Hero MotoCorp expects two-wheeler sector to stabilise from festival season

G Balachandar Chennai | Updated on September 05, 2020

Draws up market-specific plans for future growth

The country’s largest two-wheeler maker Hero MotoCorp expects two-wheeler volumes to pick up and stabilise during from the festival season this year, aided by pent-up demand and a shift in customer preference for personal mobility in Covid-19 times.

“For FY21, we expect that the industry will witness greater two-wheeler demand due to the customer’s need for personal mobility to maintain safety standards. The industry will stabilise by the festival season and the pent-up demand will provide the much-anticipated boost to the industry. Being a market leader, we should be well-placed to capitalise on market shifts,” the company said in its latest annual report.

Hero expects that the shift from shared mobility to own vehicles will benefit two-wheeler demand in the short and medium term.

During Q1 of this fiscal, the company sold 5,38,341 two-wheelers in the domestic market amid Covid-19 lockdown-related challenges and garnered a market share of 42 per cent (55 per cent in motorcycle category) in the two-wheeler segment.

Historic milestone

Pawan Munjal, Chairman of Hero MotoCorp, said the company is on the cusp of creating a historic milestone of 100 million motorcycles and scooters in cumulative sales in FY21.

Meanwhile, the two-wheeler market leader aims at enhancing R&D capability, winning in premium motorcycle and scooter segments, fortifying global footprint and foraying into emerging mobility as part of its future growth strategy.

Its investments in R&D over the past five years have been twice that of the other players in the industry. “We will continue to invest in brands and R&D to sustain our growth in the future,” he added.

The company has two big R & D operations — Jaipur in India and in Germany — with total staff strength of 826. In FY20, the company spent about ₹712 crore on R&D (revenue expenditure of ₹478 crore and capital expenditure ₹234 crore), which was 2.40 per cent of total revenue.

Munjal said Hero achieved improvement in market share in premium scooters (125cc) and backed by efficient product planning and design and engineering capabilities, the company is determined to have a strong presence in the premium segment with a robust portfolio of products over the next 3-5 years.

A few weeks ago, the company launched its new premium bike Xtreme 160R to further strengthen its premium play.

With the launch of three all-new scooters in the last 18 months, the company covers almost 100 per cent of the scooter market. The objective is to revive scooters share in Asia helped by new models Pleasure 110 and Destini 125.

Expansion strategies

For international business growth, the company has devised market-specific strategies. It plans to launch new models in the 150-160cc category and build on the momentum it has already gained in the Asian and Latin American markets, while it will further sharpen the focus on African markets. Hero is now selling its two-wheelers in more than 40 countries now, up from just four countries in FY12.

The company is also evaluating various offerings in emerging mobility opportunity, including electric two-wheelers and three-wheelers, telematics, charging/swapping ecosystem and mobility as a service (MaaS).

Published on July 21, 2020

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