With the two-wheeler market, especially the motorcycle market, becoming extremely competitive and the life cycle

of products getting shorter, the ability to offer new models to meet fast changing customer preferences has become imperative. In this context, the ability to deliver newer products calls for sound technological backing and this has become one of the critical differentiating factor among companies in the domestic market. Thus, the players have increased their focus on research and development with some having indigenously developed new models as well as improved technologies to cater to the domestic market. Further, with exports being one of the thrust areas for some Indian two-wheeler companies, the Indian original equipment manufacturers (OEMs) have realised the need to upgrade their technical capabilities. These relate to three main areas: fuel economy, environmental compliance, and performance. In India, because of the cost-sensitive nature of the market, fuel efficiency had been an interest area for manufacturers. It is not only that the OEMs are increasing their focus on in-house R&D, they also provide support to the vendors to upgrade the technology and also assist them striking technological alliances. Niche markets also witnessing intense competition A significant trend witnessed over the past five years is the inclination of consumers towards products with superior features and styling. Better awareness about international models has raised expectations of

consumers on some key attributes, especially quality, styling, and performance. High competitive intensity has prompted players to launch vehicles with improved attributes at a price less than the competitive models. In an effort to satisfy the distinct needs of consumers, producers are identifying emerging consumer preferences and developing new models. For instance, in the motorcycles segment, motorcycles with engine capacity over 150cc, is a segment that has witnessed significant new product launches and hence, become more competitive. The indigenously launched Pulsar 150 had met with success on its launch and thereafter, a host of models have been launched in this segment by various players. While Bajaj Auto launched the Pulsars (150 and 180 cc) with digital twin spark technology (DTSi) that offers a powerful engine and fuel efficiency of 125 cc models, model launches by other players include LML's Graptor/Beamer, HMSI's Unicorn besides the HHML's CBZ (improved version launched in 2003-04) and TVS' Fiero F2. Moreover, in the recent past, the motorcycle segment has witnessed launch of vehicles with higher engine capacity (higher than 150cc) and power (higher than 15bhp). These include models such as Bajaj Auto Eliminator and Royal Enfield's Thunderbird followed by HHML's Karisma. Besides these, KEL has launched premium segment motorcycles GF 170 and GF Laser besides launching products from the portfolio of its technology partner (Hyosung's Aquila and Comet 250). The products in this segment cater for style conscious consumers. Quite a few players are developing models combining features such as higher

engine capacity" optimum mix of power and performance, and superior styling. However, the extent of shift to these products would depend on the positioning of such products in terms of price. In the scooters segment, the market for plastic-bodied variomatic scooters continues to witness growth in the scenario of overall decline in scooter volumes. Higher volumes and growth are especially true for certain scooter models, such as Honda Activa, that brought in new technology (besides variomatic transmission) to further differentiate themselves. Thus, the need to differentiate and create a niche has led to companies strengthening their research and development (R&D) capabilities and reducing the development time for new models.

Bajaj Auto Bajaj Auto said that the significant de-growth of 100cc motorcycle, owing primarily to product fatigue, continued to weigh down the entire industry. The Pune-based company said that it has commenced production of its new 125cc DTS-Si motorcycle at Waluj and targets sales of 20,000 units in September 2007, subsequent to the national launch on the 9th. With production and sales of this motorcycle expected to reach 50,000 units in November 2007 - 2 months ahead of schedule - Bajaj expects its motorcycle volumes from there onwards to be ahead of the corresponding period last year.

The company further stated that the 3-wheeler sales reflect the general weakness in the commercial vehicle demand. Bajaj Auto's total two and three wheeler sales in August, including exports, declined 6% to 1,95,707 units from 2,08,163 units during August last year. Bajaj Auto reported August total two-wheeler sales declined 6% to 1,70,203 units from 1,82,013 units for the same month a year-ago. Sales of three-wheeler sales dipped 2% to 25,504 units from 26,150 units a year earlier. Exports of two and three wheelers, however, during the month grew 75% to 56,452 units, from 32,283 units exported during the same month last fiscal. For Apr-Aug, the company's total two and three wheeler sales, including exports, plunged 10% to 9,53,188 units from 10,57,480 units in the corresponding period last year. The total two-wheelers sales during the five months period declined 11% to 8,33,259 units from 9,33,792 units for the comparable period a year-ago, while three wheelers sales declined 3% to 1,19,929 units from 1,23,668 units for the corresponding period last year. Exports during the period grew 50% to 2,59,974 vehicles from 1,73,022 vehicles for the comparable period a year-ago. Hero Honda Hero Honda stated that the growth is being driven by the recently launched variants of Pleasure, Splendor NXG and Passion Plus bikes.

Hero Honda Motors clocked two-wheeler August sales growth of 12% at 2,40,875 units compared to 2,15,076 units for the same month in the previous year. For Apr-Aug, the company reported sales of 12,63,254 units, down marginally from 12,82,860 units in Apr-Jun 2006. For the five-month period in the current fiscal year ending 2008, while there was a pick up in four wheelers sales, the two and three wheeler sales showed a declining trend.