HHML's Munjal (left) and BAL's Bajaj: Warring faces of the great Indian two-wheeler industry

Sales of seven million vehicles in 2005-06, six lakh in April 2006-it is not a bad time to be a two-wheeler manufacturer in India. But it is an even better time to be one of the top two manufacturers, the Pawan Munjal led Hero Honda Motors Limited (HHML) and the Rajiv Bajaj led Bajaj Auto Limited (BAL). The two control close to 80 per cent of the motorcycle market. But you can't expect them to be content with their respective positions, what with bal determined to wrest back the # 1 slot it lost to HHML back in the late nineties, and HHML resolute about clinging on to the numero uno crown.

HHML today is way ahead with a market share of just under 50 per cent for 2005-06. But that's 1.8 percentage points lower than what it was the previous year. Bajaj on the other hand has moved from 27.1 to 30.1 in a year, and by April 2006, BAL's share had spurted to 32.4, with Hero Honda plunging to 45.8 per cent (it is obviously losing share to other players too). Yet, it's too early, and too simplistic, to take a call on who's going to win the race over the long term. BAL seems to have got its act right on the product development and marketing fronts, particularly at the higher end with products like the Avenger cruiser, which grew faster than market did last year (30 per cent as against 24 per cent). Hero Honda on the other hand had to grapple with labour disputes at its Gurgaon plant, the resignation of its long-time marketing head and some uninspired product launches.

That said, the Delhi-based company did make a semi-successful foray into the scooter market with 'Pleasure,' targeted at young female riders. At a stroke HHML has squeezed into third spot, behind Honda Motorcycle and Scooter India (HMSI) and TVS Motor. BAL's focus, for the time being, doesn't seem to be on scooters, the biggest signal of which came when it laid to rest one-time bestseller 'Chetak' in late 2005 (although it does have a string of more contemporary launches lined up).

Bajaj's magic in product development isn't ebbing, what with a 200cc-plus Pulsar DTS-Fi (digital twin spark-fuel injection) lined up for launch. The bike, along with a few new scooter offerings, was displayed at the Auto Expo in January in the capital. So, does the future belong to Bajaj? S. Sridhar, General Manager, Marketing, BAL, believes Bajaj will catch up with Hero Honda, but putting a time-frame on that is impossible. "For every action we take, there is a counter action from them," he laughs. "But, we will continue to outpace the market growth as we have done for the last two years."

"I believe Bajaj will be able to continue its rapid pace of growth in motorcycles, maybe not at 30-odd per cent but 20-24 per cent growth is easily manageable", says Kalpesh Parekh, auto analyst at brokerage ask Raymond James. The main reason for his optimism: Bajaj's continuing domination of the 'economy' segment with the ct100 and its stranglehold of the top-end (and very high-margin) segment with the Pulsar and the Avenger.

But it's the mid-segment that's the largest, and this, HHML controls with an iron fist. And it's clearly not all doom and gloom for the Honda affiliate, despite the loss of market share and the relative unexciting nature of its new launches. The company has managed to put its labour disputes behind it and is aggressively increasing capacity at its two existing plants at Gurgaon and Dharuhera. Yet, in an attempt to claw back share the company has announced an aggressive product introduction schedule, with plans for eight new models in 2006 itself. The 'Pleasure' and the 'Achiever' have already been launched. However, the bulk of its sales still come from the 'Splendor' and 'Passion' models, which explains why HHML still enjoys a three-fifth share in the crucial 'executive commuter' segment, despite Bajaj's recent inroads into that segment with the new Discover.

"I feel Bajaj will keep chipping away at Hero Honda and eat into its share, but overtaking them will be difficult. After all Hero Honda is still the market leader and just one of their new launches has to click," says Parekh. Is Rajiv Bajaj listening?