After clocking record sales during the recently concluded festival season, India’s largest two-wheeler maker Hero MotoCorp Ltd remains optimistic about the two-wheeler demand going forward. Wedding season and an uptick in rural sentiments are expected to boost sales ahead.
“The positivity is continuing. This year we are seeing a lot of wedding days. A lot of positives from the monsoon are yet to come into the income of the bottom of the pyramid. We are very positive about the outlook,” CEO Niranjan Gupta told investors in a post-earnings call.
Hero MotoCorp recorded its highest-ever retail sales during this year’s 32-day peak festival period at 15.98 lakh (1.6 million) units sold, representing a growth of 13% on year. Good momentum and growth in most parts of the country, with rural sales catching up with the urban segment in the latter half of the season aided the demand.
The recent data released by the Federation of Automobile Dealers Associations shows that two-wheeler retail sales rose 13.8% on year during the 42 days festive period between the first day of Navratri to 15 days post Dhanteras to 33.11 lakh units.
Highlighting the scope for sustained growth in the industry, Gupta said: “A good part of the bottom of the pyramid is yet to fully participate in India’s growth story. They are coming back, we have seen them in part during the festive season.”
Apart from short-term drivers such as good monsoon and higher crop yields, Gupta believes government spending will have a long-term impact on the auto sector.
On the rural-urban demand, Hero MotoCorp saw a balanced growth in both areas with doubled-digit growths though strong demand from rural was seen during the second half of the festival season.
“Overall, between rural and urban, it was a very balanced and good demand trend that we have seen. What really came through during the festival season was a very strong consumer buying behavior, that we see continuing even as we go forward,” Gupta said.
Hero MotoCorp’s core strength has been in the entry-level 100-110cc segment and has struggled in the premium market due to its limited offerings. However, the company has recently been focusing more on the 125cc and premium segments.
The company has been betting on newly launched models and the expansion of new format stores – Premia and Hero 2.0 – to drive volume growth and market share gains in the premium and 125cc segments. It launched the highest number of products last year, with more offerings in the premium and 125cc segments.
Hero MotoCorp is planning for a slew of launches in the scooter segment this year, that will cover both ICE and EV portfolio. The company is likely to launch two new variants of its Zoom scooter and a new Vida electric scooter in this financial year. The automaker will also launch the recently unveiled three motorcycles – Xpulse 210, Xtreme 250R and Karizma XMR 250 – in the next six months.
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