Time appears to be ripe for home-grown automakers — two- and three-wheeler makers in particular — to expand aggressively in select international markets as many factors will favour them for stronger growth.

South America, Africa, West Asia and Asia now account for nearly 80-90 per cent of India’s total two-wheeler and three-wheeler exports.

Bajaj Auto and TVS Motor Company have cracked many markets in these four regions and presently these two brands sell higher number of motorcycles outside India.

Hero MotoCorp is likely to achieve similar success soon, while Royal Enfield, which sells higher CC bikes, has achieved some breakthroughs, too.

During the 11-month period of this fiscal, Bajaj sold 1.647 million bikes in international markets against 1.626 million bikes in India. In February 2021, its international motorcycle sales stood at 1.83 lakh units against 1.48 lakh units in India.

Advantage Indian products

With strong demand revival in export markets in recent months, TVS Motor has already entered positive growth curve in export volumes at 6.16 lakh units during April 2020-February 2021 period as compared to 5.71 lakh units a year ago. At home, it sold 5.68 lakh units during the 11-month period of this fiscal. With a revised strategy, Hero has also been seeing strong growth in its export volumes.

“The purchasing habit in South American, African and Asian markets are similar, in terms of cost-consciousness, to the domestic Indian market with products meant for the Indian market largely suiting buyers in developing countries as well. Indian OEMs have ensured to provide easy access to sales and service facilities, develop local assembly operations, and build a network of distribution partners and dealers,” says Hetal Gandhi, Director, Crisil Research.

Also, Indian companies offer vehicles with greater fuel economy to cater to the growing demand for last-mile connectivity in semi-urban and rural areas in those countries.

Strong acceptance of Indian products, BS-VI edge, local network partners, India’s image as a leader in vaccine distribution and support to emerging markets are positives for Indian brands to ramp up their operations further.

“Traditionally, Indian automakers have only pursued international opportunities sporadically. Now, however, they should double down on select international markets and invest in expanding their brand, distribution, and service reach to build a lasting franchise,” say Brajesh Chhibber & Nitesh Gupta, Partners, McKinsey.

Customised products

TVS Company has been aggressively focusing on strengthening its distribution partnerships in various markets as the company sees a shift to premiumisation in all those markets and foresee a good potential for its two-wheelers such as Apache, NTorq 125, Jupiter ZX and Grande series.

“We are now witnessing strong demand from West Asia and recovery from traditional markets in South Asia, West Africa and Latin America. Irrespective of markets, some challenges like safe, personal transportation are universal, which will drive the business for months, possibly years to come,” says a spokesperson of TVS Motor.

While seeding its products in more and more international markets, Hero MotoCorp is also putting the customised products in some of the key markets. In markets like Colombia, known as a gateway to South America, Hero has now moved into break-even phase after few quarters of losses. In Mexico, a big market, it has roped in a partner. It is also expanding in Nigeria, Bangladesh and Sri Lanka for volume growth going forward.

Royal Enfield has so far set up about 100 exclusive stores. Share of international revenue has grown from 3 per cent in FY2016 to 9 per cent in FY2020. It will continue to ramp up its international presence.

“Having a strong presence in the export market protects revenues of companies from lower demand in a particular geography. The share of two-wheeler exports to total sales volume was 17 per cent in FY20, while that of three-wheelers was 44 per cent, says Gandhi.

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