Hero MotoCorp is rapidly losing its hold on India’s two-wheeler market, with its share dipping to an all-time low despite multiple product launches backed by the largest sales and service network amongst its peers.
From controlling half of India’s domestic two-wheeler market, Hero MotoCorp has seen its share fall to less than one-third, as per data shared by the Society of Indian Automobile Manufacturers (SIAM).
Failed attempts at grabbing segments outside the entry level bike categories, such as commuter motorcycles and scooters, are to blame for the slide, according to experts. Hero, which is known for its fuel-efficient 100cc motorcycles, has a share of just 4% of the 125-200cc bike segment and 21% of the up to 125cc segment.
The company’s warhorse 100cc bike Splendor still makes up a majority of its volumes. New launches like the XPulse 200 4V, XPulse 200 T, Xtreme 160R and the Xtreme 200S in the premium category, where Hero aimed for leadership, did not generate the expected response.
“Our exhaustive channel checks across six of Hero MotoCorp’s key states indicate that the 125cc segment is slowly emerging as a customer favourite, and as a result, contribution of 100cc has declined to 51% of motorcycles in FY23, from 58% in FY19. This shift in mix doesn’t bode well for HMC (Hero MotoCorp),” HDFC Securities said in a report.
A questionnaire sent to Hero MotoCorp remained unanswered at the time of going to print.
“HMC has lost significant market share in the 125cc segment to 21%, from 55% in FY19. This shift in mix has also led to HMC losing 510 bps share in motorcycles since FY20. While HMC has a healthy launch pipeline largely focused on the 125cc and above segments, we do not expect it to recover meaningful share, given its multiple failed attempts in the past,” HDFC Securities added.
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Moreover, competition is also heating up in the 100cc segment. Hero’s partner-turned-rival Honda is making a renewed attempt in this segment with the launch of the 100cc variant of Shine, its most successful motorcycle brand in India. This could pose a serious threat to HMC, say analysts.
“We feel demand in the entry level segment has bottomed out and uptick would benefit HMC significantly as more than 90% of volumes comes from the economy segment,” said a report from Phillip Capital.
Gunning for leadership in the 125cc scooter segment, Hero has actually fallen to the fourth position in the total scooter segment behind Honda, TVS and Suzuki. Its share in the segment has nearly halved to just 6% in FY24 from 11% in FY19.
With a portfolio of four scooters, including the recently launched Xoom, Hero MotoCorp has sold one-eighth the volumes clocked by Honda so far in FY24. While the domestic scooter segment grew 16% till May, Hero’s volumes dipped 8% during the same period.
TVS, Royal Enfield and Suzuki have grabbed Hero’s slippage in market shares. As per the SIAM data the domestic two-wheeler market share TVS, Royal Enfield and Suzuki to 16%, 5% and 5% in FY24 compared to 14%, 4% and 4% clocked in FY20, as per SIAM.