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Super bike makers lining up for India
May, 31st 2008

Machines that are mean, jazzy, bold and audacious. A cult that transcends nationality and territorial boundaries. And a hefty pricetag. Welcome to the world of superbikes. A world that India, superbike makers hope, will explore with enthusiasm and pockets to match.
Super bikes
Yet theres a catch. Call it the Indian paradox: On one hand we have local bike makers battling with dipping sales; on the other, almost all international players have promised to roll out their high-end offerings on a silver platter. So whats with this twin-take? ET Automania spoke to bike makers and experts and did a reality check in how realistic the targets are and how effective would strategic plans be.

Despite having a longstanding homegrown brand like Royal Enfield, the Indian consumer has never developed a robust appetite for high-end bikes of 500 cc and above. But in the past one and half years, there has been a surge of sorts and most high-end bike manufacturers claim that there is an increase in demand for super bikes. The moot point is whether this demand is high enough to create a sustainable segment.

When ET Automania spoke to TVS Motors senior vice-president, marketing and sales R Chandramouli, he corrected us by saying, The superbikes havent entered the country yet. (No one is actively selling super bikes as currently all plans are on drawing board) However there is definitely a potential for these bikes. But how big is the potential only time will tell.

A senior executive with a Japanese bike company said however, Lets face it these bikes are anyway coming through the illegal route to Indian shores. So why not legalise it? Moreover theres no denying that theres a potential for these super bikes. Point taken. But the fact that these bikes have been gaining entry through the grey market proves that no matter how premium the product, the consumers will press for complete value for money. Indians are price-sensitive and would not pay a penny more than what they believe the product deserves.

Japanese bike maker Yamaha took the lead last year and launched R1 and MT10. Suzuki India will launch Hayabusa by September this year.Honda Motorcycles and Scooters India has also planned to enter the high end bikes markets.Ducati launched its super bikes in the price range of Rs 15-50 lakh last week. Also Bajaj which has a technical collaboration with Kawasaki , would be launching high end bike products in collaboration with sports motorcycle maker KTM Power Sports.

 Last year, most superbike makers said that at least 100-150 bikes are likely to be sold, which is expected to double year on year. The ground realities tell a different tale though. As part of its brand building and before its fullscale launch , a well known superbike maker parked one of its flagship models in more than 50 outlets. Sadly despite the hype and frenzy, its failed to garner a single booking in the past few months. Ironical.

However an optimist, Abdul Majeed, partner at PricewaterhouseCoopers says, Most super bike makers are clear that they will require at least 5-7 years to develop the full potential market for high-end bikes. India is the flavour of the automotive industry. These bike makers are entering the Indian market much before the superbike revolution begins to take off. They dont want to miss out. Also they want a first mover advantage over the others. Most important they have promised to vroom in the best and latest technology for the Indian consumer.

TVS Motors Chandramouli says that even though there is a potential for super bikes in India, these players are not likely to get a first mover advantage. Super bikes are lifestyle products. They are meant for people who aspire to drive those products. Consumers will buy them only for the brand and the technology they offer. I dont think in luxury brands like these any one has a first mover advantage.

Experts have been talking for a long time about the increase in consumers with high disposable incomes and the fundamentals of Indian economy being strong. Moreover experts also believe that since 70-75% of the automobile industry is still dominated by bikes, there would be enough takers for these superbikes. The ground reality though is that automakers believe the demand is largely for bikes in the range up to Rs 10-20 lakh if one is looking for significant volumes. Demand for these bikes is around 50 per month.

The challenges, however, cannot be ignored. The most important is the threat from the grey market. Most bikes available there are nearly Rs 3-4 lakh cheaper than the price offered by bikemakers. In fact bikes which cost more than Rs 15 lakh are already available cheaper in the grey market. Experts believe that the more expensive the bike is priced by legal channels, the price differential increases for it in the grey market. In addition there are no effective checks to prevent illegal import of superbikes.

 The other factor is the time gap between a global launch and the Indian launch of a new model. According to industry players, a new version of an old model is available for sale only 3-4 months before the calendar year ends. So if for instance a model named X2007 which is globally launched in September 2007 is offered in India in March or June 2008, the consumer will postpone the buying decision to be able to buy X2008 version in September. This experts believe could break or make the superbike makers overall sales plans.

Suzuki India believes its strategy is based on keeping these ground realities. Says Suzuki Motorcycle & Scooters India vice president sales and marketing, Atul Gupta , We hope to launch our Hayabusa in the Indian market in September. We delayed the launch because we wanted to offer the latest models. Gupta also believes that once Suzukis models are in the market, they will make the consumer aware of the advantages of buying these through the legal channel. We will propose to the government that Suzuki bikes imported into India should be vetted by us, since we are the original makers, he added.

auto analysts also believe that all the super bike makers would also have to strategically invest in creating awareness about their products. Whether its promoting rallies or starting a racing series, the bike makers will have to invest their time and energy to create brand image that clicks with the Indian consumer, said a senior auto analyst with a consultancy firm.

Industry sources believe that several foreign players are not really ready to face the Indian challenge. Besides bad infrastructure, superbike makers have to keep in mind the fact that they will have to have full-fledged service centres. One cannot enter the country with a half-baked strategy. One cant open one or two showrooms and ignore the servicing bit of the story. It will be like throwing darts in the dark, agrees Mr Gupta.

BMW bikes were the first to enter India, in the 1980s in collaboration with the Hero Group. One of the most important reasons why the venture died out was because despite having a local partner they devised strategies ignoring the ground realities, believe industry experts. This time round we have players like Honda, Bajaj and Suzuki betting on the segment. All of them have been successful in different segments of automobiles and have spent a long time in India, reminds PwCs Majeed.

Knowing the twists and turns of the road may be the key to a different ending to this superbike race!

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