Into the headwind

It’s been a bumpy ride for two-wheelers, with sales falling by 4.8 per cent in 2007-08. In the current fiscal’s first three quarters, sales have risen by a measly 1.85 per cent. Contrast this with a decade of spectacular double-digit growth for the industry before the slowdown hit home.

Even as all the major two-wheeler manufacturers have been grappling with a decline in sales and profitability, there has been one winner amidst the gloom. Market leader Hero Honda has consistently shown an ability to stay ahead of the pack. In 2007-08, the company had increased its overall market share by one percentage point to 42 per cent. It further increased its domestic market share during the first nine months of the current financial year to almost 46 per cent. In a market scenario where other auto players posted moderate sales growth, the company’s results were impressive. While the motorcycle industry’s increase was less than 1 per cent in the first three quarters, Hero Honda’s rose by 11 per cent.

So, how has Hero Honda managed to buck the trend when others around it are stumbling? Says Anil Dua, Senior Vice President: “We are ahead of the field as we had put some building blocks in place well before the slowdown.”

The company management says its biggest strength is its wide product range catering to all segments. Hero Honda launched as many as seven new models across categories in the third quarter of 2008-09 to give a fillip to sales in a difficult period. Says Navin Matta, Equity Analyst at Dolat Capital: “Intermittent concerns regarding overdependence on its flagship models—Splendor and Passion—have been put to rest with continued refreshed variants.”

Why Hero Honda is a winner Building a wide product range across segments Differentiated brandbuilding campaigns Focus on driving sales in rural India Launching new models

Hero Honda has supplemented these launches with elaborate brand building initiatives. There is a dedicated campaign for each and every model to build a distinct image and boost market demand. Says Dua: “We go for sharply focussed and well-differentiated advertising.

So the promotional strategy for an entry segment model would be completely different from a premium segment model keeping in mind the target audience.” This has ensured better performance by key brands and resulted in strong volumes across segments— CD Deluxe, in the entry segment, Glamour, New Splendor NXG, Splendor+ and Passion Plus in the deluxe segment and Hunk, CBZ X-treme and Karizma in the premium segment.