Planning 10 products every year, focus is on premium: Hero MotoCorp CEO

Pawan Munjal, Chairman & CEO of the company, says strengthening premium segment will be the top focus.

For months, the scrip of Hero MotoCorp, the largest two-wheeler, maker hasn’t been a darling of the markets. Analysts and dealers have been pointing out that despite the company’s large volumes, its absence in the premium segment, which gives better profitability, is a key concern. Pawan Munjal, chairman and chief executive, tells Arindam Majumder that strengthening the premium segment and developing capabilities in electric vehicle will be the company’s primary focus. Edited excerpts:

What is the vision for the next decade?

From here on, we will be following our vision, which is the future of mobility. All directions, planning, and investment will ensure strong place in the future of mobility. For us, in the future, collaboration, alliance, and partnerships are going to play a big role.

What role will Ather Energy play in this route of yours?

The future is electrification. We are seeing that happening across the world. We have a three-pronged approach — our investment in Ather, our own research development, and our internal start-up.

All of them are progressing at a fast pace. Ather has been expanding very fast, opening up more and more dealerships. It recently introduced products that have been well accepted by the market. The founders are following their vision in a focused approach.

You have steadily increased stake in Ather. Will Ather become a Hero-owned firm?

Nobody has seen the future. I can only say that the founders are doing a great job and we are happy to put our might behind them. We have got results from that.

Can you give us a perspective on how fast electrification of two-wheelers will happen in India?

It’s too early to give numbers. India is very large and very vast. There is a need to set up infrastructure. We will be introducing 10 pro­ducts every year. All those 10 will not be entirely new. There will be variants and modifications, but from a customer point of view they will be new.

So far, 50 per cent of our products have been in the commuter (mass) segment. The rest has been in scooter and premium products. Going forward, the scooter premium segment will move to two-thirds of new introduction.

Scooters and premium will be two new focus areas for us.

How will you scale up in the premium segment? What will be the focus areas?

Our focus has been very clear from the product introduction. From 150 CC to 180, 200. Then the progression has been going up to the middle weights where there is development going on. We are targeting the middle-weight segment. We are also learning from rally bikes.

So, in terms of the whole pie, will there be less focus on the entry-level segment?

Absolutely not. We are not going to lose focus on our bread and butter, which is giving us the cash to invest in new segments. We have such a large pool of customers who can be brought to entry-level segment. That is not something we are going to give up. 

So, chartering into new areas means that you will be investing more in research and development?

Our focus on research and development is only on the rise. I am not giving any numbers. In 2020, a lot of revisions had to take place. We are revisiting all our investment and we will come back at an appropriate time.

What role will the tie up with Harley-Davidson play in premiumisation?

The partnership is a clear step towards that direction. The licensing arrangement will offer us many opportunities. The fact that Hero will manufacture and put the Harley badge on it is a sign of clear faith that Harley has put in our capability and is another support towards premiumisation.

After a catastrophic 2020, how do you think 2021 will shape up in terms of demand?

I am optimistic about 2021. The sentiment has been going up every day. We had a good third quarter. The fourth quarter is normally a good quarter. Internally, we have said that we will make Q4 better than a normal Q4.

What are your expectations from policymakers in order to increase demand?

I expect continued focus in rural segment. We did see a lot of focus in government’s push in the rural segment, which helped firms like us to increase sales. I see that continuing. Also, I have always maintained that in terms of two-wheeler industry what is to be done is reduction of goods and services tax. We are selling our products to common man, and 28 per cent is a very high rate.