If there is one company that depicts the Indian dream and the Indian middle class in one single statement, it is Hero MotoCorp. However, this trendsetter has been consistently losing market share and
June 20, 2023
It is losing market share with not much novelty to offer
Recapping the Hero Moto story
When the idea of a two-wheeler was floated by Hero Honda in the
mid-80s, it was seen as an attempt to break the virtual monopoly of Bajaj Auto
and few gave them any real chance. Hero Honda built its two-wheeler business in
India on the famous tagline “Fill it, shut it, forget it.” Super fuel efficient
and trendy bikes that gave over 70KPH were not heard of at that time. Their
products were an instant hit and the 2-wheeler market changed forever. From
then on, it was Hero Honda all the way.
In an interview, Rahul Bajaj said that he never realized when they
became the second largest player in India. Bajaj had apparently taken markets
for granted or had just forgotten about trendy bikes. It was another 20 years
before Bajaj Auto fully gave up on scooters, but by then the damage had been
done and Hero Honda had already captured 60% of the two-wheeler market. They
had tough competition from Bajaj and TVS, but it could not dent the market
share of Hero Honda. Over the years, Bajaj shifted its focus to become the
biggest exporter of two-wheelers, but Hero Honda remained the most dominant
Hero Honda minus Honda
In the year 2011, after 27 years, the partnership between Hero and
Honda was called off, resulting in a change of name to Hero MotoCorp. However,
the bigger shift was that Honda could now directly introduce its two-wheelers
in the Indian market. Unlike Bajaj Auto and TVS Motors, Honda knew the
strengths and weaknesses of Hero Moto well. It is not surprising, therefore,
that in a span of few years Honda Motors emerged as the second largest player
in the two-wheeler space. It led to a major loss of market share for Hero Moto
as Honda was cannibalizing markets from the very markets where Hero had a stronghold.
More than just competition
market share of Hero Moto had fallen from 60% to about 51% and has fallen
further to just about one-third the market at 35%. This is the lowest share
that Hero Moto has enjoyed in memory. One reason was the aggression of Honda
but there is more to it. Hero has relied on the entry level bikes for too long
and most of its premium offerings have not been well received in the market.
Now, even the entry level bikes face pressure from Honda’s latest, which could
hit Honda where it hurts most. The entry level segment is facing stress due to
the delayed monsoons and the stress on rural sales. It is time for Hero Moto to
do a strategic rethink. It is time for Hero Moto 2.0; a new approach!
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