What
has been your experience with Hyosung in India? But before you tell me that
what prompted DSK to buy Hyosung which was previously with Garware Motors?
The person who handles this side of
the business is Shirish Kulkarni. He is the son of the D S Kulkarni who is the
Chairman of DSK group. Shirish is an avid automobile person, he owns supercars
and superbikes. So his interest was to enter in the manufacturing part of the
two-wheeler business. He is quite far
sighted, since Garware Motors is Pune based, DSK is also Pune based and the
owners know each other, so he bought it over. DSK in some sense has been in the
auto industry since 2000. In fact DSK Toyota is the first elaborated showroom
of Toyota in India. So in that sense they have had a touch with the auto sector
and today they are the biggest dealers of Toyota in India. This year DSK Toyota
has won the Platinum Award for the best Toyota dealership in the world. So they
knew how to sell automobiles, they knew how to run that business and Shirish is
just 29 years old. His aim is to be one of the major players in the next ten
years.
What is your strategy to introduce the Benelli brand to
India? What kind of a dealer network are you looking at and how many
dealerships are you expecting to set up by the end of FY15?
Benelli is one of
the oldest Italian brands established in 1911. It is one of those few brands
which have seen both the world wars. Like any other Italian company it has gone
through its ups and downs but Benelli has too many firsts to its name like the
first six cylinder engine. Benelli was going down till the Qianjiang Group of China
took it over. They are just into the management part of the business and fund
the operations. When Benelli was looking at expanding operation, they thought
the DSK Group was a good partner so they landed up in India. Benelli is an
exotic Italian brand and we are going to brand it that way. We are bringing in
some exotic Italian bikes which have a racing heritage. In fact Benelli
probably holds the most number of trophies in racing for any European
two-wheeler brand. They have the racing culture and pedigree which is now
coming to India. The most important part of Benelli being an Italian brand is
that it is the only European brand which has a range of bikes from 300cc to
1130cc. They also have plans to launch two more 250cc bikes being next year.
There is not a single European manufacturer besides KTM which is not into the
CKD part of the business and which can offer you something below 675cc while
Benelli will offer three to four products in this category in the next two
years. You also have the 1130cc and the 899cc which are cult bikes. There are models
which also go up to 1600cc. So you have Benelli which will sell from 250cc to
1600cc and that is the kind of range which is unimaginable by any manufacturer
in the next two years. Then you have Hyosung on one side and Benelli on one
side. Though the engine capacity varies the products are chalk and cheese. Hyosung
specialises in V-Twins while Benelli specialises in In-Line engines, Benelli is
an Italian brand and Hyosung is a South Korean Brand, we have fully fared
bikes, cruisers, sports bikes and naked street bikes. We are increasing the
scope of super bikes in India. When any one wants to buy a super bike whether
it is a 250cc bike or an 1100cc bike they would have to come to a DSK showroom
to look at one. We are going to launch 8 showrooms in the third week of January
2015 in Delhi, Bombay, Ahmedabad, Pune, Bangalore, Chennai, Hyderabad,
Chandigarh and Kolkata. We also have plans to open 20-25 showrooms by June-July
2015.
What USPs do Hyosung and Benelli have over its
competitors?
Benelli has a lot
of firsts to its name. It produced the first in-line four which is not there in
the 600cc category, you have the first adventurer in the 600cc, the first
in-line two in the 300cc and they made an anniversary edition 1130cc in gold.
Benelli will introduce the 2015 range which has new decals and new colours.
They would be starting that with India. The bikes which you see today on the
net and the ones with us today are not the colours which will be coming to
India. The most important part is the price for the Indian market. It is going
to be very competitive. We are going to make European bikes very affordable in
India. Hyosung has also been doing well. As of today we have sold more than
2200 units and we have another four months to go. We are the second best brand
in terms of sales and as of today we boast of the largest dealer network. We
just opened our 39th showroom day recently and we will be open two
more showrooms. Hyosung is going from strength to strength. A lot of people have
been asking me what will happen to Hyosung once we start the operations of
Benelli in India. They are going to operate separately is the answer. They both
are in the race and everything in the front end, the sales team, and the
dealerships every aspect will be different except the DSK logo and the DSK
service standard however the backend will be the same. We have about 4 years of
experience and we have committed some mistakes but we have learnt from them as
well. Now we know what goes into making a perfect superbike. Secondly with
shared backend operations our overheads are less. So we can give a better price
to the customers.
What
is the current marketing and advertising campaign which you are running to tap
into tier 1 and tier 2 cities?
We have witnessed that people get
very excited when they see a superbike. We want to take our bikes and show it
to as many people as possible. So we took part in the autoexpo and we also display
it where the high end customers are. Photographs don’t do justice to these
bikes. Superbikes are a niche category and it is not present in all segments so
you cannot go the TV way as it is a wasteful expenditure of money. So we go
through auto magazines and auto portals where our target customers are. We are
very serious about marketing on social networking sites as that is where
customers blog and talk about these bikes. In the next four months we will be
participating in 16-20 displays in Delhi. South Delhi has some high-end
customers so we will be displaying our bikes for 15-20 days in some south Delhi
malls. Unless you don’t see the 600i you don’t realise how big it is.
It is bigger than a Z800. People are comparing Kawasaki’s er600 to the 600i. We
want to take these bikes to people and show it to them from close quarters. When
you touch it, feel it, sit on it and ride it only then will you understand what
it is like. We also have fraternities and clubs for Hyosung and we will have
the same with Benelli. We have plans for 2 rides every month which will be done
at a dealer level and we will have one grand ride once in every two or three
months done at the company level.
Is
there a facility which is coming up in Karad in Maharashtra? What is the
progress on that facility and will we be seeing a drop in prices of your
products once this facility comes up?
A huge part of our price today is
custom duties. So when we begin to manufacture locally we will get a good cost
and we will not pay extra import duties. At this time we are looking at a 2
year horizon before we start manufacturing locally. However, Benelli is very
clear, they are coming for a bigger chunk of the Indian market and a few
thousand does not excite them. Vendor partnerships have also started in a small
way and as we go forward they will continue to grow. Today in Hyosung
approximately 15-17pc of the parts are locally procured in India like tyres,
wiring harnesses, switch gear, etc. The reason why we do this is the equipment
produced here is better suited for Indian conditions. Like MRF tyres are better
suited for Indian roads rather than Pirelli tyres which are on the softer side.
So there are a few parts which are locally
produced and procured. Some concerns for us are the vendor chains who are more
interested in the 150cc-200cc segment as that is the segment where 13 million
motorcycles are sold. Another concern is that our vendor base has not evolved
to make parts for this segment of motorcycles but these companies are investing
in R&D and bringing global standards to India.
Who do you see as competitors?
Most of the
Indians are not educated about superbikes. They look at the engine capacity and
price of a bike. So if it is a 300cc bike they will compare it with a Kawasaki
Ninja or a Hyosung. These bikes are all quite different to each other. Since we
are a European brand to start with we will compete with Triumph. Since the
configurations of the bikes are more or less similar to each other and they
produce more or less the same power, we will compete with Triumph.
What are your plans to extend the current product
portfolio? Which segment do you see scope of growth in?
India being
India we are obviously looking at the commuter segment between the 200cc-500cc.
So with Benelli we plan to introduce at least 2-3 models in the next year apart
from the present plan of 5 models. Benelli has a programme which is developing
4 new models in the 200cc-500cc category. They understand the importance of
Asian markets. The 899cc, 1130cc, 1300cc and 1600cc will always be eye candy
but not many Indians can buy it. Your bread and butter come from the low end
products. This is where you need to introduce more products and Benelli is the
only European brand to bring in this range. In the case of Hyosung we are a
little delayed, we should have launched the GT250 earlier but that will come in
March 2015. The faired version of the GT250 will come after two-three months of
launching the GT250. So we have two 250cc bikes and a new 300cc cruiser which
will come from Hyosung next year. Hyosung will have 3-5 models launched next
year.