Bike makers chase used two-wheeler segment

Bajaj may rev up plant to meet sales spike

At 16.5 million units sales per year India's two-wheeler market is one of largest in the world. Two-wheeler sales have doubled in just seven years thanks to a boom in new model launches.

This has given rise to the market of pre-owned two-wheelers, which as of last financial year stands at roughly 40 per cent of the new two-wheeler market. Currently three in every ten two-wheelers sold in the country is a used two-wheeler.

At 6.6 million units India's pre-owned two-wheeler market is bigger than the entire African continent's new two-wheeler industry. It is estimated to have grown at 20-25 per cent in the last five years.

This has attracted the attention two of India's biggest two-wheeler manufacturers — Hero MotoCorp and Honda Motorcycle and Scooters India (HMSI) — who have found a way to keep two-wheeler buyers loyal to their brand.

Y S Guleria, senior vice president (sales and marketing), HMSI said: "Honda's customer base has crossed 25 million in India. We know they are some users who even have fifth two-wheeler in the family. The used two-wheeler industry is very unorganised but gives us a great opportunity for a viable business. We are able to garner the loyalty of the brand and keep the customer in the same family."

While India's used two-wheeler market may not be in the same proportion as used car market, which is more than twice the new car market, there has been a robust growth in sales especially with the entry of online players like Olx and Quikr.

According to Ken Research the used two-wheeler market displayed strong growth on account of increasing income of households, immigration of working individuals in search of work or education, as well as greater availability of used two-wheelers in the country.

Such a robust growth has prompted HMSI to add a new business verticle within the company, which it had also done for exploring opportunities in the rural a few years ago.

"Honda reported used two-wheeler sales growth of 20-25 per cent last year. We have created a separate verticle for this business. As of now we have 90 'Best Deal' outlets at the moment which we plan to take it to 100 by end of next month", added Guleria.

Models such as Honda Activa, which is India's largest selling two-wheeler followed by Hero Splendor remain the most desired brands in the pre-owned market.

Hero Motocorp, which rolled out Sure, a pre-owned two-wheeler brand a few years ago, has been operating through its existing dealer network. Refurbished bikes are sold by its dealers with a one year warranty and two free services.

"'Hero Sure' was a pilot project that enabled customers to upgrade to new vehicles through exchange of their used two-wheelers. The exchange programme currently operates though our existing dealer network. This initiative is expected to grow further once the Goods & Services Tax (GST) gets implemented", said a Hero Motocorp spokesperson.

The industry has also provided start-ups the opportunity to enter and expand faster. Mumbai-based used two-wheeler online marketplace CredR, which claims to deliver 100 bikes a day, attracted the attention of private equity company Fidelity Growth Partners who invested Rs 96 crore in the company.

CredR estimates India's used two-wheeler market at 12 million units whose estimated market value is expected to be around $8-12 billion.