Even as Indian two-wheeler makers like TVS Motors and Bajaj Auto were registering falling sales month after month during the last financial year, Hero Honda was busy strengthening its base in the Indian market. The slowdown period has been the most lucrative one for the company. It even crossed the landmark of selling 25 million units (cumulative) in the last fiscal taking its market leadership to around 57% (60% currently). Moreover, Hero Honda’s bottom-line grew by 33% to Rs.12.8 billion during the financial year. But how did they manage it, when the whole industry was struggling, is definitely a big question.Well, a right product at a right time is the trick that has clicked. In addition Hero Honda has also utilised the last fiscal to get closer to consumers. The company has built an extensive network of over 3,500 touch-points across the country, selling and servicing its two-wheelers. The company’s rural initiatives too have played a role in strengthening its presence in Tier-II & Tier-III markets, which contribute almost 40% of total sales. Explains Pawan Munjal, MD, Hero Honda, “An unprecedented share of 57% in the domestic market, when the industry has been witnessing a slowdown, is reflective of the strong fundamentals.”
Though auto experts like Murad Ali Baig say that “Hero Honda as a company is known for its continuity and stable approach,” they also accept that when it comes to the premium segment Bajaj Auto rules the roost. And that’s not baseless either. While Hero Honda sold about 185,000 units in the segment during the last fiscal, Bajaj sold 840,000 units. But then, the pace at which Hero Honda is catching up is noteworthy. What is more inspiring is its strong association with the youth and its effective campaigns in the rural markets. However, as Bajaj Auto plans to stage a big show in the executive segment, the days ahead may soon throw up more challenges for Hero Honda.
Pawan Chabra
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Source : IIPM Editorial, 2009
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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