Contents:

Executive Summary 1 INTRODUCTION 1.1 Classification 1.2 Industry Players 1.3 Evolution of the industry 2 INDUSTRY OVERVIEW 2.1 Characteristics 2.1.1 Consolidated Industry 2.1.2 Short product life cycle 2.1.3 Strong backward linkage 2.1.4 Strong forward linkages 2.1.5 Technology Intensive 2.1.6 Rain dependent demand from rural India 2.1.7 Finance dependent 2.1.8 Duty Structure 2.2 Demand Drivers 2.2.1 Growing consumer class 2.2.2 Demographic transition 2.2.3 Rising proportion of female income earners 2.2.4 Increasing rural focus 2.2.5 TW financing 2.2.6 Wide product portfolio 2.2.7 New Model Launches 2.2.8 Strong Brand Influence 2.2.9 Competition 2.2.10 Product Features 3 TWO-WHEELER (TW) MARKET 3.1 Trend of domestic sales of TW in last decade 3.2 Segment-wise market share 4 DOMESTIC MARKET 4.1 Segmental Growth Trend 4.2 Motorcycles Sales Growth Trend 4.3 Scooter / Scooterettes (SS) Sales Growth Trend 4.4 Moped Sales Growth Trend 4.5 Electric Two wheelers Sales Growth Trend 4.6 Market share of players in domestic sales 4.7 Players & Products 5 EXPORT MARKET 5.1 Trend of TW Exports 5.2 Player-wise details for FY09 5.3 Segment –wise TW Exports (FY09) 6 COST ANALYSIS 6.1 RM expenses 6.2 Employee expense 6.3 Selling expense 6.4 Operating Margins II OUTLOOK SECTION 7 INDUSTRY OUTLOOK 7.1 Domestic Market 7.2 Exports 7.3 Outlook on profitability III COMPANY SECTION 8 COMPANY PROFILES 8.1 Hero Honda Motors Ltd. 8.2 Bajaj Auto Ltd. 8.3 TVS Motor Co. Ltd. IV ANNEXURES 1. Company wise Motor cycles / step throughs 2. Company wise Scooters/Scooterettes/ Mopeds / Electric TW 3. Segment-Wise Domestic sales – based on engine capacities 4. Segment-Wise Exports– based on engine capacities 5. Company wise Scooter/Scooterettes Domestic Sales 6. Company-Wise Scooter/Scooterettes Exports 7. Company wise Motor cycles/Step Throughs Domestic Sales 8. Company-Wise Motor cycles/Step Throughs Exports 9. Company wise Mopeds and Electric Two Wheelers Domestic Sales 10. Company-Wise Mopeds and Electric Two Wheeler Exports LIST OF FIGURES Fig. A. TW Sales Trend (FY04-09) Fig. B. Domestic TW Sales Forecast (FY09-14) Fig. C. Target population, PCI and TW penetration in different regions in India Fig. D. TW penetration in some countries across time periods Fig. 1.1 Segment-wise Domestic Sales of TW (FY09) Fig. 1.2 Domestic market share of TW players in FY09 Fig. 2.1 Domestic market share of TW players in FY09 Fig. 2.2 Proportion of female working population in India Fig. 2.3 Share of female working in organised industrial activities Fig. 3.1 TW unit sales trend Fig. 3.2 Segment-wise domestic market share (FY09) Fig. 3.3 Segment-wise domestic market share (FY96) Fig. 3.4 Category-wise Domestic Market position in FY 09 Fig. 4.1 Y-o-Y growth of TW unit sales Fig. 4.2 Percentage composition of TW unit sales (FY08) Fig. 4.3 Percentage composition of TW unit sales (FY09) Fig. 4.4 TW unit sales distribution in FY09 Fig. 4.5 TW unit sales distribution in FY04 Fig. 4.6 Y-o-Y growth of Motorcycles Fig. 4.7 Composition of motorcycle unit sales (FY09) Fig. 4.8 Y-o-Y growth of Scooters Fig. 4.9 Composition of scooter unit sales (FY09) Fig. 4.10 Y-o-Y growth of Mopeds Fig. 4.11 Market share of players in domestic TW sales (FY04) Fig. 4.12 Market share of players in domestic TW sales (FY09) Fig. 4.13 Market share of players in domestic motorcycle sales (FY04) Fig. 4.14 Market share of players in domestic motorcycle sales (FY09) Fig. 4.15 Market share of players in domestic scooter sales (FY04) Fig. 4.16 Market share of players in domestic scooter sales (FY09) Fig. 4.17 Market share of players in domestic moped sales (FY04) Fig. 4.18 Market share of players in domestic moped sales (FY09) Fig. 5.1 Major export destinations (FY08) Fig. 5.2 Y-o-Y growth of TW export Fig. 5.3 Exports as a % of Total TW sales Fig. 5.4 Market Share of Players in TW Exports (FY09) Fig. 5.5 Y-o-Y growth of Motorcycles Exports Fig. 5.6 Y-o-Y growth of Scooters Exports Fig. 5.7 Y-o-Y growth of Mopeds Exports Fig. 6.1 Domestic Steel Prices Fig. 6.2 Steel Prices in China Fig. 6.3 Aluminium Price Trend Fig. 6.4 Natural Rubber Price Trend Fig. 7.1 Penetration of TW Fig. 7.2 TW Penetration and income levels by regions Fig. 7.3 TW Penetration and income levels in top 20 cities Fig. 8.1 HHML Share Price Trend Fig. 8.2 Segment-wise sales distribution (HHML - FY09) Fig. 8.3 BAL Share Price Trend Fig. 8.4 Segment-wise sales distribution (BAL - FY09) Fig. 8.5 TVS Share Price Trend Fig. 8.6 Segment-wise sales distribution (TVS - FY09) LIST OF TABLES Table A. Segment-wise Domestic TW Sales Forecast Table B. Outlook on TW exports Table 1.1 Production and sales trend for the last 5 years Table 2.1 Indigenous raw material & components (RMC) as a % of total RMC cost Table 2.2 Duty structure (%) Table 2.3 Income Distribution of the Households Table 2.4 Selling expense as a % of total sales Table 4.1 Growth in domestic sales for FY09 for each vehicle segment Table 4.2 Segment-wise growth in domestic motorcycle sales in FY09 Table 4.3 Segment-wise growth in domestic scooter sales in FY09 Table 4.4 Y-o-y growth% of TW sub-segments (FY09) Table 4.5 Top players in different segments in FY 09 (based on domestic sales) Table 4.6 Launches in FY09 Table 5.1 Trend of TW exports (FY04-09) Table 5.2 Domestic-Export Sales Distribution (FY09) Table 5.3 Top players in different segments in FY09 (based on exports sales) Table 6.1 RM expense as a % of total sales Table 6.2 Employee expense as a % of total sales Table 6.3 Selling expense as a % of total sales Table 6.4 PBDILT margins (%) Table 6.5 Un-audited results for the period April – December 2008 (9 months) Table 6.6 Margins for the period April – December 2008 v/s last year Table 7.1 Domestic TW sales forecast Table 7.2 TW exports forecast Table 7.3 Industry cost and margin forecast Table 8.1 Profile of HHML Table 8.2 Two-wheeler Product Range (HHML) Table 8.3 Profile of BAL Table 8.4 Two-wheeler Product Range (BAL) Table 8.5 Profile of TVS Table 8.6 Two-wheeler Product Range (TVS) LIST OF BOXES Box A. Demand Forecasting Model for Domestic TW Sales Box B. Corporate action (HHML) Box C. Strengths and Weaknesses (HHML) Box D. Corporate action (BAL) Box E. Strengths and Weaknesses (BAL) Box F. Corporate action (TVS) Box G. Strengths and Weaknesses (TVS)

Summary:

Indian Two-Wheeler Industry: Rural India to be in the driver’s seat The Indian two-wheeler industry has come long way since its humble beginning in 1948 when Bajaj Auto started importing and selling Vespa Scooters in India. Since then, the customer preferences have changed in favour of motorcycles and gearless scooterettes that score higher on technology, fuel economy and aesthetic appeal, at the expense of metal-bodied geared scooters and mopeds. These changes in customer preferences have had an impact on fortunes of the players. The erstwhile leaders have either perished or have significantly lost market share, whereas new leaders have emerged. Rising income levels, reducing excise duties, higher loan tenure and loan-to-value offered by the financing companies have all fuelled the growth of two-wheeler sales in the country. Besides, mounting traffic chaos and limited parking space has also increased the demand for two-wheelers from households that can afford or actually do own a car. Furthermore, with increasing women working population, changing social philosophy and broad-mindedness, the penetration of two-wheelers that is currently at abysmally low level is expected to increase significantly going forward. We have developed a statistical model that attempts to forecast the domestic two wheeler sales on the basis of ownership cost and the target population that includes young populace that can afford but do not own a two wheeler. Other qualitative factors like macro-economic outlook, consumer confidence, willingness of vehicle financers to finance TWs, etc. have also been quantitatively built in demand forecasting model. We foresee the growth of two-wheeler sales to be healthy during the period FY09-14, albeit with some short-term hiccups. According tour research, rural India would drive the growth, whereas the opportunity in urban India, especially bigger cities, is limited. Abundant and low cost labour coupled with local availability of raw materials like steel, aluminium and natural rubber has placed India amongst the low cost producing centres of two-wheelers. Consequently we anticipate buoyant growth in two-wheeler exports as well.

Companies Mentioned

-Hero Honda Motors Ltd. -Bajaj Auto Ltd. -TVS Motor Co. Ltd.