Barely over a year since the Munjals’ promoted Hero MotoCorp and Japanese auto major Honda Motorcycle and Scooter India (HMSI) parted ways, the latter has overtaken its former partner in the premium motorcycle (between 125 and 150 cc engine segment) category sales.
Data available with industry body Society of Indian Automobile Manufacturers (SIAM) shows while Hero’s sales in the premium segment has declined by a steep 53% to 80,303 units between April and October of this fiscal, HMSI registered a strong growth of 76% to sell 134,650 units in the period.
Notably, HMSI sold 54,347 units more in the 125-150 cc segment than Hero despite not having introduced any new products in the category. In the corresponding period last year, Honda was trailing behind Hero by 92861 units. The category contributes over 11% to overall motorcycle sales but has strong revenue implications as product prices are 45-92 percent higher than that of a model in the entry-level mass segment, hence, translating into higher margins for companies.
If that was not enough, HMSI has closed the sales gap with Hero MotoCorp to a mere 3418 units (April-October 2012) even in the 110-125 cc motorcycle segment as compared to 26,542 units in the same period last year. HMSI’s growth in this segment, which accounts for 19.2% of the total motorcycle sales in the industry, has been led by CB Shine that saw sales increasing by 54% to 358,711 between April and October this year.
The growth numbers in the 125-150 cc segment for Honda has majorly come from the sale of CB Unicorn, which sold 122,894 units till October this year compared to 65,007 units sold in the same period last year.
| Apr | May | June | July | Aug | Sept | Oct | |
| Hero MotoCorp (Achiever, HUnk, CBZX-Treme, Impulse) | 21,129 | 15,365 | 13,121 | 8,772 | 2,547 | 3,859 | 15,510 |
| HMSI (CB Unicorn, Unicorn Dazzler) | 17,068 | 18,141 | 20,125 | 20,186 | 19,800 | 20,533 | 18,797 |
“Our sales in the 150cc segment have been driven by strong demand for CB Unicorn particularly in southern and western markets. We had back orders last year due to capacity constraints but now with the increase in production, sales of the model have increased by nearly 90% in the first seven months of the fiscal”, said Yadvinder Singh Guleria, vice-president (sales & marketing), HMSI.
On the other hand, Hero MotoCorp attributes the fall in its numbers to disruption in dispatches due to rebranding exercises of Hunk and CBZ X-Treme, which contributes a substantial part of company’s sales in the 125-150 cc segment. “Two of our volume models Hunk and CBZ X-Treme were undergoing a rebranding exercise because of which we had no dispatches in August and September”, Anil Dua, senior vice-president (marketing& sales), Hero MotoCorp had recently told Business Standard.
But a closer look at the numbers reveal that HMSI had actually overtaken Hero in the 125-150cc segment earlier in May this year and has maintained lead since. HMSI’s market share in the segment has increased to 20% (April-October 2012) from the earlier 8.9%, while Hero’s has slid to 12% from 19.6%. Bajaj Auto with its Discover and Pulsar model continues to remain the market leader in the category with a share of over 46% of total sales.
Deepesh Rathore, managing director, IHS Automotive India said, “Hero still relies on the Splendor and the Passion for sales, HMSI has a fresher portfolio. Earlier HMSI had distribution issues, but that gap too is narrowing now. Hero used to have a lot of repeat customers, some of whom are now opting for HMSI products because of the Honda brand. Long-term, I do see Honda overtaking Hero in two-wheeler maker in India.”
Honda attributes the increase in sales to better distribution network and advertising. “Our growth is being driven by DNA – demand for our products, network expansion, and appropriate advertising and marketing. We started the fiscal with 511 full-fledged dealerships and have added 75 outlets the last in seven months. That is the pace at which we are expanding,” Guleria added.
Despite sales slowing down to a moderate 4.5% in the domestic two-wheeler market, HMSI has managed to clock in growth rate of 47% between April and September this financial year. The company has sold 1.53 million units till October. Hero MotoCorp has reported a decline of around 1.8% to sell 3.41 million units in the same period.
Hero, however, continues to be the market leader in the 75 to 110 cc segment (which still accounts for nearly 65% motorcycle sales in the country). Hero has a share of 69% in the category with best sellers like Splendor and Passion. HMSI has introduced Dream Yuga in May this year which has helped the company double sales and market share in the segment to 4.5%. But the company has a long way to go to scale presence in the category.
To close the gap with the market leader, HMSI has said it would “core products” at aggressive price points to increase consumer base in the country. It has targeted sales of 10 million units by 2020 and could be setting up 7-8 facilities to expand production capacity over the next few years.
Hero MotoCorp has already announced its intention to have $10 billion turnover in the next five years with sales of 10 million units.
