Hero Motocorp Expects Two-Wheeler Growth Beyond 10% in FY24

Hero Motocorp, the country's largest two-wheeler maker, expects that the two-wheeler industry will also expect growth in the coming year. The company expects the two-wheeler industry to grow beyond 10 per cent, driven by buoyancy in urban and rural sentiments in the current financial year. 

Hero Motocorps Current Standing in the Market

Hero MotoCorp's newly appointed CEO, Niranjan Gupta, has expressed optimism about the 

current macro indicators. This positive outlook is driven by the government's capex push, successful Rabi crops, strong GST collection, and healthy water reservoir levels. Gupta believes these factors will boost consumer sentiment and employment, benefiting the two-wheeler industry.

The current standing of Hero MotoCorp has improved from 47 % to 60 % in FY20. This significant improvement helped to counteract the impact of cost inflation and enabled sales of more premium variants within the same brand. Additionally, the company is focusing on upgrading its existing retail format and has already established 20 pilot stores with a new retail identity. 

They plan to transition 500 stores to the new format in the next two years. Furthermore, Hero MotoCorp is actively working on expanding its core business of commuter 100cc-125cc motorcycle segments and recovering market share in the 125cc segment.

Highlights of Hero Motocorp’s Growth

It highlights the company's growth possibilities in particular. Gupta stated that the business intends to increase two-wheeler penetration by attracting first-time purchasers, expanding retail finance penetration, and utilizing its extensive network. 

Challenges Faced 

He said on the recent price hikes, "Commuter segment customers faced significant challenges due to substantial cost inflation and the impact of the Covid-19 pandemic. As a result, prices in this segment have gone by over 30 per cent. However, with the gradual recovery in consumer confidence, the company expects growth in this segment." 

He also stated that retail financing penetration is increasing at 60%, up from 47% in FY20. "It helped dilute the impact of cost inflation and enabled sales of more premium variants within the same brand," Gupta added. Furthermore, the organisation is trying to improve its current retail structure. It has already opened 20 pilot stores with a new retail brand and expects to convert 500 locations to the new format over the next two years.

Business Expansion Plans of Hero MotoCorp

Hero MotoCorp is actively working on expanding its categories in the commuter 100cc-125cc motorcycle segments. The company can tap into additional markets and increase its market share by venturing into new segments.

Recovering market share in the 125cc segment is a strategic move by Hero MotoCorp. The company already holds a dominant market share of 80 per cent in the commuter motorcycle segment. Therefore, focusing on the 125cc segment allows the company to explore new opportunities and attract a different set of customers.

About Hero XTEC Variants

The introduction of XTEC variants, which are feature-rich motorcycles, is a smart move by Hero MotoCorp. These variants offer enhanced features and technology, which can attract customers looking for more advanced options in the commuter motorcycle category. XTEC variants already comprise 25 per cent of the company's portfolio.

The success of the Super Splendor XTEC, gaining a 3 percentage point market share within three months of its launch, is a positive sign for Hero MotoCorp. It indicates that customers are responding well to the feature-rich offerings in the 125cc segment. 

Entry into other Segments by HeroMotocorp

Hero MotoCorp has received a positive response for its new scooter model, Xoom. The company plans to introduce several new models in the 100cc and 125cc scooter categories. It indicates Hero MotoCorp's intention to cater to a wider range of customers and provide them with more options in the scooter segment.

Partnership with Harley Davidson

In the premium segment, Hero MotoCorp recognises the need to improve its market share, which currently stands at just 3%. The collaboration with Harley Davidson in the 440cc segment is a significant step for Hero MotoCorp. The partnership can help the company gain credibility and access a new set of customers who are interested in the Harley-Davidson brand.

Hero MotoCorp is also planning to launch over 100 exclusive stores for premium products in the next 12 months. 

It demonstrates its commitment to enhancing the buying experience for premium customers. These exclusive stores will likely provide a specialised environment for customers to explore and purchase premium motorcycles. 

Before you go, do check - Comparison of Hero Passion Plus and Honda Shine 100

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