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China and the two-wheeler industry in India: 

China and the two-wheeler industry in India Study done for SIAM

China State of two-wheeler industry: 

China State of two-wheeler industry Total market for motorcycles -- 10 million -- Domestic market -- 8 million -- Export market -- 2 million Large growth in the last five years Become a giant But lacks technology and know-how to develop prototypes - that is the focus now.

State….: 

State…. Total manufacturers = 460 (160+300) 160 set up under government supervision 300 come up in the last five years when market opened up for private competition -- These 300 hurt market. Cut costs to capture markets and technology obsolete

Chinese two wheeler industry A structure: 

Chinese two wheeler industry A structure

State….: 

State…. Range of motorcycles in China -- 50cc (controls 30% to 40% of market) -- 100-125 cc(controls 40% of market) -- 250 cc (controls 20-30%of market) Out of 460 manufacturers just 10 control 70% of the market which are all joint ventures

Local price for M Cycles : 

Local price for M Cycles 50 cc -- 2000-2500 Yuan ($ 225-$270) 100-125 cc-- 3000-3500 Yuan ($ 330-$380) 250 cc -- 4000-5000 Yuan ($440-$550) Most competitive in the 50 cc and 125 cc market for exports Retail network adds 25-30% to manufacturing costs. Taxes add another 15% to 20 %

State….: 

State…. Right now only Euro I compliant. But will move to Euro II very soon. Maximum of three years. But capable of supplying Euro II for export markets at about 20 to 30 per cent higher costs.

Motorcycles in China Some basic facts: 

Motorcycles in China Some basic facts Where are they situated Changqung Shandong Canton Shangchum Zhejiang Hunan Partners Suzuki Honda Piaggio Kwangyog

Plans for the future: 

Plans for the future Control emission norms. Transfer technology from big companies and the “digest” technology locally. Take the help of auto univs. in the process

Plans for India: 

Plans for India Want small and medium sector industries in this sector to visit India Keen on entering Indian market 3 possible ways 1) Joint Ventures with Indian companies in India 2) Export two wheelers 3) Sell parts and accessories to Indian cos.

Plans for India: 

Plans for India Gathering information on Indian laws If customs duty “within reasonable limits” (50 per cent) then the Chinese can be very competitive. But final price will also depend on pollution norms and technology level. Want to send a delegation to India to look at possible tie-ups

Plans for India: 

Plans for India Most companies keen on selling engines rather than full vehicles. Reasons for this bias -- Need to develop retail networks for fully built vehicles -- Have to create new market or eat up some of the existing market. So high costs of competition

Engines: 

Engines CAAM officials say that many manufacturers willing to sell 50 cc engines at $ 110 to $125 depending on technology Have to add duty and freight to this cost.

Engines: 

Engines At present levels of duty of 40 per cent it will work out to $155 to $175. Freight average $ 20 = $ 175 to $ 195 (Rs 8225 to Rs 9165 at an exchange rate of Rs 47 to a $) If this is 60 per cent of the cost then the cost of a full vehicle will be Rs 13,708 to Rs 15,275.

Engines: 

Engines If we add about 30 per cent retail costs to this then the cost will be Rs 17,820 and Rs 19,857. We will then have to add local taxes like octroi and sales tax also to this figure which will be different for different states. What needs to be flagged is that this is for a Euro I compliant engine.

China: 

China So are the Chinese a real threat?

Chinese Policies: 

Chinese Policies Enterprises having an annual production of over 300 thousand motor vehicles, an annual sale of over 200 thousand units, and the funds they spend on technology development were less than 3% of the annual sales revenue, the government will support to target an annual production capacity of over 600 thousand units. Similar policy in place for 150,000 vehicles as well.

Chinese Policies: 

Chinese Policies The government encourages and supports automotive enterprises to establish own institutions for product development and scientific research and to build up the independent product development capability by introducing and absorbing foreign technology. The government will lend financial support to key research and development projects jointly undertaken by different enterprise groups.

Taiwan: 

Taiwan Has very high pollution control norms which help industry. Have introduced phased technology upgradation programme for m.cycles Fuel injection technology to be developed by 2009-2010. Follow a seven year phase out programme

Thank you: 

Thank you