NEW DEHLI, India - India is fast emerging as the next big opportunity for the international bicycle brands. Major Indian bicycle manufacturers Hero Cycles, Avon Cycles, and Atlas Cycles are busy pushing their own home-grown brands. TI Cycles meanwhile, has been able to find synergies with international bicycle brands by launching a series of global tags, along with its very own hi-priced BSA & Hercules marques.
“There is certainly some kind of rub-off or synergy in global brands we promote and our in-house brands,” said Arun Alagappan, President, TI Cycles of India. TI has launched two more global brands, GT and Mongoose, to strengthen its presence in the premium segment. The company sold 4,000 units last year and the target for the current year is 10,000 units. The other premium names TI imports and sells are Cannondale, Schwinn, Bianchi, and Ducati.
Market to grow manyfold
A few years back sceptics have dismissed the success of the premium-priced global brands in the Indian market. In the meantime the market for the premium range brands have already swelled to sizeable numbers. “As per guesstimate, the market has reached something close to 20,000 units and this would increase further at a much faster rate in the years to come,” speculates Alagappan. When checked with a few distributors the figure may be anything between 25,000 – 30,000 units.
“BMW has grown 100 per cent in the last few years and regarded India as its fastest growing car market which indicates good times ahead for (the) premium end bike range as well,” says Alagappan. “Moreover, the biggest chunk of India’s population comprises of young people with fast improving infrastructure, the numbers would further increase to unimaginable level. If India works on the Proper duty Structure and makes it more affordable to many, the market can grow faster then any one's expectation.”
“There is a huge potential for organised Cycle selling in India. Definitely it will grow to a different level... in the next 5 years,” says Zahir Laliwala, CEO of Sportxs. Bangalore based Sportxs is one of the biggest bicycling outlets in India, housing all kind of bicycle accessories, from foot pumps to car bike racks, baby seats, and training gear, along with bicycle brands such as Merida, Raleigh, Schwinn, Cannondale, Bianchi, Ducati, Btwin, Track , Firefox, and Giant.
Meanwhile, the international brands are increasing their reach in the Indian market by strengthening distribution networks and reaching out to Tier Two cities. “We have rolled out our business in a step by step manner focusing on the Western and Southern regions of the country. Probike has been able to set up a distribution and sales network of 35 dealers across West and South India. We also supply to organized retailers Hypercity and Reliance, with the Raleigh range of bikes and accessories and bikes under their own brands,” explains Jaymin Shah, Country Manager, Probike.
In the last 12 months the company delivered 11,000 bicycle units to the Indian cycling market, but accessories are currently its top priority. “We are focusing on the accessories segment which has the potential to do some huge volumes in the future,” says Shah. “We carry 80 lines in our bike accessory range alone and ensure that these lines are always in stock.”
In October of 2010 Probike launched its own range of high end bicycles under the ‘Nomad by Raleigh’ brand name. “We see huge potential in the Indian market in the years to come and are making the right investments towards achieving our business aims,” says Jaymin Shah. “The most surprising aspect of the business has been the consistent demand for Raleigh bikes in the Tier One cities. It is amazing how the internet and social media such as Facebook, Twitter has impacted lifestyles. The aspirations of a 10 year old in Kolhapur are no different than the aspirations of a 10 year old in Mumbai.”
Besides that, active bicycle communities have been created over the years. The numbers are not available, but they are easy to spot on social networking sites such as Facebook ,Twitter and blogs. Sport18, the sports marketing division of the Network18 group and TI Cycles, launched the second edition of the BSA Hercules India Cyclothon 2011 in Bengaluru. Attended by 6,863 participants, the event was one of the largest mass cycling events ever in Bengaluru.
Explaining the marketing strategies for the event, Issac John, Senior Manager, Marketing, Sport18, said, “This is one of our main properties apart from our golf and running events. We started promoting Bengaluru Cyclothon about a month and a half ago on all the mediums including print, television, and radio. We have provided integrated marketing solutions to our sponsors through the event to create a meaningful connect with the TG. This is the fourth time BSA has partnered with us in the event as they have seen an actual sale increase of 25-30 percent after being associated with the cyclothon. The event is a differentiator because of the sheer huge scale. Never has such a big number turned out in any other cycling event in India.”
The event saw participation from institutions such as the Army and corporations such as Infosys, iGATE, Accenture, Thomson Reuters, SIEMENS, IBM, Philips, along with the fast growing cycling clubs in the city.
Bicycle Production & Exports
Indian bicycle manufacturers have produced close to 15 million bicycles in 2010. “About 4 to 4.5 million bicycles are being produced by the Tier Two bicycle manufacturers or the second range bicycle makers,” says Mr Satish Dhanda, head of the bicycle panel for the Government of Punjab.
When asked why the share of Tier Two bicycle makers is increasing in total bicycle production over the years, Dhanda said, “Capacities of the major bicycle makers are stagnant whereas bicycle makers like Sadem, Safari, Seth Industrial Corporation, KW etc are increasing. Moreover, the production momentum has been sustained by government schemes such as ‘Sarve Shiksha Abhiyan’ and the Tribal Welfare Scheme’, in which various Indian state governments procure bicycles from the manufacturers.”
About 1.5 million bicycles have been ordered under the promotional schemes in 2010. Meanwhile, complete Chinese bicycles have failed miserably in the Indian market due to a variety of reasons, including differences in specifications. Indian bicycle and components makers exported bicycle and components worth about $166 million US in 2010.
Leading Indian manufacturer Hero Cycles has announced earlier that it is planning to set up a new bicycle plant to cater the high-end US market. “Nothing has been firmed up as yet, various options are under consideration,” says S. K. Rai, President (Works), Hero Cycles. The company has invested in paint shops and work shops during 2010.
“Last year was fabulous as production and sales in the month of December alone reached a record level of 511,000 units, which we believe is the highest number of bicycles produced by anybody anywhere in the world under one roof,” says Rai. In 2010 Hero Cycles manufactured around 5.6 million bicycles and exported around 350,000 bicycles for an export turnover of about $26 million US).
TI Cycles manufactured about 3.8 million bicycles in 2010. “We normally maintain the same production level. Though, we are increasing the share of fancy bicycles every year. It has reached almost 65% in 2010,” explains Arun Alagappan. TI Cycles annual turnover reached about $200 million US in 2010. The company, which has almost withdrawn from exports, is eager to re-open the option, if it makes financial sense. “We do not want to export for the sake of export, unless we make some money there is no point making exports,” Alagappan notes.
Atlas Cycles (Sahibabad) Ltd
Atlas invested heavily in research and development in 2010, bringing a new paint plant and technology online. “During 2010, we have opened two new markets – Holland and Germany, by developing manufacturing customer specific bicycles for the European market and these bicycles are now already being exported to both countries,” said Gautam Kapur, Joint President, Atlas Cycles (Sahibabad) Ltd.
The company expects an overall growth of about 20% in the domestic market and about 15% in the international market during 2011. To achieve this target there are specific plans to launch new MTBs, Ladies and Kids models and target a growth of 25%.
“In the international market too, we have launched the customer specific product for theEuropean market and neighbouring country Bangladesh and are expecting an overall growth of about 15%,” said Kapur. Atlas manufactured 1.7 million bicycles in 2010 and exported 70,000 units. It recorded an overall turnover of about $88 million US and exported bicycles worth $2.9 million US.
Chinese Imports Bad for Indian Business
Although Indian components makers are no match to their Chinese counterparts in the international market, they were always dominant in their home market. Now Chinese components are showing up in the Indian market and the country’s cycling parts manufacturers’ association is raising the alarm. “Now the Chinese factor is hurting us in our home market,” says D. S. Chawla, President, United Cycle Parts Manufacturers Association (UCPMA) in an interview with Bike Europe.
Although the imported parts are claimed to be of inferior quality to those produced in India, the large quantity is what’s worrying the local industry. “As per an independent estimate, components worth about $100-125 million US have already entered into the Indian market,” says Chawla. Now the UCPMA is lobbying the Indian commerce ministry to ban such imports in the Indian market.
“We have called for imposing anti-dumping duty on such components. Currently, we are in the midst of assessing the quantum of damage done by imports of inferior bicycle components on the Indian bicycle industry,” explains Chawla, who heads the one of the oldest and the biggest cycling manufacturers’ associations in Asia. The UCPMA represents the small-scale bicycle components industry catering to the OEM market. The association claims the Chinese imports will severely impact the Indian bicycle components industry in the long-term, if nothing is done. “The industry gave direct or indirect employment to over 500,000 people and more than 2.5 million families are dependent on the industry,” says Chawla. “Therefore, we are calling for severe action.”
It is known that components for roughly 15 brands, including Bhogal, Dass, and KW, to name a few, are imported from China. Chawla says those components include items such as chainwheels, pumps, spokes, hub cones, ball bearings, pedals, and freewheels. Unfortunately, the association feels it may not be easy to stop the inflow as it requires some serious action on part of the government and the Indian bureaucracy has other important things to do. Moreover, the small component makers do not have the money or clout to register their brands in the Indian and international market. “Bigger players could register them internationally, but it is not possible to for smaller players to protect their brand identity in the international market,” says a worried Chawla.
Meanwhile, the Commerce Ministry has listened to the component makers and is in the process of identifying the modus operandi and ports where such components are entering the Indian market. “We want the customs to seize the components at the time of landing, before they find their way in the Indian market,.” says Chawla. “The components started pouring in about more than a year back and already damaged the industry.”
The Indian bicycle industry has not made much progress and is no match for China when it comes to production volume over the past decade. According to UCPMA, Indian bicycle production was 13.1 million in 2001, compared to 55 million by China. While Indian players made marginal growth in the last ten years, Chinese manufacturers have shown impressive growth. For 2010, Indian bicycle production is likely to have totalled at15 million units, for a marginal growth rate of about 16%. Chinese production will total approximately 90 million units in 2010, nearly doubling in a decade. Moreover, the share of India’s ubiquitious black city bike has gone down to 70% from 90% a decade ago, while the share of roadster-style bicycles has dropped from 70% to 30%.