Kings of the highway | The Economist
THE morning rush hour within the southern Indian metropolis of Chennai (previously Madras) is very similar to these in different large South Asian cities. A throng of principally small vehicles hoot and jostle in a race in opposition to three-wheeled auto-rickshaws, dilapidated buses, fume-belching lorries and the odd bullock cart. However the true kings of those roads are the hordes of commuter bikes that swarm out and in of the choking site visitors at daredevil velocity.
Tom Tompietrasik
A watch on the competitors
Asia is dwelling to almost 80% of the world’s 315m bikes. About 45m of these are in India, the area’s second-biggest fleet after China, with greater than 100m. Gross sales of two-wheelers in India are working at about 7m a 12 months, outstripping these of vehicles by practically 5 to at least one. Not even one in 100 Indians owns a automobile, however one in 20 owns a two-wheeler.
The TVS group has a foot in each the automobile business, as considered one of India’s most profitable makers of automotive parts, and the motorbike enterprise, by means of TVS Motor, the nation’s third-largest producer of two-wheelers, with a 16% market share. Venu Srinivasan, the autocratic chairman of TVS, which is family-controlled, nonetheless sees loads of potential for progress within the Indian motorbike market. After a slight contraction final 12 months due to tighter credit score, enterprise seems to be selecting up once more.
Amongst Mr Srinivasan’s causes for optimism are the a lot higher ranges of possession in different South Asian international locations the place revenue ranges are increased, comparable to Malaysia, Thailand and Indonesia (the place TVS has lately opened a manufacturing unit that may construct 300,000 items a 12 months). In Thailand, for instance, greater than 1 / 4 of the inhabitants owns a two-wheeler. Most creating international locations discover that when GDP per particular person reaches about $5,000, motorbike gross sales start to say no as folks change to vehicles. Thailand has practically reached that time, however India is simply about half-way there.
The dominance of two over 4 wheels is defined principally by price. Till the arrival of the Tata Nano the most cost effective new automobile on sale in India had been the $5,000 Maruti 800, whereas the comparatively small bikes that account for 85% of the Indian two-wheel market promote for $800-$1,500. Petrol in India can also be costly by developing-country requirements. Even the light-weight Nano is unlikely to do higher than 60 miles per gallon, whereas a few of TVS’s machines will do about 190mpg, says Mr Srinivasan. Upkeep, too, is less expensive than for vehicles, and bikes can cope extra simply each with poor roads and with congestion.
Since breaking with Suzuki, its joint-venture companion, in 2001, TVS has been the one large Indian motorbike producer to rely solely by itself designs (the market chief is Hero Honda with a 47% share, and Kawasaki is a expertise companion of second-placed Bajaj). As Mr Srinivasan sees it, parting from Suzuki has given TVS the liberty to design merchandise which can be appropriate for the native market but in addition to construct an export presence. By 2013, he says, 40% of TVS’s gross sales will probably be exterior India. He reckons that Indian bikes have a bonus over Chinese language rivals in international locations with poor infrastructure as a result of they’re extra closely constructed: “Our bikes deal with the worst roads and infrequently have to hold three folks. Chinese language high quality shouldn’t be pretty much as good.”
TVS’s pristine manufacturing unit at Hosur exterior Bangalore (considered one of three in India) with its impressively disciplined workforce suggests that there’s nothing unsuitable with the way in which the corporate makes its bikes. Holding tempo with the expertise of its two heavyweight rivals could also be extra of a problem. Mr Srinivasan concedes that TVS misplaced market share final 12 months as a result of a few of its merchandise have been “not so good”. Seven new bikes launched in September ought to assist to repair that, however “there isn’t any such factor as patriotic shopping for right here, and Honda simply retains grinding away.”
