January 07, 2012

Indian Bike Market is at an Inflection Point

Last time the Indian two-wheeler market took a step towards maturity was when Hero Honda introduced the 150cc CBZ. That's when we graduated from being a commuter bike market to a sporty-commuter one.This was a bike which every college-going kid and his dad lusted after. The CBZ sparked the growth of a 150+cc segment and the rest, as they say, is history.

If there was anything that the 2012 Auto Expo showed us, it was that our two-wheeler market is taking another step towards maturity. And the global bike majors can't wait to get a piece of the action.
Global bike majors have come to realise that China, India and other South-East Asian markets have a huge population riding underpowered bikes. And even if a few of them decide to upgrade to higher-capacity bikes, it represents a massive swell of potential customers. They want to establish themselves early to be able to catch the rising tide.

Ducati already has a factory in Thailand (taking advantage of the India-ASEAN FTA), while Harley Davidson has set up their production facility here. Probably, the recent Thai floods prompted Triumph to choose India as their manufacturing base. Bajaj already assembles some KTM and Kawasaki bikes here while the other Japanese majors already have manufacturing facilities here for their smaller bikes. Most of these facilities are built with the intention of exporting the bikes to other Asian markets.

Bikes assembled here (and the ones imported from ASEAN) get to avoid our horrendous +100% CBU import duty. This means we get (relatively) cheaper high-powered bikes. Also, local manufacturing would mean cheaper and better availability of spares. By the end of 2012, we will have more than 5 bikes competing in the 600cc class alone! 

Also, don't be surprised when bike majors start announcing cheaper Asian-spec bikes in the 300-600cc range. KTM has already confirmed that they are working on one while Ducati and Triumph are rumoured to be doing the same.

The single thing that would lead to the creation of the high-powered bike segment is lust. To give you an example, a few years back whenever a college kid saw the newly launched CBZ on the road he promised himself that he would buy one with his first salary. The more CBZs on the road, the more people wanted it. Till finally it became a segment in itself. Similarly, the sights of Ducati Monsters, KTM Dukes and Triumph Speed Triples on our roads will simply entice the fence-sitters to save up and get them some day. 5-10 years from now we would definitely have a sizeable high-powered bike segment.

I would be lying if I said I'm not smacking my lips in anticipation.

PS: This could also lead to the birth of an aftermarket parts and accessories market, but that's for another article.