WAZIR
THE STRATEGY AND CONSULTING CLUB
Presents
GURU
AAR
GURU
AAR
GUESSTIMATE I
Estimate the two-wheeler market
in India
GURU
AAR
SCOPE & ASSUMPTIONS (1/2)
Scope:
Didn’t take into consideration two-wheelers used
for commercial purposes like Dominos, Swiggy,
Zomato, etc
Didn’t take into consideration bicycles
Assumptions:
Population segment growth rate = 2%
Average replacement period = 10 years
Urban Household’s average family size = 4
Rural Household's average family size = 6
Trisection of Urban and Rural Populations for
Income and affordability & preference
© Wazir- The Strategy & Consulting Club, IIM Rohtak
1
GURU
AAR
SCOPE & ASSUMPTIONS (2/2)
URBAN
Low
Medium
High
Income
30%
50%
20%
Affordability & Preference
30%
90%
0%
Average no. of vehicles/ household
1
1.5
0
Low
Medium
High
Income
80%
15%
5%
Affordability & Preference
0%
30%
90%
Average no. of vehicles/ household
0
1
1
RURAL
© Wazir- The Strategy & Consulting Club, IIM Rohtak
2
GURU
AAR
STEP 1
Divide the demand into:
NEW DEMAND
(New Users)
REPLACEMENT DEMAND
(Existing Users)
New Demand = (Population segment
Growth Rate) * Total no. of two-wheelers
currently in the country
Replacement Demand = (Total No. of
Two Wheelers Currently in India) /
(average replacement period)
STEP 2
Two-wheelers can be of two kinds
DOMESTIC
(owned for personal usage)
PROFESSIONAL
(owned by professional agencies
such as dominos, police, postman)
LET US ESTIMATE FOR PERSONAL USAGE
(employ top-down method)
© Wazir- The Strategy & Consulting Club, IIM Rohtak
3
GURU
AAR
STEP 3
Start with population of India, 1.4 Billion
URBAN
30%
RURAL
70%
0.42 billion
0.98 billion
0.42/ 4 = 105
million
0.98/ 6 = 163
million
No. of Urban
Households with
average family size
4
No. of Rural
Households with
average family
size 6
STEP 4
Find out the number of households that can afford a two-wheeler
Divide the households into low, middle, and high-income groups.
Further, filter the groups based on affordability & preference and
the average number of two-wheelers per household
© Wazir- The Strategy & Consulting Club, IIM Rohtak
4
GURU
URBAN
105 mn
AAR
RURAL
163 mn
LOW
(<2 lac)
MIDDLE
(2 lac-10 lac)
HIGH
(> 10 lac)
LOW
(< 1 lac)
MIDDLE
(50k-2 lac)
HIGH
(> 2 lac)
30%
50%
20%
80%
15%
5%
31.5 mn
52.5 mn
21 mn
130.4 mn
24.45 mn
8.15 mn
30%
90%
0%
0%
30%
90%
9.45 mn
47.25 mn
0 mn
0 mn
7.33 mn
7.33 mn
1
1.5
1
1
9.45 mn
47.25 * 1.5
7.33 mn
7.33 mn
70.87 mn
Affordability and Preference
Average number of vehicles per household
© Wazir- The Strategy & Consulting Club, IIM Rohtak
5
GURU
AAR
NOTE
The average number of vehicles per household would be 1 for every
segment except for the urban middle class, which is 1.5 (1+2/3)
STEP 5
Number comes out to be around ~94.98 million
Now, based on the current number find out the expected replacement
demand
New Demand = 94.98 * 2%
Replacement Demand = 94.98/10
9.498 Million
1.89 Million
Hence total domestic market = 9.498+1.89
~ 11.39 million/year
© Wazir- The Strategy & Consulting Club, IIM Rohtak
6
THANK YOU
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Wazir | The Strategy and Consulting Club, IIM Rohtak
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