Positive expectations from festive season: Hero Honda

Q: How do see that - your margins have improved and going forward, do see this trend because we have been hearing from you that there could be a margin pressure in the coming quarters but going forward do see some relief on that front?

A: Right. So over the past couple of quarters, we have been talking about pressure on the margins and we seen it happen. Going forward, it all depends upon how the input cost behaves, especially the commodity prices. As I said, for the time being, they seem to be doing alright.

But while I have said that steel prices have still gone up in the recent past, I hope there are no further increases.

In fact we would be looking forward to some reduction in commodity prices. If that happens, things should work out well. Also, on the other side, we are also hoping that there would be further reductions in the interest rates so that our consumers can benefit and we can once again start getting big numbers.

Especially now that we have the festive season on, the sentiment is good. So if that input also happens things should be looking good.

Q: You talked about the interest rate, how much has that impacted in your business? We know 90% of the bikes are financed. So how much of that has really impacted your business and what can you expect after there is some improvement on that front?

A: As we have all seen that in the first six months of this fiscal the overall two-wheeler industry has declined and declined badly. Fortunately for us, at Hero Honda, we just about declined by just over 1% and especially in the last two months, August and September we’ve done fairly good numbers and going forward, at least in October-November-December, we are hoping to do much better.

Q: We know that you have just achieved a landmark figure of 2 crore bikes, possibly the world’s only manufacturer to have done it in the shortest span of time. Also your new Hunk was launched yesterday. Going forward, what is the company’s focus going to be in terms of segment? Are you really going to focus on premium end bikes because you see better margins there?

A: As I have been saying, with the launch of the new 150 cc Hunk, the company clearly has a focus and clear outlook on all three segments. In fact, in the recent past, when the market was doing badly, we have outperformed the market and have improved our share in all the three segments. We have done well in all the three segments.

Of course, we put in a fourth product in the premium segment after Karizma, Achiever, CBZ Xtreme, because we do believe that that is a segment, even though it is a small percentage of the overall two-wheeler pie, that is a segment that is going forward where the youth is.

And India being a young country, I think we want to focus there and we let them influence the rest of the two-wheeler markets. Even though, the entry-level segment is very different from our premium level customer, but that is how you influence your customers, the overall markets.

Q: You have about a dozen vehicles in the market today. How many more can we expect and what is the sort of product mix that is helping you get that? Also, one question on the scooter market. We know that that is one exception that is growing. So, you have just one product there, Pleasure that was refurbished recently. Going forward do we see more products for the scooter market as well?

A: On the question of our product range, I think we have a very wide range and a complete range from 100 cc to 230 cc today covering all the three segments. And between the last fiscal and six months of this fiscal, we have already put 8+5 new models and variants, which is a huge number. Everything practically that we are producing today is new, it is either a new variant or a completely new model. So, I think this should be really good for the consumer out there, and also we have our hands full in production, in design, and everywhere else, and dealers also need to put in a lot of focus for new models and variants. So, today we have already given a fairly large, wide and good range to the customers.

As far as the scooter goes, yes, the Pleasure scooter is doing very well, and the scooter segment is growing and as you said, we have recently refreshed the scooter and also with the new ad campaign, we are doing very well on the Pleasure scooter. Going forward, of course, we would be expanding that segment as well.