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Hero MotoCorp market share at 12-year low

Swaraj Baggonkar  |  Mumbai 

Surging competition and a host of other reasons have led to a marked fall in the July market share of two-wheeler maker Hero MotoCorp, hitting a 12-year low.

According to industry sources, the Delhi-based company closed last month with a 36 per cent market share in the domestic two-wheeler industry. It has already lost the leadership position to rival Honda in eight states and Union territories.

Hero's July market share was only better than its 2002-03 position with 33.94 per cent share, data provided by the Society of Indian Automobile Manufacturers (Siam) show. The market share has fallen below 40 per cent for the first time in 11 years after hitting a peak in 2008-09, clocking 49 per cent share.

Meanwhile, the country's third-largest two-wheeler manufacturer, Honda Motorcycle and Scooter India (HMSI), closed last month with an all-time-high share of 29 per cent. The Japanese company has significantly closed the gap with Hero after the two broke their relationship four years ago.

Rural demand, which forms the backbone of Hero's domestic volumes accounting for as much as 40-50 per cent of its total sales, has taken a severe hit since the past one year. Low agricultural output due to erratic weather and drop in government-backed upliftment schemes has led to crippled incomes in the rural areas.

Economy bikes such as Splendor and Passion, accounting for 70-80 per cent of its volumes, have a bigger consumer base in the rural areas. The company has not been able to grow sales as effectively in segments above the two mentioned brands. Pune-based Bajaj Auto is the market leader in the 150cc and above premium segment, while HMSI is the leader in the 125cc commuter segment.

With the launch of CT100 and Platina (ES) Bajaj's share in the entry-level 100cc motorcycle segment has jumped to 40 per cent in seven months, against under-20 per cent earlier.

Even its scooters Pleasure and Maestro, which are mostly sold in the urban markets, have seen a sharp reduction in sales in the first quarter this year. Hero's scooter sales dipped by 20 per cent to 148,908 units against 185,778 units sold in the same period last year. During the same quarter the scooter segment grew 7.25 per cent to 1.07 million units led by robust growth of 20 per cent by HMSI.

Meanwhile, Chennai-based TVS Motor has beaten Hero to emerge the second-largest scooter seller in India. The company, which posted a sales growth of 6.24 per cent in the June quarter of this year at 156,975 units, enjoyed a share of 14.5 per cent, against 13.79 per cent share of Hero, according to Siam data.

Hero's domestic two-wheeler market share could come under further pressure as Bajaj has said it is confident of achieving a market share of 23 per cent in the motorcycle segment up from the current 18-19 per cent presently by the end of March. HMSI is confident of clocking domestic volumes of 4.5-million-unit sales this year, which would translate into 26-27 per cent market share.

"It is grossly unfair and absolutely misleading to talk about month-to-month fluctuation of market share, particularly when Hero MotoCorp currently has its all-time-high YTD share of over 71% in the 75-110cc segment and close to 51% in the 125cc segment at the end of Q1 of FY15. Our share in the domestic two-wheeler market is 40% and in motorcycles it is 54% at the end of Q1. We are still not resting here; going forward, we will strive to keep consolidating our leadership with a slew of new launches of motorcycles and scooters lined up this year.

"The historical data quoted by you on monthly share is inclusive of exports and that's not the way the industry calculates market share. Even then, the historical data is factually wrong, as we had a market share (inclusive of exports) of over 37% in July 2012," the company said.

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First Published: Mon, August 03 2015. 00:49 IST