Prices of all two-wheelers will sky rocket post implementation of Bharat Stage VI (BS-VI) in 2020 but the budget bike segment will perhaps be most impacted, making them unaffordable to a large section of the buying class.
Meeting BS-VI emission standards is mandatory for all vehicle makers post April 1, 2020 and doing so will entail investing in electronic fuel injection (EFI) technology and rework the exhaust system for two-wheeler producers.
An average of Rs 5,000-10,000 jump in prices is expected in two-wheelers post BS-VI implementation which in some cases will be more than 10 percent of the vehicle’s price, according to estimates. Most two-wheelers today come with carburetors while a handful are equipped with EFI technology.
Budget bikes are those prices typically start at around Rs 33,000 and runs until Rs 55,000. These come powered by 100cc or 110cc single cylinder engines running on carburetors. Hero Motocorp, the country’s largest two-wheeler maker, is the market leader in budget bike category with Splendor, Passion and HF Deluxe models.
Speaking exclusively to Moneycontrol News, Minoru Kato, president and CEO, Honda Motorcycle and Scooter India said, “Technically we can do it but to keep it affordable is our biggest challenge. It depends on supplier and factories. It won’t kill the 100cc segment. 125cc also will increase because of BS-VI. The 100cc segment will continue but only for a segment of buyers.”
That’s the reason why Honda has decided to go slow on development of new products for the 100-110cc segment even as its focus remains on scooters and executive commuter bikes with engines of 125cc where it is also the segment leader.
Honda, which has the advantage of tapping into its parent company’s technologies including BS-VI, has not launched any new product in the budget segment since the past several quarters. Rapid scooterisation of rural markets has also contributed to the reason why Honda has stayed away from the low margin budget bike segment.
According to data shared by the Society of Indian Automobile Manufacturers (SIAM) Hero Motocorp had a share of 74 percent of the budget bike segment by end of last month. Three out of every four two-wheelers sold by the company is a budget motorcycle.
Last year the segment dipped by 3 percent to close at 6.48 million units as compared to 6.66 million units sold in FY16. In the period of April-October the segment showed a rise in sales by 7 percent to 4.48 million units primarily on the back of improving levels of spending in rural areas.
Eric Vas, President (motorcycle business), Bajaj Auto said, “Our R&D chief has said that he would be able to give us BS-VI on our full range including 100cc bikes. We are able to move quicker to new technologies such as BS-VI and ABS because geographically we are so spread out and there are some markets.”