BackHero plans Honda Activa rival to tackle sales slump
Company defers release of new bikes, speeds up work on a 110cc scooter to meet July launch deadline
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New Delhi: Hero MotoCorp Ltd has deferred the launch of new motorcycles and speeded up work on a scooter to counter former partner Honda Motor Co.’s best-selling Activa, said three people familiar with the development.
The move by India’s largest two-wheeler maker comes in the backdrop of slowing growth in the motorcycle segment—where Hero remains the leader—and Honda’s advance in the fast-growing scooter segment.
The Activa rival—a 110cc, full metal body unisex scooter under development—is being put through rigorous trials to meet the July launch deadline. It will have features such as external fuel filling, telescopic front suspension, tubeless tyres, digi-analogue console, integrated braking system,remote-controlled seat and fuel lid opening, a USB mobile charging unit and a light in the under-seat storage. This will be followed by another scooter Dash, which the company had displayed at the 2014 Auto Expo in Delhi along with two other models Dare and ZIR, said one of the people mentioned above. The motorcycles that were supposed to be launched included Hero’s much-awaited HX 250cc sports bike, its first indigenous product that would have proved its technological independence.
The company was also planning to launch two new platforms for its iconic Splendor and Passion brands. “While the new range of motorcycles, including the 250cc sports bike, were originally scheduled to be launched in the first half of 2015, the company wants to hold them back for some time," a person familiar with the development said.
Calling it “speculation", a Hero spokesperson declined to comment on future product models.
Another person aware of the development said Hero did not display the model at the Auto Expo due to competitive reasons. “They want to take Honda by surprise," said this person, requesting anonymity.
A third person who has business relations with Hero also confirmed the development.
After separating from Hero, Honda has introduced motorcycles in the 100-110cc segment, traditionally a Hero stronghold.
Between April 2014 and March 2015, sales of scooters grew 25.06% to 4.5 million units while motorcycle sales grew 2.50% to 9.8 million units in this period.
The motorcycle sales have declined for the sixth month in a row due to poor demand in rural India, where economic activities have been affected by unseasonal rain and poor harvest.
Scooters accounted for 58.68% of Honda’s total sales in 2014-15 while 12% of Hero’s total sales come from this segment. “Going forward, Hero will increase focus on scooters, which has very much become an urban phenomenon. There will be more variants of Pleasure and Maestro," said the second person.
Ever since the two companies parted ways, Hero has been in a state of transition. Its first indigenous product is yet to hit the market, and the lack of technology is seen by analysts as a constraint for Hero’s future prospects.
The company is developing its own capabilities through partnerships with Austrian engine developer AVL List GmbH and Italy’s Engines Engineering SRL and Magneti Marelli SpA. It has also bought a 49.2% stake in US-based Erik Buell Racing (EBR) for $25 million (around ₹ 150 crore)—the Indian company’s first such investment outside the country.
Hero showcased a range of new vehicles during the 2014 Auto Expo. These vehicles will be developed by Hero on its own with some of the technology sourced from the tie-ups it has made worldwide.
An industry consultant, who also did not want to be named, said despite Honda’s strong performance in the two-wheeler market, its sales have come only from scooters. “Barring the exception of (CB) Shine (125cc motorcycle), the new motorcycles—including the Dream Yuga series—are finding it difficult to make a dent in Hero’s share," the consultant said. Honda’s motorcycle sales grew 6.4% to 1.65 million units during 2014-15.
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