The move would bring Hero Honda's owner, the Hero group, in competition with Japan's Honda Motor Co. Ltd, which agreed to sell its stake in Hero Honda, their joint venture, to the local partner last year. "Scooter sales at Hero Honda are still less compared to other companies in the market," said a Hero Honda board member, asking not to be named. "Going forward, the company would like to generate 20-25% of its total sales from scooters." The New Delhi-based company plans to launch six to seven two-wheeler models every year, including at least two scooters, the board member said. The company is seeking to capitalize on the resurgence of scooters, at one time regarded as a segment in decline. In 2009, two-wheeler maker Bajaj Auto Ltd said it would stop making scooters as the business was "commercially unviable". But manufacturers such as TVS Motor Co. Ltd and Honda Motorcycles and Scooters India (HMSI), the Indian arm of Honda Motor, have revived the segment. HMSI is the market leader with models such as Aviator, Activa and Dio; 55% of total sales comes from the scooter segment.
At present, Hero Honda's only scooter, Pleasure, contributes about 6% to the company's total sales. The Pleasure's sales grew at nearly 70% to 340,000 units in fiscal 2011, a Hero Honda spokesperson said. The scooter industry in India grew 31.5% in April-February over the same period a year earlier to sell 1.9 million units, according to the Society of Indian Automobiles Manufacturers, or Siam. Honda Motor's 26% stake in Hero Honda had prevented the latter from expanding aggressively in the scooter market. The Munjal family, promoters of the Hero group, agreed to acquire Honda's stake for '3,842 crore last year. "Munjals had a meeting with the dealers immediately after the break-up," said a Hero Honda dealer, requesting anonymity. "While talking about the future course of action, they had emphasized on the scooter segment but did not elaborate on the products." HMSI has also recently announced plans to expand in the 100cc motorcycle segment, a stronghold of Hero Honda. The dealer added that Hero Honda will increase scooter production to 40,000 units per month, from 27,000 at present, to meet growing demand.
Currently, all the three plants of the company are running to full capacity and the company is in the process of identifying a location for its fourth plant. The Pleasure model has undergone alterations periodically since it was launched in 2006, the Hero Honda spokesperson said via email. "Going forward, we will stay true to this strategy and keep bringing new excitement for our customers."
The spokesperson did not answer questions on the firm's sales target from scooters. "They will have to come up with good products and create a separate segment. For example, they may look in to tier-II cities, which are growing," said Abdul Majeed, India leader for automotive at PricewaterhouseCoopers India. "They need to ensure the right product for right audience." Hero Honda is eyeing women motorists to sell its new scooters, said the board member cited above. "Most of the company's focus was on male buyers. Now with the scooter market growing at a brisk pace, along with the growing women's workforce, the company will devise new strategies to target this audience."
Source: Hero
0 comments:
Post a Comment