Hero's new bikes for a fresh premium bid

The line-up will 'woo' discerning buyers amid stiff competition

Two years before Bajaj Auto's fortune-changing Pulsar150 (150cc) bike rode onto the scene in 2001, India had already got its first sports-oriented, 4-stroke, 150-cc bike from Hero Honda (now renamed Hero MotoCorp). The Hero Honda CBZ paved the way for expensive, superior-performance motorcycles

Despite being expensive (the first to breach a Rs 50,000-tag), the CBZ instantly garnered a fan-following, thanks to a Honda-developed engine and its power, ride and handling features. With a top-speed of 125km/hr, the CBZ was faster than most other motorcycles at that time.

But the trail blazing was short-lived. The CBZ struggled to keep its lead and Hero has not been able to make a mark in the premium segment ever since. Hero's failure in the segments with engines of 150cc and above has been seen as the result of its inability to keep buyers excited and the onslaught of competition.

Bajaj's indigenously-developed premium bike, Pulsar, hit the sweet spot and has not let go of its lead till date. The Japanese two-wheeler giant Yamaha too rejuvenated itself by launching the FZ, Fazer and R15 (all 150cc) after several years of hibernation. Honda (after breaking off from Hero) strengthened its portfolio with the Unicorn (150cc) and the CBR150.

Hero could not repeat in the premium segment the kind of growth it had registered with the Splendor, Passion and the Dawn in the entry segment (100cc-110cc, which comprises 63 per cent of overall bike sales).

Since the launch of the CBZ (now renamed Xtreme) in 1999, Hero has expanded its offering to six premium models, the highest count in the segment. Yet, it has just 15 per cent share by the end of September, according to the Society of Indian Automobile (Siam).

The four 150cc-engine models - the Acheiver, Hunk, Xtreme and Impulse - and the Karizma and Karizma ZMR (fitted with larger engines) comprise Hero's premium portfolio. Impulse, an off-road, dirt bike, was the first it had showcased at London's O2 Arena in 2011. But dealers maintain the Impulse has been one of the slowest-moving bikes under brand Hero.

Senior company executives agree that Hero has failed to grab a larger slice of the premium pie, which is dominated by Bajaj with a share of more than 40 per cent. Hero, more used to the staid needs of the humble economy segment, could do with being more nimble in adapting to the changing demands of the dynamic premium-bike buyer. Anil Dua, senior vice-president (sales and marketing), Hero MotoCorp, says, "New models become very important in the premium segment. Buyer requirements change more rapidly than in other segments".

The need for speed in new premium product launches is the first thing the company is addressing to fare better. Hero will roll out a totally new range of premium bikes in 2014 that it has developed with its partners, EBR (of the US) and AVL (of Austria).

The Impulse will be relaunched with a more powerful variant in the following months, as will the Karizma, Hero's most powerful bike, that will have a substantial face-lift. More will be launched in the category at the Auto Expo in February next year.

"Clearly, we are now unleashing products which are developed wholly by us. If you are not bringing new models in this segment then you are losing out. We were late entrants in the premium market that has become radically dynamic. We have not been able to capture the market but we are targeting a share of 20 per cent," says Dua.

In comparison, Hero has 66 per cent share in the economy segment with six products. While maximum mileage helped it maintain an iron grip on the volume market, consumers chose competition when it came to higher-powered bikes. Though its share of the economy segment has dropped from 85 per cent five years ago, to 3.17 million units, Hero still commands the largest in overall two-wheeler sales.

An analyst says, "Low-cost, high-mileage bikes bring good volumes but profitability is driven by the premium bikes. Hero will have to create a success story in this segment, amidst competition that is higher than ever".