Hero Honda aims for 25% growth

Plans nine launches in next six months.

India’s largest motorcycle maker, Hero Honda Motors, is looking to sell more than a million units in each of the next three quarters, even though market conditions may not be in favour of the two-wheeler market.

The New Delhi-based two-wheeler company, also the world’s largest, is aiming for an overall growth of about 25 per cent in sales by the end of the financial year, which will take its tally to about 4.5 million units, up from 3.64 million units last year.

However, according to industry experts, the two-wheeler industry itself is expected to register less than double-digit growth due to continued lack of focus by financiers such as banks.

The two-wheeler industry, comprising motorcycles, scooters, mopeds and electric bikes, witnessed sales of 7.43 million units last financial year.
 

BIKE JOURNEY
Company	Apr-Jun 2008-09	Apr-Jun 2009-10	Growth %)	Market Share (%)
Hero Honda	877,089	1,094,996	24.84	51.26
Bajaj Auto	391,100	331,731	-15.18	15.53
TVS Motors	292,530	315,785	7.94	14.78
Honda	226,068	284,890	26.01	13.33
Total Market	1,865,767	2,135,869	14.48	-
Source: SIAM

This is expected to expand to 8 million units this year.

Hero Honda is heavily banking on the current quarter to make up for any dip in demand in the last quarter, when sales are generally sluggish. At present, every second two-wheeler sold in the domestic market is by Hero Honda (see table).

Anil Dua, V-P (sales and marketing), said: “We expect the first half of the current fiscal to be better than the second half on the back of the commencement of the festive season. The industry will record a high single-digit growth of about 9 per cent but we will post about 25 per cent growth in the fiscal.”

The company’s thrust is on new model launches, most of which will debut in the current and the next quarter. In all, the company will launch nine models, of which one or two will be new while the rest will be face-lifts.

“We are constantly increasing our market share both in the motorcycle space as well as the scooter segment. Our target for the year will ride on the success of the new launches as well as our top models”, added Dua.

The two-wheeler space, unlike the passenger car segment, has witnessed the worst consumer finance crunch along with the commercial vehicle segment. Although banks have only recently relaxed their stand, industry players say the demand for finance far exceeds supply.

“Finance has become available once again, but at a costlier rate than before. In addition, new norms set by banks are more stringent than earlier. Two-wheeler buyers are price-sensitive,” said an auto analyst.

Meanwhile, growth for Hero Honda’s traditional rivals such as Bajaj Auto and TVS Motors has been minimal, largely due to their absence in the rural and semi-rural sector.

Bajaj Auto’s marketing focus has been on the urban buyer, while TVS Motors has been strong only in the southern market.

Bajaj’s recent launch of the face-lifted Pulsar 220 (dubbed as the fastest production bike in India), and TVS Motors’ Apache 180 are in the premium range and may not become volume drivers.

Hero Honda’s dominance may come under pressure later during the year due to increased aggressiveness by Japanese giants Honda Motorcycle and Scooter India and Yamaha Motor India.

Both have seen double-digit growth on the back of strong product line-up and powerful brand value.