passenger car manufacturing. The two-wheeler
industry in India has grown at a compounded annual growth rate of more
than 10 per cent (in number) during the last five years and has also
witnessed a shift in the demand mix, with sales of motorcycles showing an
increasing trend. Indian two wheelers comply with some of the most
stringent emission and fuel efficiency standards worldwide. The
passenger car segment has been growing at a rapid pace -- from over
6,50,000 vehicles sold during 2001 to over a million vehicles sold during
2004-05, showing an annual growth rate of 17.36 per cent.
Indian industries consists of 500 firms in the organised sector and around 31,000
enterprises in the unorganised sector. In the domestic market, the firms in this
sector supply components to vehicle manufacturers, other component suppliers,
state transport undertakings, defence establishments, railways and even
replacement market. A variety of components are exported to OEMs abroad and
after-markets worldwide. The automobile manufacturing sector, which involves
assembling the automobile components, comprises two-wheelers, three-
wheelers, four- wheelers, passenger cars, light commercial vehicles (LCVs),
heavy trucks and buses/coaches. In India, mopeds, scooters and motorcycles
constitute the two-wheeler industry, in the increasing order of market share. In
2005-06, the Indian auto sector had produced over 7.6 million two wheelers and
1.3 million passenger cars and utility vehicles. India is a global major in the two-
wheeler industry producing motorcycles, scooters and mopeds principally of
engine capacities below 200 cc. It is the second largest producer of two-wheelers
and 13th largest producer of passenger cars in the world. Tata figures among
the ten largest global manufacturers of LCVs, heavy trucks, buses and coaches,
while it is among the top 25 in passenger car manufacturing. The two-wheeler
industry in India has grown at a compounded annual growth rate of more than
10 per cent (in number) during the last five years and has also witnessed a shift
in the demand mix, with sales of motorcycles showing an increasing trend. Indian
two wheelers comply with some of the most stringent emission and fuel efficiency
standards worldwide. The passenger car segment has been growing at a rapid
pace -- from over 6,50,000 vehicles sold during 2001 to over a million vehicles
sold during 2004-05, showing an annual growth rate of 17.36 per cent.
Factors influencing motorcycle ownership in Asian Cities
Factors Description Impact
Cost & financing Low cost & availability through easy financing terms,
sometimes at zero interest rates
Cost & Low cost & availability through easy financing terms,
financing sometimes at zero interest rates
Fuel Economy Consumes less fuel & has better mileage compared to other
modes
Congestion Highly Congested areas suit 2-wheelers
Trip Length Motorcycles provide highly competitive service for trip
lengths at the 10/km range while for trip lengths greater
than 10km, buses 7 cars are preferred
State of Public Transport Low levels of services & adequate facilities for public
& NMT transportation & non-motorized transportation
Parking Less Parking space requirement
Manoeuvrability High manoeuvrability in traffic congested areas & narrow
streets
Technology & Maintenance & technological problems are relatively
Innovations easier & cheaper to manage
Tax Lower tax rates compared to 4-wheeled vehicles
Regulations & Poor &/or lack of regulations & insufficient enforcement
Enforcement
Environmental, security, safety and
pedestrian amenity improvements
• Noise pollution, especially in narrow alleyways and at night,
was greatly reduced, and significant reductions in carbon
monoxide, particulates and nitrogen oxide emissions were
reported.
• Crashes significantly declined in January to August 2007 (when
there were no motorcycles) compared to the same period a
year earlier. Crashes declined by 17.5%, deaths by 2.2%,
injuries by 20.4%, and property losses by 42.3%.
• In Guangzhou from January to August 2007 there were 52,141
criminal cases, a decline of 15.3% compared with the
corresponding period a year earlier. Snatch theft cases
declined by 44.3% over the same period.
• The quality of the walking environment throughout the
city has been greatly improved.
DEMAND DRIVERS
The demand for two-wheelers has been influenced by a number of factors over
the past five years. The key demand drivers for the growth of the two-wheeler
industry are as follows:
1. Inadequate public transportation system, especially in the semi-urban
and rural areas;
2. Increased availability of cheap consumer financing in the past 3-4
years;
3. Increasing availability of fuel efficient and low-maintenance models;
4. Increasing urbanization, which creates a need for personal
transportation;
5. Changes in the demographic profile;
6. Difference between two-wheeler and passenger car prices, which
makes two wheelers the entry level vehicle;
7. Steady increase in per capita income over the past five years; and
8. Increasing number of models with different features to satisfy diverse
consumer needs.
While the demand drivers listed here operate at the broad level, segmental
demand is influenced by segment-specific factors. National Council of Applied
Economic Research (NCAER) had forecast two wheeler demand during the
period 2002-03 through 2011-12. The forecasts had been made using
econometric technique along with inputs obtained from a primary survey
conducted at 14 prime cities in the country. Estimations were based on Panel
Regression, which takes into account both time series and cross section variation
in data. A panel data of 16 major states over a period of 5 years ending 1999 was
used for the estimation of parameters. The models considered a large number of
macro-economic, demographic and socio-economic variables to arrive at the best
estimations for different two-wheeler segments. The projections have been made
at all India and regional levels. Different scenarios have been presented based
on different assumptions regarding the demand drivers of the two-wheeler
industry. The most likely scenario assumed annual growth rate of Gross
Domestic Product (GDP) to be 5.5 per cent during 2002-03 and was anticipated
to increase gradually to 6.5 percent during 2011-12. The all-India and region-
wise projected growth trends for the motorcycles and scooters are presented in
Table 3.1. The demand for mopeds is not presented in this analysis due to its
already shrinking status compared to' motorcycles and scooters.
Demand forecast for motorcycles and scooters for 2015 - 16
2 WHEELER
REGIONS
SEGMENT
North- East &
West All India
Central North-East
2835 4327 2624 883 1066
Motorcycle 9
(12.9) (16.8) (12.5) (11.1)
(14.0)
203 219 602 99 1124
Scooter
(2.6) (3.5) (2.8) (2.0) (2.08)
It is important to remember that the above-mentioned forecast presents a long-
term growth for a period of 10 years. The high growth rate in motorcycle segment
at present will stabilize after a certain point beyond which a condition of
equilibrium will set the growth path. Another important thing to keep in mind while
interpreting these growth rates is that the forecast could consider the trend till
1999 and the model could not capture the recent developments that have taken
place in last few years. However, this will not alter the regional distribution to a
significant extent.
Two important dimensions for the two-wheeler industry. The region-wise
numbers of motorcycle and scooter suggest the future market for these
segments. At the all India level, the demand for motorcycles will be almost 10
times of that of the scooters. The same in the western region will be almost 20
times. It is also evident from the table that motorcycle will find its major market
in the western region of the country, which will account for more than 40 per cent
of its total demand. The south and the north central region will follow this. The
demand for scooters will be the maximum in the northern region, which will
account for more than 50 per cent of the demand for scooters in 2011-12.
The present economic situation of the country makes the scenario brighter
for short-term demand. Real GDP growth was at a high level of7.4 per cent
during the first quarter of 2004. Both industry and the service sectors have
shown high growth during this period at the rates of 8.0 and 9.5 per cent
respectively. However, poor rainfall last year will pull down the GDP growth to
some extent. Taking into account all these factors along with other leading
indicators including government spending, foreign investment, inflation and
export growth, NCAER has projected an average growth of GDP at 6.7 per cent
during the tenth five year plan.
Two-wheelers cater to the needs of low and middle income users and help
fill the gaps when public transport systems are inefficient, not integrated, or non-
existent (PCFV 2010).The reality is that many Indian cities lack substantial and
efficient public transport systems. As incomes rise, users of public transport and
people limited by their lack of mobility are looking to private modes of
transportation to meet their mobility needs. While car ownership may be on the
rise, it is two-wheelers that are leading the process of mass motorization as
millions of people in India’s growing middle class are able to afford an entry-level
two-wheeler.
A nation-wide study by the Indian Ministry of Urban Development found
that the share of personalized modes has grown by leaps and bounds in the past
couple of decades, especially two-wheelers at 12 percent per annum, while the
share of public transport has generally dwindled (MoUD, Wilbur Smith Associates
2008). As Figure 3.1 demonstrates, two-wheelers (shown in green) play an
important role in motorized transport in Indian cities of all sizes, with the highest
modal shares of about 30 percent in
Mid-sized cities. However according to the World Health Organization (WHO),
two-wheeler users are more vulnerable to road accidents and deaths, and have
very high levels of air pollution exposure (PCFV 2010). On the other hand, they
are also criticized for contributing to air pollution, traffic congestion, unsafe driving
conditions and accidents. The issue of whether two-wheelers should be
considered a “boon” or “bane” has been debated by practitioners, without being
conclusive either way, likely because the mode both, offers several benefits to
travellers, as well as creates several challenges. Thus, policy recommendations
for the sector in other cities have ranged from not taking any action to banning
two-wheelers altogether.
Its mid-term forecast suggests an expected growth of 7.4 per cent in GDP during
2004-05 to 2008-09. Very recently, IMF has portrayed a sustained global
recovery in World Economic Outlook. A significant shift has also been observed
in Indian households from the lower income group to the middle-income group in
recent years. The finance companies are also more aggressive in their marketing
compared to previous other companies.
Combining all these factors, one may visualize a higher growth rate in two-
wheeler demand than presented in Table 3.1, particularly for the motorcycle
segment. There is a large untapped market in semi urban and rural areas of the
country. Any strategic planning for the two-wheeler industry needs to identify
these markets with the help of available statistical techniques. Potential markets
can be identified as well as prioritized using these techniques with the help of
secondary data on socio-economic parameters. For the two-wheeler industry, it
is also important to identify the target groups.
Hero Honda Motors Ltd (HHML), Bajaj Auto Ltd (Bajaj Auto) and TVS Motor
Company Ltd (TVS) account for over 80 % of the industry sales. The other key
players in the two-wheeler industry are Kinetic Motor Company Ltd (KMCL),
Kinetic EngineeringLtd (KEL), LML Ltd (LML), Yamaha Motors India Ltd
(Yamaha), Majestic Auto Ltd (Majestic Auto), Royal Enfield Ltd (REL), Suzuki
Motor Corporation and Honda Motorcycle & Scooter India (P) Ltd (HMSI). Honda
Motors Ltd (HHML) has brands such as Splendor, Super Splendor, Splendor
NXG, CBZ X-treme, Hunk, Glamour, CD Deluxe, Passion, Pleasure, Passion
plus, Splendor Plus etc.
Domestic Sales of Two-Wheelers in India
S. Name of
Number of Vehicles
No. company ‘
April-
April-Dec.2010
Dec.- 2009
1 Hero Honda 3,440,287 3,844,614
2 Bajaj Auto 1,235,548 1,797,378
3 TVS Motor Company 999,255 1,321,204
4 Honda 830,039 1,163,194
5 Mahindra Two-Wheelers 37,977 122,868
6 Yamaha 170,712 206,404
7 Suzuki 124,190 196,928
8 Royal Enfield 38,612 38,458
Total 6,779,102 8,691,048
For various categories of motorcycles and scooters. With the formal introduction
of second hand car market by the reputed car manufacturers and easy loan
availability for new as well as used cars, the two-wheeler inustry needs to
upgrade its market information system to capture the new market and to maintain
its already existing markets. Availability of easy credit for two wheelers in rural
and smaller urban areas also requires more focused attention. It is also
imperative to initiate measures to make the presence of Indian two-wheeler
industry felt in the global market.
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