Flooding the Indian Motorcycle Market

With the de-licensing of the automobile sector in the mid-1980s, the motorcycle sales registered a healthy growth during the late 1980s. In 1990, due to the rise in fuel prices, high input costs and reduced purchasing power due to significant rise in general price level and credit crunch in consumer financing, the industry witnessed a recession. Added to that, factors like increased production in 1992 due to the entry of new players resulted in companies either reporting losses or a fall in profits. In 1993, the recession began to ease off and the growth in the motorcycles segment began. The two-wheeler industry saw large-scale structural changes. With the launch of lighter, 100-cc motorcycles, a significant inter-segment shift began to take place and motorcycles sales began to grow...

The companies were forced to reduce prices and offer discounts to survive the competition. Moreover, analysts were skeptical about the segment's ability to maintain the growth rate in the years to come. One of the major assumptions underlying the motorcycles rush was that if the market was considerably large and was growing at a constant pace, there was room for a profitable existence for all brands. In 2001, there were over 30 motorcycle brands in the market. However, with the top five brands accounting for more than 60% of the market, only 40% of the market was available for all other new brands put together. Despite the launch of more vehicles, the survival prospects of many of the individual brands were deemed to be rather bleak...