Despite numerous electric motorcycle rollouts by multiple start-ups over the last few quarters, Hero MotoCorp affirms that the electric scooter segment is where all the action will be over the next five to seven years. A senior official of the company said that while it will be doubling down on its EV programmes, it foresees no disruption from new-age start-ups in the two-wheeler market.
"We are doubling down on our EV (electric vehicle) programmes. And within EVs, the scooter (segment) is where we see the next five to seven years as an (electric two-wheeler or E2W) industry. This is because motorcycles are even tougher at the commuter end because of the cost economics, which is why you see our tie-up with Zero Motorcycles for the performance motorcycle, which is in a premium segment," said Niranjan Gupta, who was appointed Chief Executive Officer (CEO) of the company early this year.
In Gupta’s view, EV start-ups are "hugely crowded" and there the company sees some consolidation, which will further narrow down the industry to "fewer players".
Asked if the company will look to acquire any EV start-up, Gupta said, "In any business, first the strategy matters and what you want to achieve and in what period of time. The route to that can be always organic or inorganic. If there are opportunities that accelerate what we are already embarking on, then we might look at them. It’s a build versus buy model that you continue to evaluate."
Gupta revealed that it has adopted a top-down approach with the Vida-branded e-scooters and is working on numerous models that are priced below the Vida V1. The Vida V1 is available in two variants: the Vida V1 Plus priced at Rs 1,35,705 and the V1 Pro at Rs 1,46,880 (ex-showroom Delhi, including FAME II and state subsidies). He also revealed that the company will be establishing a chain of 100 exclusive Vida outlets by March 2024.
"We consciously adopted a top-down strategy in the EV space. That’s because if you start as a commuter (player), it's very difficult to move upward towards premium. We wanted to establish Vida as a premium brand. In the next four quarters, we will be putting a product in the middle segment and the bottom segment of the e-scooters market," added Gupta.
On its plans to hive off ‘Vida’ as a subsidiary and go for a stake sale subsequently, Gupta maintained, "Those can always be on the table for shareholder value and market cap creation. I think it is important to get the business right. But we continue to evaluate different options for spin-offs as there are pros and cons."
Expansion plans in ICEV segment remain unchanged
Despite making an aggressive foray into the E2W market, the world’s largest two-wheeler maker has clarified it will not shift focus from the petrol-driven two-wheeler market. While the company is looking to strengthen its presence in the 100-125 cc commuter motorbike segment, it is also looking for a wider foothold in the premium segment.
"We have been leaders in the commuter segment, which is defined as anything up to 125 cc motorcycles. We have 65 to 70 percent market share there, and our role there is to grow the category rather than just defend or recover it," said Gupta, adding, "This year, you are going to see the maximum number of premium launches compared to any other year in Hero’s history."
Restructured distribution footprint
With a retail footprint of 6,500 stores across the country, Hero MotoCorp is working on multiple sales and distribution strategies for a brand push. While it is planning to give a facelift to 30-40 percent of its 1,000 mega outlets in 30–40 cities that will be showcasing its Vida and premium range of products (160-450 cc segment bikes), it is also planning to set up a chain of signature stores for high-end motorcycles in tier 1 cities with a ‘different brand name' for 'brand visibility' purposes.
"A combination of these two distribution strategies will ensure that we provide a different level of retail experience to the premium customer. The third pillar of winning in premium will be about the brand. That is where our collaboration with Harley (comes in). (It) was signed, and therefore, that addresses the brand part of it in terms of carrying the premium imagery," added Gupta.
Gupta also clarified that its exports have not been impacted by global uncertainties, as its overseas business accounts for just 5 percent of its total revenues.
"We are present in 40+ markets, and we are going to double down our efforts on eight to 10 big markets out of those and disproportionately put resources there. That’s going to be the likes of Mexico, Colombia, Nigeria, Bangladesh, Nepal, and Sri Lanka. We are also entering Southeast Asian markets," stated Gupta.
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