The 100 cc segment, which has hogged the limelight in every discussion on two-wheelers in the past few months, is showing no signs of taking a backseat yet.
NEW DELHI: The 100 cc segment, which has hogged the limelight in every discussion on two-wheelers in the past few months, is showing no signs of taking a backseat yet.
Both the big daddies of two-wheeler industry — Bajaj Auto and Hero Honda Motors — continue to bet their money on a segment that has de-grown over the past few quarters and become the main reason for their dwindling profitability.
And they have good reasons to continue supporting the humble 100 cc.
While the deluxe, 125 cc continues to show robust growth, the premium segment is also expected to soon come under the threat of the Tata Rs 1 lakh car — leaving two-wheeler makers with little option but to continue patronising the laggard 100 cc.
Bajaj Auto managing director Rajiv Bajaj has been emphasising his company’s intention to get out of the 100 cc segment altogether over a period of time.
While announcing the company’s July sales on Wednesday, Bajaj was again categorical: “The motorcycle industry continued to de-grow owing primarily to product fatigue as consumer disinterest in uninspiring 100 cc motorcycles continued to translate into postponement of purchase.”
The company has already declared its intention to unveil a new, “non 100 cc engine platform” next week in its bid to upgrade existing consumers to a better product.
But from Bajaj Auto’s latest annual report, it becomes clear that the company would continue in this segment for quite some time to come despite its plan for an upgrade. “Bajaj Auto will continue to aggressively play in this segment and expand both
markets as well as its market share,” Bajaj said in the annual report.
Not only Bajaj, market leader Hero Honda, too, seems well-entrenched in the 100 cc space with close to 50% share of the pie.
While recognising that deluxe and premium bike categories are growing at a much faster clip, managing director Pankaj Munjal said in the company’s latest annual report “in the short to medium term, most of the action is expected to take place in the deluxe and entry segments, given the current income profiles of Indian households”.
So what does it mean for the humble 100 cc? 100 cc bikes account for an overwhelming 80% of Hero Honda’s overall sales against only about 50% for Bajaj so it is no wonder that Bajaj has been making the maximum noise about moving customers away from this segment. For the industry, though, 100 cc still commands the lion’s share at 69%.
While the deluxe, 125 cc segment comprises about 20% or one in five of all bikes sold, the premium 150 cc plus segment is still the laggard with just 11% share of the bike market.
Besides, with the Tata Rs one lakh care expected to be in the market next fiscal, both the bike makers are also gearing up for the loss of many premium bike customers to the new entrant. Munjal acknowledged as much, saying: “Another uncertain variable is the possible entry of low-cost, Rs one lakh cars by 2008, as is being envisaged. Pricing at these levels could pit the premium segment directly against four-wheelers.”
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