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Management And American Based Company That Manufactures Motorcycles

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Question:

Discuss On American Based Company That Manufactures Motorcycles?

 

Answer:

Introduction

UM-Motorcycles, also known as United Motors, is an American based company that manufactures motorcycles. The company was formed by Octavio Villegas Llano in the early 2000s and has its headquarters based in Miami while its manufacturing facilities are located in China and Taiwan. UM-Motorcycles was founded in 1951 in Columbia.  The company has been expanding its business in the international market and has its business operations running in 25 nations with almost 1200 outlets at present.

UM-Motorcycles in India

The company has been expanding its business at a fast pace and a recent expansion of the company has been into the Indian market. The Indian market holds a lot of potential for two wheeler companies as it accounts for 78 percent of the total global two wheeler demand. The company entered the Indian market in 2016 by starting a 50:50 joint venture with Lohia Auto and invested around 100 crores INR to set up a manufacturing plant in Kashipur, Uttarakhand. The plant has a capacity of producing 5000 units in a month. The company is now operating under the name of UM Lohia in the Indian market and is rolling out two different variants of 280cc motorcycles – Renegade Commando and Renegade Sport S (UM motorcycle seeks entry into the Indian scooter market, 2016). The company has identified the potential that the Indian market has to offer for two wheeler companies and is planning to exponentially expand its business in India and its neighbouring countries by the end of 2019.

In an Auto Expo, where the company first showcased its two wheelers, the company was not able to grab the interest of the ultra-conscious Indian customers. It was only when the company announced the price of its cruiser bikes that it was able to spike the interest for its two wheelers in the Indian market. The company prices its products in a range that is affordable as per the Indian standards and is highly competitive as compared to the substitute products (Bawikar, 2016). The company has received a good response in the Indian market and is not planning to invest more resources so that it can start manufacturing engines for its two wheelers locally and reducing the prices even further (UM Motorcycles mulls manufacturing engines in India, 2016).  

UM Motorcycle market position in India

The Indian market has a lot of demand for two wheeler vehicles because of its rising population and increasing purchasing power of the customers. The Indian population is diverse and there is a lot of demand for two wheelers belonging to all sections. At present, two major players in the Indian market are Royal Enfield and Harley Davidson. Without a doubt, Harley Davidson outperforms its competitors in terms of design, quality and performance but then the price difference between a Harley Davidson two wheeler and a two wheeler by Royal Enfield is around 3 lakhs INR. Most of the Indian customers desire to own a Harley Davidson two wheeler but the high price of the products makes it difficult for the customers to afford it. Thus, the company is left with Royal Enfield as the only option when it comes to cruiser bikes. The ability of UM Motorcycles to offer cruiser motorcycles in a range that lies in between the two is a competitive advantage for the firm and the firm has already received around 4,000 orders from the Indian market. A major issue that the company might face in the Indian market is that companies like Bajaj, Hero and Honda have already taken a huge market share when it comes to entry level segment of two wheelers and the Indian customers are happy with the quality of products that these companies are offering. The company has been planning to double up its manufacturing capacity by the end of 2017 because of the rising demands of its products in the market. UM Lohia has also revealed that it will be introducing two different two wheeler products in the Indian market that would be priced below the price of 1 lakh INR, which will definitely help the company in outperforming its competitors in the Indian market. Thus, the company has a bright future in the Indian market and the company’s plan to invest additional resources to make the prices of its two wheelers even more cheap will have a huge impact on the Indian two wheeler market.

       The above chart shows the market share of different two wheeler companies in India during March 2016 (TeamBHP, 2016)

 

Impact of UM Motorcycles on Indian economy

The company has already been having a huge impact on the Indian two wheeler market and the Indian economy on the whole. The company has already invested around 100 crores in the Indian market to set up its plant and is planning to invest another 50 crores to set up a new plant that would allow the company to manufacture its engines and related parts locally rather than importing them from other foreign subsidiaries. The company has been expanding its operations in the Indian market at such a fast pace that at present, the company has around 71 dealerships in India spread across 50 cities and is planning to set up more dealerships to maximise its sales. This has definitely been having a huge impact on the Indian economy as with the foreign investment that the company is bringing into the country, there are more and more job opportunities opening up for the Indian employees in the plants that the company has set up and also in the dealerships that the company has started. Further, the growth of UM Motorcycles will also provide a boost to the Indian GDP because most of the Indian customer have a desire for premium and cruiser bikes but the demand for higher end or premium motorcycles has been restricted because of high prices. Once UM is able to come out with affordable premium and cruiser bikes, the demand for bikes will rise with a consequent rise in the production. Thus, the complete cycle will help in boosting up India’s GDP.  

Conclusion

UM motorcycles definitely has an obvious chance of grasping a large market share in India because of the ability of the company to satisfy the demands of the Indian customers by providing them with two wheelers that are competitive in terms of price, features as well as quality. The only thing that the company needs to keep in mind with respect to the Indian market is that the Indian customers are price conscious and also give a huge importance to product life and quality. Thus, by keeping the prices of the two wheelers steady and competitive and also by ensuring higher quality products, UM Motorcycles has a high chance of outperforming companies like Bajaj, Hero and Honda in the near future.

 

References

UM motorcycle seeks entry into the Indian scooter market. (2016, August 13). Retrieved April 26, 2017, from www.deccanchronicle.com: https://www.deccanchronicle.com/business/autos/130816/um-motorcycle-is-pondering-to-entry-in-indian-scooter-market.html

Bawikar, P. (2016, July 23). UM Renegade cruisers are desirable, but they have a lot to live up to. Retrieved April 25, 2017, from www.hindustantimes.com: https://www.hindustantimes.com/autos/um-renegade-commando-sport-s-desirable-cruisers-but-have-a-lot-to-live-up-to/story-6TrbaDbeuWYt1uPpOW5OtI.html

UM Motorcycles mulls manufacturing engines in India. (2016, September 22). Retrieved April 26, 2017, from www.moneycontrol.com: https://www.moneycontrol.com/news/business/companies/um-motorcycles-mulls-manufacturing-enginesindia-962760.html

TeamBHP. (2016). March' 16 market share

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