New Delhi: Hero MotoCorp Ltd, the country’s largest two-wheeler maker, could see its market share shrink further with rivals seeking once again to challenge the company’s strongest selling models—motorcycles with 100-110cc engines. And, while Hero looks set to lose overall motorcycle market share in 2013, erstwhile partner Honda Motorcycle and Scooters India Pvt. Ltd (HMSI) will gain, analysts said.
Hero’s rivals have tried making inroads in the segment before as well, but the Munjal-owned company has so far managed to protect its market share by offering a wider range of products, aggressive marketing campaigns and leveraging its marketing network. There are 17 models in the 100-110cc range on offer from various manufacturers and that number is about to increase.
Rivals are now bidding for a fresh attack on the market leader by offering products in the mass commuter segment with new features. Hero may find it difficult to stave off the challenge and matching such innovations as it’s still in the process of consolidating its research and development after separating from Honda Motor Co.
Hero is up to the challenge, said Anil Dua, senior vice-president (marketing and sales).
“With the enduring success of our established brands such as HF Dawn, HF Deluxe, Splendor and Passion, we aim to not only protect, but also consolidate our presence in this segment with new news and clutter-breaking communication as we go forward,” he said in an email response.
“Competition is not new to us. The 100cc segment, being the largest, has always seen intense action with multiple brands being launched by various manufacturers. While several competitors have made numerous, novel attempts in the past, Hero MotoCorp has always remained the clear leader in the 100cc market and now commands a lion’s share of this segment,” he said.
HMSI, the Indian two-wheeler unit of the Japanese auto maker, will introduce its third offering in the segment this year. Mahindra 2 Wheelers Ltd, a subsidiary of the $15.9 billion (around Rs.87,450 crore) Mahindra and Mahindra Ltd, announced on Saturday its re-entry into motorcycles with two 110cc bikes—the Centuro and the Pantero. Hero’s traditional rival, Bajaj Auto Ltd, said on Monday it will start selling the 100cc Discover 100T this month.
In the April-November period, Hero had a 69% share of the 75-100cc segment, which accounted for 64.57% of total motorcycles sold, according to the Society of Indian Automobile Manufacturers (Siam).
In the first eight months to November this fiscal, Hero’s motorcycle market share declined three percentage points to 52.54% while that of Bajaj dropped one percentage point to 25.23%. In contrast, Honda’s share rose more than four percentage points to 11.47%, thanks to the popularity of the Dream Yuga 110cc model.
According to Siam, Hero’s sales in the mass segment declined 6% to 3.2 million units, while in the 125-150cc segment its plunged 50%.
Hero’s share is likely to decline 1-2 percentage points in the next 12 months, said Mahantesh Sabarad, senior vice-president (equity and research), Fortune Equity Brokers Pvt. Ltd.
“With its new plant being operational, Honda will not have any production constraints and it will only raise its share. Not only Hero, but others will also lose market share,” he said.
A consultant, who spoke on condition of anonymity, also said that Hero’s dominance in the segment will shrink.
“That’s only logical with more companies coming in. That’s what happened with Maruti (Suzuki India Ltd). Their share came down from 80% (to 38% now) as more companies entered the market. So, it’s not rocket science,” the person said. “Any newcomer’s probability of chipping into 70% (Hero’s market share in 100cc bikes) is higher than the rest of the market.”
However, Bajaj aims to rejuvenate the segment with its offerings, according to K. Srinivas, president (motorcycle business).
Buyers “had to be satisfied with boring and undifferentiated 100cc bikes”, he said. “While 100cc bikes do offer good mileage, their style, features and performance leave a lot to be desired,” Srinivas said in a press release Monday.
Bajaj claims its Discover 100T has the power of a 125cc bike and the mileage of a 100cc one.
Meanwhile, Mahindra’s yet-to-be-launched bikes incorporate new features such as central locking, lamps to help riders locate their bikes in a parking lot, a digital console with an in-built, programmed service indicator, and distance-to-empty fuel calculator.
“Our motorcycles have a host of innovations, which have been made with a lot of thoughtfulness for our customer’s stated and unstated needs. Mahindra Centuro is the most advanced 110cc motorcycle in India with unique first-to-market features,” said Viren Popli, executive vice-president (strategy and market development), Mahindra 2 Wheelers.
Sabarad said consumers in the segment are still sensitive to price and mileage, which gives Hero an advantage as cost of maintenance is lower for bikes made by the Munjal-owned firm.
“Price will still matter the most. Extra features are unlikely to bring in more consumers. Consumers in the segment will refrain from paying more for certain added features,” he said.
The consultant cited above said new features will win over consumers if they help boost mileage. HMSI declined to participate in the story.