Revving Back Into The Race

Hero Honda's market share has been slipping but capacity expansions could take care of that problem. A report.

Hero Honda (HHML) the lead player in the Indo-Japanese motor bikes market has been slipping lately. While it had a 49.8 per cent market share in 1993-94, it has come down to about 39.4 per cent in the first half of the financial year. The gainers were TVS-Suzuki and Bajaj. While TVS-Suzuki's market share increased from 17.6 per cent to 24.1 per cent, Bajaj saw its market share go up from 13.9 per cent to 18.7 per cent. Can Hero Honda stem further erosion of its market share?

Vikram Sharma, vice-president (marketing) holds that the decrease was solely due to capacity constraints. From December 3, 1996, we stepped up daily production by 25 per cent following a capacity expansion. The last two months' sales show that we have gained six percentage points in January. Yet, we have not met the full demand of dealers, He points out to bolster his argument.

It produced 24,820 and 26,000 bikes in December 1996 and January 1997 as against 20,000 in October 1996. HHML has almost zero finished goods inventory. Historically its production is nearly always equal to monthly sales.

Hero Honda , the last entrant into this market still emerged as a market leader as it had entered with a 4-stroke model while other manufacturers had 2 stroke engines. That gave it a significant advantage since it boasted unparalleled fuel efficiency