Hero guns for leadership in scooter market

Launches Duet and Maestro Edge scooters

Hero MotoCorp, the country's largest two-wheeler maker, is eyeing a leadership position in the fast expanding scooter market where its market share (of 13 per cent) is way behind the leader and former partner Honda.

Hero, which enjoys a 52 per cent share in motorcycle market, on Tuesday expanded its presence in the scooters with the launch of two products - Duet and Maestro Edge. Maestro Edge has been priced at Rs 49,500 to Rs 50,700 (ex-showroom, Delhi). Price of Duet will be announced next month. Until now, Hero had two scooters in its portfolio - Pleasure and Maestro.

A growth in scooter volume from new products makes business sense for Hero, which pays royalty to Honda on Maestro. Since the two new products are developed by Hero there is no royalty component. "The target is to gun for leadership in scooters. I know it is not going to happen overnight," said chairman and managing director and chief executive Pawan Munjal.
 

Growing urbanisation and improved mileage has triggered a growth in scooters in the past few years. In the year ended March, domestic sales of scooters grew 25 per cent to 4.5 million units, while motorcycles sales grew by a mere 2.5 per cent to 10.7 million units. In fact, scooters helped the overall two-wheeler market report a healthy growth rate of eight per cent past year.

The growth in scooters remained strong this year, too. In the April-August period, sales of scooters grew by 11 per cent, while motorcycles sales declined 4.3 per cent, impacted by sentiments in rural markets.

Rural economy has been affected by unseasonal rains early this year and a deficit monsoon. Obviously, Hero also saw its sales decline 7.5 per cent in first five months of the current year due to a portfolio skewed heavily in favour of motorcycles. For Hero, scooters currently contribute less than one-tenth (9.5 per cent) of volumes. For Honda, the second-largest two-wheeler player, scooter makes up for 65 per cent of volumes.

"Today's launch is a step towards leadership in scooters. A market share of 13 per cent in scooters is less than what Hero deserves. We expect the scooter market to continue growing at double digits," said Ashok Bhasin, head of sales, marketing and customer care. Indicating that a healthy product pipeline is underway, Munjal said, "This is only the beginning for Hero in terms of new product launches. A lot of work is being done by our research and development team."