New Delhi: India’s largest two-wheeler company Hero MotoCorp Ltd is working on regaining the market share it lost in the first half of this fiscal.

The company expects to sell at least one million bikes in October and November backed by newly added capacity and in anticipation of pent-up demand driving sales during the festival season, Anil Dua, senior vice-president, marketing and sales, said in an interview.

A delayed monsoon, the shradh period that Hindus consider inauspicious and the slowing economy may have kept buyers away but improving economic sentiment following a slew of pro-growth measures is lifting overall sales. Not for Hero, though.

Hero’s market share since April has declined 3 percentage points to 42% because of the slowing economy, production adjustments at its plants in August and September, and in part because of growing competition, especially from erstwhile partner Honda Motorcycles and Scooters India. Hero’s stock has declined about 12% since April.

“But this month, we are confident of selling more than 1.5 lakh (150,000) of Splendor (Hero’s largest-selling bike) and more than five lakh units in total," said Dua. “ We will do similar numbers even in November."

“Hero has not lost market share due to a brand change exercise from Hero Honda to Hero, the impact is due to the overall market slowdown and production adjustments that we did last quarter. We had to reduce production of Splendor by 25,000 units," Dua said. “Production adjustment that we made in 100cc is essentially on account of industry slowing to negative 5% in the last quarter."

In the six months to September, overall two-wheeler sales grew 3.12% to about 6.8 million. But sales at Hero declined 14% in the September quarter—its sharpest monthly drop in a decade, Mint reported on 20 September. Honda’s market share, meanwhile, grew from 15% at March to 20%.

An analyst tracking the sector said the dent on Hero’s market share was a consequence of Honda’s growth over the last six months. But he also said that “from now onwards, I do not expect the road for Honda to be as smooth as it has been".

The analyst, requesting anonymity, explained: “Whatever share Honda has gained, that always belonged to them as they did not have capacity to produce 20% of the market. Now that waiting period on all its (Honda) models have gone with additional capacity being added, I expect that the company will focus on defending the market share that it has gained from Hero and Bajaj."

Hero’s Dua expects the festival season will define the market dynamics in the Indian two-wheeler industry.

“A clearer picture on likely full-year growth of the market will emerge only after November. These two festive months of October and November are very crucial for industry and us," Dua said. “Festive season serves as stimulus in the market. Also, rains were delayed but their eventual arrival has improved sentiment. So we are banking on these two months to realize the pent-up demand."

The sales of bikes launched under the Hero badge post the company’s separation with Honda have grown monthly, he said. “Whatever I am launching under Hero brand is going through the roof. I have to increase the capacity of our 125cc bikes by 15,000 units per month due to the response we are getting on Ignitor. Maestro’s success is forcing us to increase capacity for scooters by 20,000."

On an average, Hero has sold 5,000 Ignitors a month since it launched the bike in June, and Maestro, the second scooter from Hero’s stable, sells 20,000 units a month.

Honda’s share of the scooter segment fell from 52% in the June quarter to 49% in the September quarter, while Hero’s share of this segment rose from 15% to 17%, according to the Society of Indian Automobile Manufacturers.

In bikes, Splendor continues to lead the Indian segment by a huge margin, Dua said. Hero sold over 1.2 million Splendor bikes in the first half of this fiscal, and the Passion close to 700,000 units, according to the company.

“Market dynamics in the two-wheeler segment is changing rapidly. While Hero is in a transition phase, Honda is getting aggressive but yet Hero will have an upper hand purely due to its marketing network and a wide range of products," said a consultant, who, too, did not want to be identified. “What happens in October and November will decide the future course of action in the segment."

Hero is scheduled to declare its quarterly financial results on Tuesday.

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