Hero MotoCorp would introduce new models in the scooter segment to not only regain its peak market share but also to grab at least one-fifth of the market.
Speaking to shareholders at the recent annual general meeting, Pawan Munjal, Chairman and Managing Director, said that the company would focus on a few models rather than stretch itself thin with a plethora of offerings.
The move is aimed at bolstering its presence in the scooter segment, which is dominated by Japanese giant Honda, followed by Chennai-based TVS. The two companies together control 75 percent of the domestic scooter market, with popular models like Activa and Jupiter.
“We have had recent launches in the scooter segment. Going forward, closer to the Diwali season, you will see more launches,” said Munjal.
The company has four scooters in its portfolio -- Destini 125, Maestro 125, Maestro 110 and Pleasure+. Hero MotoCorp’s market share, as of end-FY20, stood at 7 percent, according to data from the Society of Indian Automobile Manufacturers (SIAM).
Hero’s poor performance in the scooter segment led to the company losing its third position to Suzuki in FY20. Hero scooter sales slumped 44 percent in FY20 to 402,676 units, much higher than the 17 percent fall recorded by the industry during the same period.
“We had, at one point in time, a 19 percent market share in the scooter segment, where I am sure we will get back and we will also go beyond that,” added Munjal.
Going by market trends, Hero will most likely focus on the 125cc scooter segment, claimed to be the fast-growing segment. The company also recently highlighted this trend when it spoke about better demand for the Maestro and Destini 125cc models.
SIAM does not provide further segmentation in scooters for models below 125cc engine.
“We are focusing on a few models so that the entire investment, entire focus, entire effort goes behind those few models, few segments, to get to a higher market share which we used to have”, added Munjal.
Biggest reach
Hero MotoCorp’s sales network includes over 6,000 touchpoints, comprising around 1,000 dealers, service centres, among others, across the country. But the strongest markets for the two-wheeler leader are motorcycle-dominated states like Uttar Pradesh, Bihar, Rajasthan and West Bengal.
Hero’s motorcycles, especially entry-level models such as Splendor and HF Delux, enjoy high demand in agrarian states.
In these states, scooter penetration has been much lower than comparatively advanced states like Maharashtra, Gujarat, Karnataka and Tamil Nadu. The primary reason behind this is higher urbanisation and better proportion of quality roads.
Scooter market
Scooters have traditionally struggled to attract buyers from the rural pockets. But with Centre-funded schemes like Pradhan Mantri Gram Sadak Yojna, manufacturers like Hero are hoping for ‘scooterisation’ to reach the hinterlands of the country.
During last year, the scooter market recorded a fall of 17 percent in sales at 5.56 million units, down from 6.7 million units in FY19, as per SIAM data. The fall was due to a cyclical downturn hitting the two-wheeler market where motorcycle sales, too, fell by 18 percent to 11.21 million units.
While sales of scooters fell for two consecutive years, its share in the total domestic two-wheeler pie stood at 32 percent. Nearly one in every three two-wheelers sold in India is a scooter.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
