It is important to understand why biking giants are foraying into the four-wheeler domain. Has the two-wheeler sector saturated already? Let’s look at the figures. As compared to FY2006-07, domestic two-wheeler sales 
shrunk by a lamentable 7.92% to 7.25 million during FY2007-08; exactly the period when the CV sales rose by a commendable 4.07% to touch 486,817 units and PV segment sales rose by a healthy 12.17% to touch 1.55 million. Infact, during the same period, the LCV segment alone witnessed a walloping 12.29% growth to touch 215,823 units. So there you are, if we base our analysis on historical data, considering that with two-wheeler sales suffering, Hero and Bajaj couldn’t be making a better extension to their product mix. Confirming the same, Vaishali Jajoo, Auto Analyst, Angel Broking asserts, “The two-wheeler industry growth is expected to fall in the long run as per capita incomes increase. Further interest rate fluctuations and uncertain movement in inflation have put comparatively larger pressure on the two-wheeler industry as well...” Therefore, the move is positive in the long run as improving affordability is resulting in higher volumes for the four-wheeler segment compared to two-wheelers. Even when we consider the moves ordinally, they do look well-judged. No wonder the investment plans are also huge with Hero-Daimler’s JV plan to invest over €700 million over the next five years (of which Daimler will bring-in €220 million in the form of FDI). The JV expects to start production of CVs by 2010 and aims to achieve a localisation rate of up to 80% in order to optimally utilise cost synergies, with exports planned to commence a couple of years after production begins.
On the other hand, the Bajaj-Renault-Nissan trio in a perfect military secret mission type have given a code to their project – ULC. Bajaj will own a 50% chunk in the JV while Renault and Nissan will own 25% each. A production plant will be set up in Chakan (Maharashtra) with an initial capacity of 400,000 units/year. The company proposes to commence roll-out of vehicles by early-2011. “The venture is still at the nascent stage. We are here surely to make a difference and apart from this, we cannot disclose much at this point of time,” reveals Nitin Kochar, Exec. Director, Bajaj Auto. Indeed the plans of the two-wheeler giants look grandeur. However, the four-wheeler Indian drive for these specialists is expected to be bumpy. They need to overcome a number of bottlenecks. “The foremost challenge is moving into a completely new segment. Dealership problem to a certain extent will also pose as a major challenge,” cautions Jajoo. Moreover, with competition heating-up every minute, we might just see a situation of oversupply. Surely, late movers will have very little advantage in this regard.
shrunk by a lamentable 7.92% to 7.25 million during FY2007-08; exactly the period when the CV sales rose by a commendable 4.07% to touch 486,817 units and PV segment sales rose by a healthy 12.17% to touch 1.55 million. Infact, during the same period, the LCV segment alone witnessed a walloping 12.29% growth to touch 215,823 units. So there you are, if we base our analysis on historical data, considering that with two-wheeler sales suffering, Hero and Bajaj couldn’t be making a better extension to their product mix. Confirming the same, Vaishali Jajoo, Auto Analyst, Angel Broking asserts, “The two-wheeler industry growth is expected to fall in the long run as per capita incomes increase. Further interest rate fluctuations and uncertain movement in inflation have put comparatively larger pressure on the two-wheeler industry as well...” Therefore, the move is positive in the long run as improving affordability is resulting in higher volumes for the four-wheeler segment compared to two-wheelers. Even when we consider the moves ordinally, they do look well-judged. No wonder the investment plans are also huge with Hero-Daimler’s JV plan to invest over €700 million over the next five years (of which Daimler will bring-in €220 million in the form of FDI). The JV expects to start production of CVs by 2010 and aims to achieve a localisation rate of up to 80% in order to optimally utilise cost synergies, with exports planned to commence a couple of years after production begins.On the other hand, the Bajaj-Renault-Nissan trio in a perfect military secret mission type have given a code to their project – ULC. Bajaj will own a 50% chunk in the JV while Renault and Nissan will own 25% each. A production plant will be set up in Chakan (Maharashtra) with an initial capacity of 400,000 units/year. The company proposes to commence roll-out of vehicles by early-2011. “The venture is still at the nascent stage. We are here surely to make a difference and apart from this, we cannot disclose much at this point of time,” reveals Nitin Kochar, Exec. Director, Bajaj Auto. Indeed the plans of the two-wheeler giants look grandeur. However, the four-wheeler Indian drive for these specialists is expected to be bumpy. They need to overcome a number of bottlenecks. “The foremost challenge is moving into a completely new segment. Dealership problem to a certain extent will also pose as a major challenge,” cautions Jajoo. Moreover, with competition heating-up every minute, we might just see a situation of oversupply. Surely, late movers will have very little advantage in this regard.
