Will Hero Honda Retain it’s Sweet Spot Again?

When Japanese automobile giant, Honda, partnered with Hero Group of India in 1984, little did the world know that this JV would garner as immense success as it did. Hero Honda has been the world’s largest automobile manufacturer for many years in a row now and even saved its parent company from the deadly arms of recession.

And it’s no hidden secret that they have always banked upon that versatile 97cc engine which does duty on Splendor, Passion and other CD series of bikes. Splendor is the single largest selling model in the world. If you read our monthly sales report, you would know how big a difference it is between Hero Honda and countries second largest seller, Bajaj Auto.  Hero Honda majorly banks on the sub 125cc segment with innumerable models placed in this segment and why not when this segment accounts for almost 75 percent of the share of Indian market. Hero Honda benefitted directly when Bajaj called for an exit in the 100cc segment citing lesser profits as the reason a couple of years ago. Hero Hondas sales soared to new highs and eventually they gained more margins from this segment. Later, Bajaj understood the mistake and returned back to this segment. But this time, the ploy was slightly different from the earlier times. Previously Bajaj did not have a proper model and strategy to make a mark in this segment.

This time Bajaj came out with a 100cc bike and named it under its more prominent Discover brand. The bike turned out to be a runaway success for Bajaj as they sold zillions of them in a very short span of time. Now where did these sales come from? Direct from Hero Hondas pie! The figures speak for this fact. In 2008-09 Hero Honda had a market share of 80 percent in this sub 125cc segment with Bajaj gasping for breath at 10.5 percent. But for the just bygone year 2009-10 Bajaj’s share rose to a new high in this segment at 17 percent whereas Hero Honda lost ground with 74.6 percent of the market share.

Many would say that there is still a yawning gap between these two figures. And then how about sharing the remaining (25 percent) share of the market! With Bajaj’s concentration mainly on the over 125cc segment, they hold a 50 percent market share with its Pulsar brand of motorcycles dominating the scene. Hero Honda is a minor player in this segment and frankly speaking, their laid back attitude for performance seekers has never been appreciated by even the best of Honda diehards. To make the matters worse for Hero Honda, this segment has been growing at a tremendous pace and growing number of Pulsars and Apaches on the roads is a visible example of the same. So does Hero Honda only have to be cautious of Bajaj? Ok here comes story number two! The fully owned subsidiary of the parent company, HMSI (Honda Motorcycle & Scooters in India) has very recently ventured into this segment with its 110cc offering, the gorgeous CB Twister. In a very short span, Twister has received tremendous response from the crowd. As we tested that bike, I am sure that it has all the ingredients to become the second Splendor for Honda. Now who stands to lose from here on? A unanimous voice would scream ‘Hero Honda’!  So does this mean we are set to witness a turnaround of events in the Indian motorcycling market with Bajaj and HMSI threatening the lives of the ever so confident (and lazy) Hero Honda. Though, it’s too early to predict anything, but with the kind of recipe that is cooking up in the market, it seems so possible. And truly so, you cannot continue selling your 1980s engines & technologies in exact tunes by adding pluses and minuses to their names. And with those horrible graphical disasters, company’s every bike has gone through; people might one day say, ‘We have had enough of it’.

Hero Honda has the faith of the masses with them. It has the largest and the most exhaustive sales and service network which roots to many rural areas. It has the technology and the best think tanks. But with market analysts also predicting a loss of share for the company, they will have to stand up to the upcoming challenges. Mere plastic upgrades might not woo the ‘now-more-mature’ consumer. And why would he not go to a showroom which offers a better bike or better price for a similar product! Hero Honda must be wary of the uprising that might be brewing up and might only want to hurt them the most. And this time yet another plus sign might not be able to do the trick for them.

– Saad Khan