Hero MotoCorp looking to sharpen focus on ICE and EV scooters, widen portfolio in premium motorcycles

Niranjan Gupta, CEO, Hero MotoCorp

After augmenting its presence in the entry-level and executive motorcycle segments, Hero MotoCorp is now gearing up to launch scooters that are petrol-driven and also battery-powered during this fiscal. This was revealed by a senior company official who also hinted at new premium motorcycles in the pipeline.

“There will be a big product action on the scooters front on both ICE (internal combustion engine) and EV (electric vehicle) sides during this fiscal. Our new launches will  enable us to re-energize our scooter segment. That will be our path to increasing market shares,” Hero MotoCorp CEO Niranjan Gupta said during a Q1 earnings call with analysts.

He revealed that in the ICE scooter space, the current 125cc Destini will see a full body change, adding, “It is will be unveiled soon, maybe next month itself." He also said that this will be followed by the models in Xoom portfolio, where it already has products from 125-160cc. “So big action on the scooters, which will happen within this fiscal.”

The world’s largest two-wheeler manufacturer will also be intensifying its focus on the EV market with its Vida brand by expanding its lineup from two models to four this year. While one of these new electric scooters is expected to be budget-friendly, the other  will cater to the mid-range bracket.

“In the EV segment, we have been talking about the range expansion, you will see portfolio expansion into the mid and affordable segment within this fiscal. So I would say a huge action on both ICE and EV scooters,” added Gupta. He also indicated that the upcoming models will be compliant with the government's Production Linked Incentive  (PLI) scheme.

According to him, the company has a 5 percent market share in the electric two-wheeler market and is well-placed to double down on volume growth. "All the players leading the EV market had zero market share in ICEV (conventional two-wheelers). So this is disruption which is happening in the scooter category, and actually our low market share in ICE scooters benefits us here because when the category gets disrupted, that's when one actually has a better chance in terms of gaining (0verall) shares. The game has just begun and we will continue to ramp up our volumes."

The Pawan Munjal-led company also anticipates robust demand during the festival season for the newly launched Xtreme 125R (priced at Rs 1,32,832, ex-showroom). The company plans to increase the monthly production capacity of the 125cc motorcycle from 25,000 units to 40,000 units in the coming months.

Training its guns on executive and premium segments

Gupta highlighted the strength of their 125cc model lineup, which includes Glamour, Super Splendor and Xtreme 125. “While Glamour is being revived, Super Splendor is getting anchored on mileage. Then we have the Xtreme 125, which is appealing to the youth. With the new launches, our 125cc segment portfolio now is pretty strong and the action there is to ramp up and keep increasing the market shares every quarter,” he pointed out.

He also reaffirmed that the company will continue to hold on to its market leadership in the commuter segment comprising 100-110cc motorcycles. At present, it sells the Splendor Plus, HF Deluxe and Passion Plus in this segment.

“When we look at the entry and 100 and 110cc (segments), we've already seen last year, the Passion refresh has done very well, which has resulted in us maintaining our formidable market share in the deluxe 100 and 110 cc segment, almost at 90 percent," he said.

Gupta also said that the company is upping the ante in premium motorcycles (250cc to 500cc models). Apart from ramping up the capacities of models launched last year such as the Karizma XMR, Hero Mavrick 440 and Harley X440, there will be some new additions to the portfolio.

“Last year we had a slew of lunches and the portfolio building will continue. So, you will see some action on the premium end within this fiscal, where we will have...more models coming in within this fiscal,”’ Gupta said in response to an analyst's query. Gupta also hinted that Hero is working on hybrid technologies for the long term apart from focusing on alternative fuel variants.

"The market will continue to see alternative powertrain technologies. We are working on flex fuels, ethanol-based fuel technology. In the long term, there are hybrid technologies also being worked on," Gupta said when quizzed about the potential of compressed natural gas (CNG) powertrains in the market and whether the company has any plans along those lines in the medium term.

Output halt at Bangladesh facility

Gupta preferred to term the closure of its Bangladesh facility as a “temporary disruption” against the backdrop of the political upheaval in that country and was confident that the plant will reopen soon.

“Yes, Bangladesh is a bit of a setback, but we are focused on keeping our employees safe there in line with our philosophy of being a caring organisation. Overall, Bangladesh forms around 0.3-0.4 percent of our total revenues. The operations will resume. (As), the new government has come into place, the plants are reopening. It is not something that will have a medium or long-term impact. It is a short-term disruption," noted Gupta.

The CEO also said that Hero MotoCorp has earmarked Rs 1,000-1,200 crore for capital expenditure this fiscal year and would spend 2.2 percent of revenue on product development.