Hero aims at regaining 50 per cent market share

After a steady decline in market share, Hero Moto-Corp, world's largest two-wheeler maker by volumes in a bid to maintain its pole position, is slated to introduce a slew of indigenously developed products to regain its 50% pie in the Indian bike and scooter market.

"I am confident of not just retaining our leadership, but also of taking our market share to an alltime high by exceeding our previous best," Pawan Munjal, MD & CEO of Hero MotoCorp, told ET in an exclusive interaction on Wednesday. "We are sure of gaining market share even beyond 50%, and my confidence stems from all the stuff that we have been doing, in terms of technology, new products, people empowerment and global expansion. At the same time, our focus is also equally on improving margins."

Hero's market share for the March ended fiscal came down to 42.85% in the 13.97 lakh units Indian market. The company has enjoyed around 49% of the pie just five years back till 2009 fiscal. The erosion largely is impacted by the growing dominance of its erstwhile joint venture partner Honda Motors of Japan that is making steady inroads in the Indian two-wheeler market. Both the companies parted way in December 2010. Honda that has entered the Indian two-wheeler market in 2000 has steadily increased its share to around 20% in the current fiscal on strong demand for its newly launched Dream series bikes even as it continues to maintain leadership in the scooter segment.

Hero MotoCorp still commands well over 50% share in the domestic motorcycle market, even as its overall volumes has been falling in recent times. The company has been consistently gaining share in the fast-growing scooters market with its twin offering Pleasure and Maestro that command 19% share in domestic sales. Honda has an overall 49% share in the 3-million-strong scooter market. After going solo, Hero is planning to introduce its indigenously developed products next month. It has successfully fired the 100cc,125cc to 150cc engines that would be used in its future bikes and scooters and suitably adapted for the existing product line.

Hero MotoCorp has also initiated a dedicated project for margins improvement called "Leap 20", whereby it is aiming at cost optimisation across functions. The company's margins have been under pressure for the past few quarters on account of higher input costs and the expiry of the 100% tax exemptions of five years at its Haridwar plant. It had posted fourth consecutive drop in quarterly net profits for the June ended period, largely on declining volumes and higher tax burden incurred at its largest manufacturing facility in Haridwar.

Under the cost rationalisation initiative, to be spread over two and half years, the company is working on further rationalising its material and design costs and cut wastages. "We have undertaken this massive exercise along with McKinsey with strict deadlines to optimise our resources and prune our major items of expenditure like logistics cost and marketing expenses," Munjal added.