xBhp: Trek was earlier with Firefox, why the switch? Was it because Firefox was bought over by Hero?
Navneet Banka: Yes, Firefox was taken over by Hero. But for Trek, we have been looking at India as a sub-market for over 3 years now. Because when we looked at the sales data, even when we were with Firefox, we had a great relationship with them for more than 12 years. The data from the past 5 years showed the segment growing at almost 20% CAGR. That’s when we said, we need to bring in a greater level of commitment from the brand. And that is when we decided to enter the country as a subsidiary. That’s why we are here now. We have a Trek India corporate office, we have staff on Trek rolls and we are setting up retail shops across India, who are now working with Trek as a company.
xBhp: So is the Firefox-Trek partnership completely dissolved?
Navneet Banka: We had mutually agreed to separate in 2017. In May 2017, I joined the company and we set up the subsidiary then. August was when I and Aditya Munjal, who handles Firefox, mutually decided this. It was difficult because they have more than 150 retail stores that were selling Trek also and when we separated a lot of those stores had some products. We were fine with having them sell off the stock till the time we set up retail operations.
xBhp: How many stores does Trek currently have and how does it change the dynamic from having 150 stores earlier?
Navneet Banka: In India we have now signed up 13 partners, 9 of them are already live on the India website. We have an online dealer application form once the dealer fills up that form, we call them to the corporate office and we talk about what is our vision for India. Our focus is to take the consumer experience to the next level. It’s not about just the sales numbers. If we see a sync in the thought process, then it’s good. There are all kinds of retailers, some are there just to sell products, some are hardcore riders themselves, and many are enthusiasts. We are looking at people who are riders, who are running cycling as a business and who are enthusiasts themselves. We then visit the store; we have a discussion about what are the things for which we need to up the game a bit. A lot of stores that I visited didn’t have a service area. There was absolutely no focus on service. I was surprised to see a metal bowl, pliers and a hammer as tools. And I wonder how one services a carbon bike with that setup! We are at the stage where we want them to setup the service within the store, it’s only then we can work with them. Else, we cannot.
We have tied up with a tool company called Unior tools. Our Trek Factory Racing team uses Unior tools; we have a distributor of Unior in India. We have tied up with them, so that all Trek dealers will buy tools from them. We have mandated minimum number of tools for every Trek dealer. So, our dealer gets a benefit of buying from them. Now all our dealers are using Unior tools. Until they don’t have the requisite tools, we do not sign an agreement with them. As you can see we are going step by step.
It was very tough for us to say no to 150 retailers. But that is our commitment to this country. Currently 9 have signed the dealer agreement; these dealers will have the basic tools as standard. We are visiting them on a weekly basis, training them and taking them to the next level.
xBhp: Are you focusing on the metros or Tier II cities as well?
Navneet Banka: It’s a combination of the two. It’s very interesting. We already have a dealer in Indore. We already have a dealer in Nashik and Haldwani. Till now, my Indore dealer has given me more business than my Delhi dealer. It’s not about big or small. What seems to be happening is that when I speak to my Indore dealer Harish, he is so passionate about the whole thing. So he organizes a ride every Saturday and Sunday. The 100 km rides, randonneurs and everything. He provides support in terms of technicians. So people prefer going to his store and buying from him.
When we look at the size of the market, of course, Delhi, Mumbai, Bangalore and Chennai are the big four, where a lot of volume happens. Having said that, we see a good growth coming. We see more passionate riders there and we see more passionate dealers there.
xBhp: Giant has been in India for more than four years, do you think Trek will be playing catch up with them?
Navneet Banka: There are two ways of looking at it. In the 12 years that the collaboration that we had with Firefox, we have more than 27000 Trek consumers in India, this is what we have seen Firefox do in the last 10 years. We were in India way back in 2006; we did not enter India now. We were the first premium brand to come to India. When I think of 2006, the premium segment was all of 2500 cycles a year. Today it is 2500 cycles a month. So for us it is not about the numbers or market share. It is about setting up retail correctly. There is a lot of education which my dealers need. Nobody has trained them on how to assemble a bike correctly. They are still crouching on the floor instead of using a bike stand to service a bike in India.
We have created a technical training centre inside our office in Gurgaon. I have got someone who has hands on experience of repairing bikes as my service manager. So now we are offering training to all our dealers. If you buy a 3 lakh bike and the guy does not assemble it correctly, you are not going to enjoy the bike.
It is not about catching up. We are doing a lot of different things as a brand which we focus on for the long run.
xBhp: So as a brand you are already there, only the dealer network needs to be built?
Navneet Banka: We already have 27000 consumers who have a Trek. A lot of them are enthusiasts and as a brand it is well known within the community. What we want to do now is to take the experience to the next level. When someone walks into a store, how is a product sold? Is the sales consultant asking you what kind of riding you do? Having people riding a full suspension MTB on the road is not correct. All your energy will go into the suspension rather than pushing you forward. People don’t look at it that way; they think there are potholes on the road, so they need suspension.
I ride a Trek FX S5, which is a zero suspension hybrid, thin tyres, but all the energy that I am putting in is pushing me ahead. Rider education is not there, and that is where we come in.
xBhp: How important are cycling communities and clubs in building the Trek brand in India?
Navneet Banka: I would say they are central to what we do. We are here to build the sport of cycling. We want to get more people on a cycle. If you look globally, we don’t talk about numbers. The mission of Trek is to get more people cycling. That is where the community is central. You go to office 5 days a week but look forward to the weekend rides because of the community where you will meet others. For us that is central to what we want to do. We definitely want to work very closely with the community.
For example, when we launched in India last month, we did our first ride. We called our global ambassador, Jens Voigt from Germany for the launch itself. The next day, we did our first founder’s ride with Jens. Wherein we called all the existing Trek consumers in NCR and we all rode with them. We got about 42 riders at 5:15 in the morning in Delhi on a Saturday. We started from our corporate office and we rode for 22 km followed by a 3 hour session with Jens, since he has been with our factory racing team. He has been a professional rider for more than 20 years. He has worn the yellow jersey twice at the Tour de France. We displayed all our products there. People were amazed that we had a Madone 9.2 in India.
xBhp: Would Trek be partnering with existing communities or build a Trek owners club?
Navneet Banka: The key thing is that we want to be inclusive right now. We want to grow the sport of cycling. You could be on another brand cycle; right now we want you to ride with us. The important thing is that the person is on a cycle. The person may not be on a Trek, but he will get on a Trek eventually. We know that for a fact. But we don’t want to divide. The segment is about 35000 units a year. It is very small right now. In that segment, there are more than 13 international players. We are focusing on growing the segment. If we only try to eat out of this pie, we are only going to think how to steal someone else’s customer. We don’t want to do that. We want the community to grow. And for that our focus is on how to get more people on a bicycle.
The kind of things we are bringing in like the lifetime warranty on frames, the unconditional Bontrager warranty, the helmet crash replacement, these are programs people have not heard of. You can buy a shoe from Bontrager, use it for 29 days and return it on the 30th day, no questions asked. These things are unbelievable, nobody has these programs here. We are bringing in all the global programs. My point is that, there is no reason for someone to not buy a Trek.
We just need to focus on building the community. We have great products, great brand, great programs, so they will get on a Trek.
xBhp: Has the pricing of the products changed since Trek is now in India as a subsidiary?
Navneet Banka: Pricing on some of the products is little better now. It’s not that we have reduced the prices, because we aren’t in the pricing game, it’s about the experience. But yes, some of the benefits we got coming in as a subsidiary, we have passed on to the consumers. For example, a 3500D is now retailing for Rs. 25,600 which was Rs. 28,000 before. A Marlin 4, which was priced at Rs. 31,000, is now on sale for Rs. 26,500. So some of the benefits we got from our parent company have been passed on to the consumer.
xBhp: Which price range of products is Trek focused on initially?
Navneet Banka: It is a little early for us to look at the segmentation along price points. As I said, the segment is very small. We are talking 2500 units a month, of cycles above Rs. 25,000 and there are 13 players in that segment. For us it is more about growing the sport. We have the entire range. We have just rolled out the demo bike program for our dealers. So every retailer of Trek will carry a minimum of 10 demo cycles at their store. It has been mandated from us. It consists of road, mountain and hybrid, with 3-4 cycles of every segment. If you go to my Delhi dealer, he should have a Marlin 4, an FX, an FXS5, a Domane and a Madone as a demo bike. The Domane sits at Rs. 1.6 lakhs, the FX S5 is priced at Rs. 1.5 lakhs. Will we sell a lot of them? I don’t know, but it is a phenomenal bike. The point is, if I don’t get people to experience it, how would I know if it will sell? Because once you ride an FX S5 for 20-30 km, I don’t even have to sell it to you. You will come and say, wow! Then it is a question of how do I make it more accessible to you in terms of finance schemes. You can buy a bike on EMI. We are trying to make it more accessible also.
There are some consumers who want to take their bike out once a week. For those consumers, the price point matters. There is one segment, a little more mature consumer; which doesn’t really care about the price point but wants a really good international product. They really intend to get into it more often. So for them, the price point is not a factor. For them, the product is the factor. Then you have the professionals, who are doing it for the long haul. They will see if Trek is bringing in the best products or just bringing the low cost products in India. If there is a demand, we will bring it here. We would love to bring in Project 1, which is our fully customized bike. You have a decal with your name on it. The day you order it is the day we start production. Yes, there is a lead time of three months because we need to airfreight it. And the production starts after you order it. No other brand in the world does custom factory bikes. I would love to do that in India.
xBhp: A lot of casual cyclists look for a bike below Rs. 20,000; does Trek offer one in India?
Navneet Banka: Not in India. We have the entire range. We have products starting at $200. But the dollar conversion rate, import duty and 12% IGST brings the price point up. You can still own a Trek though. You can buy a bike at zero downpayment and maybe an 8 month EMI. So you can technically own a Rs. 25,000 Trek by not paying anything initially.
xBhp: What kind of support would you be looking from the government of India to help build cycling in India?
Navneet Banka: 16.3 million cycles are sold in India every year. When we came to India in 2006, it was more what we can do for the country, rather than what the country is doing for us. Until we make that commitment, how can we expect something back? That is our philosophy, that is why we are now here as a subsidiary. When we look at the last 10 years, we see a lot that has already been done. Are we there? Not yet probably. India is a developing country, we understand there are 10 things the government needs to focus on, and this is probably the 11th! When we look at the smart city project, we look at the smart cities today planned with a cycling infrastructure in mind. When I go to Indore, I see cycling lanes there, in Bhopal there is a bike sharing program already launched, with dedicated cycling lanes. We are seeing a lot of companies that are talking about bike sharing. We see it at the metro stations. We see a lot already being done by the government, of course in terms of cycling focused infrastructure, like dedicated cycling lanes would really help. I meet a lot of people who would love to cycle to work, but they are a little discouraged. Some people still do, in our office there are 3 people who cycle to work. Not that it is a mandate, but they love to. We have a shower inside office just for that. I talked to the MD of Convergys and he says he would love to cycle to work. There is a huge intention. And in the next few years, we will see it coming in. When you look at the environment, the number of vehicles on the road, the number of people looking at health, I think that is where the community plays a very big role. Now we see the community making a lot of noise. Apart from us manufacturers, we see the community saying; give us infrastructure which is a lot more cycling focused.
xBhp: Would you like a reduction in import duty to make the bikes more affordable?
Navneet Banka: That’s a tough one to say. We have been here for 12 years. Till 2012, the import duty on bicycles was 10%. In 2012 it was increased to 30%, despite that we are still here. Our commitment to the country is not dependant on that. For us, what Trek is doing in the country is more important. There will always be external factors which many times, are beyond our control. For us as a company, we want to look at the factors which we can control. That is the sort of products we are getting in, because we are getting in the high end. We are taking cycling to the next level. We are sponsoring a rider named Kiran Kumar Raju, who has been MTB no. 1 in India, with a Top Fuel 9.8, a top of the line carbon $10000 cycle. This is the part we want to play. When I have played this part for the next 5-8 years, that’s when I will feel the luxury of asking what you are doing. Till that time, we play our part.
xBhp: Will you be sponsoring more riders and cycling events in India in the future?
Navneet Banka: We would love to. The broad areas of focus is recreational and leisure cycling and to grow the sport of performance cycling because we are known for performance cycling. We design cycles for racing. We have a Trek Factory Racing team. So we have that legacy and a lot of innovation we do is primarily for that. Of course, it translates into the regular cycles we sell. We would love to get into that by collaborating with these kinds of races. The Tour of Nilgiris is phenomenal, the passion that we see in the riders there and the kind of bikes that we see there. We would love to partner with it at whatever level we can and eventually, also get into smaller activities and events, wherein you have riders. We would like to get the budding cyclists who want to get into professional cycling. We know for a fact that Kiran Kumar is currently working with such riders and bringing them up to a certain level.
xBhp: Which segment of cycling is growing fastest, MTBs, road or hybrids?
Navneet Banka: I will give you a little bit of history. Four years back, almost 70% of the market in India was mountain. Hybrid was a very small 20-25% and of course road. We see a lot more road focus in the south. We are extremely strong in Hybrid as a product; we started with bringing some of our best in line premium hybrids into the country. And we saw that the hybrids have been growing. Now, when we look at the country as a whole, almost 45% is hybrid, another 45% is mountain and the remaining 10% is road. As you go from region to region, it changes. We see a lot of focus on road coming up now with randonneuring, with Audax India there are 40 clubs registered. Just last month I was reading about Yogendra Singh from Noida, who did 1500 km in 5 days which is a world record. So we see a lot of interest coming in road now. In Delhi, there is a new thing going on called, 100 under 3. So you have to do 100 km in less than 3 hours. Karthik, who is part of Trek India, did it last week. That is the reason why we now have a Domane and a Madone as our mandatory demo bikes at our stores.
At the same time, people who are in corporate want to get onto a hybrid because that is a bike they can use for everything whether it’s the commute to office, the market or for fitness. So we see a lot of interest coming in hybrid.
We see pockets of interest. When I go to Haldwani, I see mountain. When I go to Mizoram and Darjeeling, I see a lot of mountain. I see Downhill taking off in India quite a bit. There are downhill events happening now. This is huge for us because we have a crazy downhill portfolio. So now I can bring in my entire portfolio. We see growth in every segment, and as I said, every segment is very small right now. So we are not particularly focusing on just one. We are bringing in world class products in every segment and we will keep on doing that.