Hero MotoCorp

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 domestic player.

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

The 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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