The country’s largest two-wheeler major, Hero MotoCorp, has been betting big on scooters for a while. The company has a 13 per cent share in the segment and aims to expand it with the launch of two new products in the 125cc category. Pawan Munjal, chairman and managing director, tells Ajay Modi that the company’s share in the scooter segment is not satisfactory. Edited excerpts.
A couple of years ago you had talked about gunning for leadership in the scooter segment. The company now has a 13 per cent share. Are we moving in the right direction?
The current market share is not satisfactory. We had gone up to 18-19 per cent after the launches in 2015. There were one or two issues with the products, which we knew at the time of the launch. These issues were addressed in due course. Now we see that within the scooter segment 125cc is growing faster. Our two new products address that and we are confident of raising market share.
Tell us about your focus on premium motorcycles while keeping the leadership intact in your bread-and-butter segment (commuter motorcycles).
In December, we launched three products in the bread and butter segment. We have not taken our eyes off that segment. That is where the money comes from, which we then invest in R&D and marketing. We are growing in the commuter segment and we plan to increase our share. This is the beginning for us as far as the premium segment is concerned. There is much more to come.
The two-wheeler market had seen some challenges in previous years. We have seen a stable growth this year. What is the outlook?
I would say that the economy is now coming back on track after a couple of big disruptions (demonetisation and the GST). Being a very large player in the rural market, we were also impacted. But with the Budget focussing on agriculture and the rural market, we will be the gainers.
Hero sold a record 7 million units in 2017. Are we looking at an annual volume of 10 million units?
Yes, for sure. We are aiming to sell 10 million units.
Cost pressure is evident in the single-digit profit growth of most auto makers. The kind of double-digit profit growth we saw last year is missing. What is your reading?
We did see the impact of commodity price increase in the third quarter and this is definitely affecting margins. It will continue to affect margins. We have in-house programmes to rationalise costs, not just in existing products but also in those that are at the design stage.
Why did Hero not showcase an electric two-wheeler at the Expo?
It will take time. We are working on both electric scooters and motorcycles. I have personally seen the prototypes at our Jaipur R&D centre. There is enough work going on. We are not in a hurry to showcase products.