China's Motorcycle Export Battle with IndiaChina’s Motorcycle Export Battle

I recently enjoyed a day in the company of Vikram Krishna – who is without doubt one of the leading experts on the motorcycle industry in India. As his home is in India and mine in China, it was only a matter of time before we came to the topic of the competition between the relative industries.

The Chinese are facing an onslaught from the Indian industry on many fronts as the likes of Bajaj and Hero (who are both listed in the top-three motorcycle producers in the world) carry their fight to markets traditionally controlled by Chinese manufacturers.

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Motorcycle demand in the domestic Indian market is huge. The contemporary youth population in the country is relatively affluent and has a bigger disposable income that previous generations and young people are more inclined to motorcycles as they are cheaper to buy and run than a car.

Powered two wheelers are also a fashion statement in universities and colleges, which drives demand even further. Besides this phenomenon, cheaper production costs are also tempting foreign motorcycle manufacturers to India.

KTM’s decision to manufacture the Duke 125, Duke 200 and Duke 390 in India can be accredited to the fact that it is cheaper to cheaper bikes in India than many (most) other countries and other international companies are looking to follow suit.

Japanese giants Honda, Yamaha and Suzuki are investing heavily to boost production capacity while Kawasaki has entered in to production cooperation with Bajaj. Harley-Davidson is already working in India by locally assembling many of its motorcycles with Victory motorcycles (owned by Polaris) working along the same lines.

India’s largest bike manufacturer, Hero MotoCorp has arranged an agreement with Erik Buell Racing, which is indicative of the ambition and knowledge shown by the Indian industry (very few people in the Chinese industry would be aware of Eric Buell and his projects).

The major difference between the industries is that while India has a steady 5 companies completing the supply chain and competing in export, China has around 200 companies (of which around 30 are capable of manufacturing over a quarter of a million units a year) vying for the export trade at any given time.

Also, Indian companies do not rebrand their products and as such are receiving a growing fan base of loyal riders as well as commuters who will recognise brand-names. China’s motorcycle companies, even the Chongqing giants that are capable enough to work with and produce engines for Europe’s biggest companies (think Loncin and BMW) rebrand at request thus negating the chance to build brand recognition worthy of their new technological standing.

One of the positives that can be taken from India’s rise in the share of commuter motorcycle power is that the completion is forcing Chinese companies to improve their research and development and by doing so, the quality and style of their models.
Of all the motorcycle markets in the world the fiercest battle lines have been drawn in Latin America.

Chilean motorcycle dealer Jeremias Alonso has been in the motorcycle industry for 11 years and has seen the changes as they occurred.

“The Chinese motorcycle industry were the first to allow the poorer people in South America to mobilize themselves with powered vehicles; until that time people that could afford to buy motorcycles (normally the people in the cities) bought from the range of Japanese bikes available,” Alonso says.

“These Japanese bikes were out of the price range of the people in the countryside. Now it is extremely possible that the poorer people might buy Indian models. Because there are comparatively much fewer Indian motorcycle brands it’s much easier to arrange and organize the parts supply chain for each model.

“People in the motorcycle industry in South America have seen that in Colombia (in particular) this organization has been done to great effect and I think it’s only a matter of time before Indian motorcycle dealerships spring up in Chile and all over South and Latin America.”

Another reason for India’s rapid growth is their expertise in market research. Chinese motorcycle companies have been known to blunder blindly in to new markets without allowing for the individuality and trends of that market. An obvious example of this was Indonesia where several Chinese companies tried and failed to enter a market almost totally dominated by the Japanese. Indian companies, Bajaj especially are known to have done their homework and released models on to the market that they know are in direct competition with the Japanese company’s weaker points.

As previously mentioned, the Chinese have responded with improved R&D and many are predicting that the Indian threat is just what the Chinese industry needed to kick it up to the next level. Time will tell.