Hero Moto sees 2% drop in market share; sales dip 13% in April-Dec
The fall in scooter sales of Hero MotoCorp benefited TVS Motor Company and Suzuki Motors whose sales grew 19% and 43%, respectively, during the nine-month period ending December 2018 compared with the year-ago period.
Two-wheeler market leader Hero MotoCorp lost market share by 200 basis points during the April-December 2018, according to Kotak Institutional Equities, as the company’s scooter sales fell 13% to 570,993 units year-on-year (y-o-y) compared with the segment growing 5% during the same period.
The fall in scooter sales of Hero MotoCorp benefited TVS Motor Company and Suzuki Motors whose sales grew 19% and 43%, respectively, during the nine-month period ending December 2018 compared with the year-ago period.
Overall, while the sales of the entire two-wheeler segment grew 10% y-o-y during the first nine months of FY19, Hero registered a tepid 3% growth.
Analysts at global research firm Jefferies observed that the fall in market share of Hero MotoCorp is due to a lack of successful brand in the 125cc scooter segment, a relatively new but the fastest-growing segment. “Although Hero did make an entry in the segment with the launch of Destiny 125 in October last year, it will take another 6-9 months if it will help Hero establish its brand in the segment or not,” said a report by the global research firm.
While the premium 125cc scooters typically command 10-20% higher price compared with mass-market scooters and offer lower fuel efficiency, they are more powerful and generate higher torque and horsepower leading to faster acceleration.
The sales of these premium scooters, with an engine size of 125cc and above, have accelerated sharply since the second half of FY17. At present, the main top-sellers in the segment are Suzuki’s Access, Honda’s Activa and TVS’s Ntorq.
Another reason for fall in Hero MotoCorp’s share is premiumization of the motorcycle segment wherein customers are opting for Pulsar, Apache and Royal Enfield, and Hero again has not been able to establish itself, according to the Jefferies report.
In the motorcycle segment which grew at 13% year-on-year during April-December 2018, Hero has been able to maintain its market share at 51% selling 105,41,997 units, mainly in the entry-level (110cc) segment. Bajaj Auto, however, gained market share by 200 bps during the same due to its aggressive pricing strategy.
The shares of Hero MotoCorp on Monday shed Rs 33.05, or 1.14% apiece, to close at Rs 2,867. 30 on the BSE.
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