New Delhi: “India’s top motorcycle maker, Hero Honda Motors, is on course to exceed its 2009-10 sales target of 4 million units and aims to maintain the pace of new launches to woo customers,” company’s managing director Pawan Munjal said.
“Our growth has been due to our new launches during the downturn and huge focus on the rural markets, where we believe a lot of money has been pumped in through initiatives taken by the government,” Munjal said on Thursday.
Hero Honda, in which Japan’s Honda Motor Corp has a 26% stake, has a near 60% market share in the 7 million units a year motorcycle and scooter market in India.
The maker of top selling bikes such as Splendour and Passion has sold more than 3.4 million units, including the Pleasure scooter, in the first nine months of the current financial year that ends in March.
The company launched six new models in the last 12 months and hopes to keep up the tempo in the next two to three years.
“The customer and the market is demading that kind of pace and launches,” Munjal said.
It plans to spend Rs350 crore ($77 million) in 2010 to expand capacity, upgrade facilities and for rolling out new models. The company, which can produce 5 million vehicles a year, aims to expand capacity at its Haridwar plant in north India.
Rival Bajaj Auto recently upped the competition in the 100 cc segment with the launch of Discover, and is aiming to capture a 35% share of the bike market.
Munjal said that sluggish bank financing for buying bikes was a challenge.
“I think it is now totally at the bottom,” he said adding: “This can only improve and I wish and hope the banks will come back with the kind of vigour we had some 4-5 years back.”
In the wake of the global financial crisis in 2008, banks in India had put the brakes on lending to the automobile sector, severely crimping demand.
While loans for new car purchases and trucks have revived, financing for bikes and scooters is still to take off as the segment is seen as high-risk by lenders.
Shares in Hero Honda, whose market value had more than doubled to $7.3 billion in 2009, ended down 2.5% at Rs1,653.35 on Thursday while the main index fell 0.5%.