Bajaj and Honda neck and neck for No. 2 slot

The race for the No. 2 motorcycle manufacturer in the domestic market is almost mirroring a see-saw battle between Bajaj Auto and Honda Motorcycle and Scooter India (HMSI) since the beginning of FY18 and the battle continues on the same lines in the current fiscal also. The country’s annual 20-million-unit-strong motorcycle market has three major players — Hero MotoCorp with a market share of 51.5%, followed by Bajaj Auto at 15.6% and HMSI at 15.5%.

Till FY17, Bajaj Auto had maintained its No. 2 position but in FY18, not only did HMSI start snapping at its heels but overtook it in sales in 8 out of 12 months. The final (annual) score was a slender victory for Bajaj Auto with total sales of 1.97 million units and HMSI at 1.95 million. Though in the April-June quarter of the current fiscal Bajaj has maintained its edge over HMSI, it is based only on June sales when it sold 2,00,949 units — a healthy lead over HMSI’s 1,74,276 units. However, during April and May, HMSI sold more units than Bajaj though the lead was slender.

The battle is going to be played out in the subsequent months and the jury is still out as to who of the two emerges as the No. 2 player. Or will it be a see-saw scenario of FY18?

HMSI’s strength lies in the 110-125cc segment where it has models like the Shine and the Shine SP. This segment makes around 17% of the motorcycle segment and saw a growth of 16% in FY18. HMSI has a market share of 45% in this segment while Bajaj’s stands at 5.3%.

Similarly, Bajaj’s strength lies in the 125-150cc segment which makes around 8.7% of the market but saw a de-growth of 13% in FY18. Bajaj has a market share of 47% here while HMSI’s share stands at 22%. The 125cc segment is a growing category and HMSI is strong here with its popular products while Bajaj lacks products in this segment.

In Q1FY19, Bajaj benefitted from recovery in demand, especially in rural areas, for entry-level bikes (up to 110cc engines) such as the CT100 and the Platina. Just like motorcycle segment leader Hero MotoCorp, entry-level motorcycles are bread and butter for Bajaj Auto, accounting for 55% of its overall volumes. The CT100 model makes up for 35% for the company’s motorcycle sales in India.

The company slashed prices of all CT100 variants from `2,000-7,000 in March this year, making it the cheapest geared motorcycle in the country, starting at `30,714. Experts say the relaunch of Discover 110 in January has also contributed to the surge in Q1FY19.

Analysts at Nomura India believe that Bajaj will continue to remain No. 2 in the domestic motorcycle market in the near future because HMSI is facing capacity constraints. “HMSI would face capacity constraints in FY19 and this would provide opportunity for other players to gain share,” Nomura said. HMSI president and CEO Minoru Kato had said the company may add an assembly line to one of the existing plant but a new facility was still two years away.

However, some analysts feel that HMSI would overtake Bajaj in the motorcycles category. “The way HMSI is going it (becoming No. 2) does look like a possibility in the medium term. It would all depend on their production capacity. The company has shown consistent growth in the motorcycle segment in the last few years,” Sridhar V, partner, Grant Thornton India, said.