The Indian luxury industry is projected to grow to nearly two-and-a-half times of its current size over the next five years, fuelled by the dynamic lifestyles of the inherited affluent as well as the aspirational nuoveau riche segment. The potential can be gauged by the following numbers reflective of the booming Indian economy: India has over 2 million households earning $100,000 or more annually and these households are expected to grow at a rate of 13 per cent over the coming years.
The auto segment shall contribute significantly to the growth of the luxury sector at 20 per cent over the next five years to reach $6.8 billion in 2015 from the current $3 billion.
The luxury auto segment has taken a cue and brands like Audi and BMW have already made themselves available in the country. Now, it is the turn of bicycle brands to realise the scope for growth in the country. The market size of the premium bicycle segment was 0.4 per cent in 2007, which has gone up to 1 per cent at present and is likely to be 2 per cent by 2014. In terms of value, 0.4 per cent was Rs 50 crore and at 2 per cent, analysts expect it to touch Rs 500 crore by 2014.
The luxury bicycle segment can be broadly defined as the segment selling bikes priced above Rs 10,000. This segment is gradually growing, with increased money flow and quality as well as brand consciousness. Moreover, the Indian youth loves adventure, and cycling for fun and recreation is rising in metros like Bengaluru, Pune, Chennai, Chandigarh, etc.
To cater to the demands of the consumers, who want nothing less than the best, companies offering luxury bicycles are coming up with newer models. Firefox, one of the country’s leading brands in this segment, has two variants – Firefox and Trek. While the Firefox range starts from Rs 4,000 and goes up to Rs 19,000, the Trek range starts from Rs 20,000 and can go up to lakhs of rupees. Introduced in 2004, Firefox Bikes has over 90 exclusive bike stations across India at present.
TI Cycles, on the other hand, offers the consumer a wide range of brands to choose from, including Cannondale, Bianchi, Schwinn, GT, Mongoose and Trek. These are world class brands distributed and marketed in India for the luxury segment. On an average, TI Cycles sees a 30 per cent growth across India every year. While some other brands like Merida, Kona, Orbea and Giant are also present in India, these are lesser known than the above mentioned brands.
“The high-end bicycle segment is picking up very well in the country. Being a market leader in bicycles, it is imperative for us at Hero Cycles that we make ourselves available at various price points, catering to the varied demands of the consumers,” says Pravin V Patil, President, Strategic Initiatives, Hero Cycles.
The company’s product range will be priced upward of Rs 10000 in adult segment and 4000 in kids segment to up till 3.5 Lakhs plus.and the product parts will be partially imported and then assembled at their base. HeroCycles has 88 dealers for Urban Trail with 30 franchise and 30 company owned outlets, and plans to set up three experience zones outlets in Delhi, Pune and Bengaluru
Why this lag?
In the international markets, sport bikes have long overtaken conventional cycles in a big way. In India, however, the face of luxury cycles emerged only 4-5 years ago. “The Indian bicycle market is growing, but it is yet to mature to the international levels. In India, if we consider a bike priced above Rs 10,000 as luxury, internationally, it would be bike priced above Rs 1 lakh. This clearly implies that the Indian market is growing, but at a relatively slower pace,” says Ajit Gandhi, Deputy Marketing Head, Firefox Bikes.
“Internationally, gear bikes have become a common thing, whereas in India, they have not taken off to such levels. This is mainly due to the socio-economic structure of our country. There are a limited number of consumers in the urban parts of the country, who are interested in these products. They are affluent enough to afford the bikes and are part of the health-conscious strata of the society,” Patil says.
The country is at par with global cycling trends and product offerings, but for Indians, the process of discovering and understanding the recreational aspect of cycling has just begun. Among more developed economies, the infrastructure is conducive for active cycling. However, in India, such facilities are way behind.
The recently concluded budget disappointed a lot of sectors, and the bicycle segment was no exception. “We are very unhappy with the recent budget with respect to our Industry,” said Gandhi. At a time when non-polluting modes of transportation should have been promoted, the government has rather strangely increased import duty on cycles and its spare parts. “Import duty on cycles has gone up from 20 per cent to 30 per cent, and from 10 per cent to 20 per cent for spare parts. Import duty has gone up from 10% to 30%. These changes will definitely play a role in weakening the buying patterns of the customers, as affordability becomes a challenge,” Patil adds. Due to the increase in the import duty, a consumer will have to pay more for a cycle, and thus the effort of the industry to do its bit for the environment has taken a step backward, thanks to the Finance Ministry.
Task at hand
Despite the challenges, industry experts view luxury bicycles as a completely new market segment in India and are excited about the changing trend in the bicycle industry. They say the lack of infrastructure for cycling and the lack of biking culture are two big challenges that need to be addressed by the bicycle manufacturers, and this can be possible only if the consumers are informed about the growing need for switching over to alternatives for transportation.
Manufacturers should try and create more and more awareness about the availability of these products in the country. “We are trying to upgrade the biking culture by supporting and organising a lot of rides and cycling events. We are also spreading education on the benefits of biking,” Gandhi adds. Although people are gradually accepting cycling as a recreational or fitness activity and encouraging others to join in as well, the government needs to get actively involved in supporting cycling-based initiatives.
Experts say given the limitations on infrastructure, a company can only initiate and motivate the public to a certain extent. With the launch of Urban Trail, Hero Cycles wants to achieve the leadership position in the premium and luxury segments, which seems rather ambitious considering the nascent stage of this segment in the country.