Hero Honda controls over 65% of the entry level market. Entry level bikes refer to bikes with an engine displacement in the range of 75cc to 125cc. Currently, the Splendor and Passion account for 70% of the total sales of Hero Honda Motors Ltd. These bikes are priced in the band of INR 45,000 to 55000.
Now, the company is keenly expressing interest to come up with a bike in the sub 40,000 category so as to hold a tight grip along this category. This is also a mass market, which can turn into a high profit making category at some point of time. The emphasis is mainly laid on the rural market for this upcoming bike.
“Japanese-oriented companies were dictating vehicle and component design. Now, with only the Hero Group as decision maker, things are not only faster but development of a new product can also be done cheaper. The Hero Group is now asking each vendor if it can do without foreign collaboration, etc and whether product development can be done at lesser cost,” a vendor said to the DNA newspaper.
This strategic move is observed after Munjal’s Hero group has split itself from the Japanese manufacturer, Honda. Also, remember Mr.Rajiv Bajaj had expressed his plan of coming up with a low cost bike from Bajaj, but for overseas market.
What we are not sure is if the bike will come under the splendour platform or an entire new platform be created for it. And the name of the bike is also not yet revealed.
About two years back Mr.Pawan Munjal, MD of Hero Honda was quoted saying, “Whatever we bring should certainly have a significant price advantage. Also, there is no compromising on either durability or performance”. So, look ahead to a decent performing bike from Hero Honda.
So, what we observe is that this segment has tremendous growth rate in the near future and the notable fact is that no company has marked its serious presence. As we know, Hero Honda is the market leader in entry level bike segment, which reveals the fact that there are more chances of it to conquer this new segment too.
It is expected that this bike will hit the market by April 2012 or so.
Regards,
Naren
