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Honda closing in on Hero; gap down to 12,300 in April

Ajay Modi / New Delhi 03 May 17 | 01:44 AM

The leadership gap between Hero MotoCorp and former partner Honda in the world’s biggest two-wheeler market is close and the Japanese challenger has come within a striking distance. 

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Honda in April sold a record 579,000 two-wheelers, 12,300 less than market leader Hero. The numbers include small export volumes.

Hero’s sales to dealers declined by three per cent in April as Honda’s sales grew 34 per cent, owing to a 40 per cent surge in scooter sales. Hero’s production has been affected by component supplies and the company is trying to resolve the issue. Hero did not comment because it was in the silent period before announcement of its results.

Honda said many of its dealerships were left with little inventory at the end of March, when they cleared stocks of BS-III vehicles. This supported the high April sales. 

Y S Guleria, senior vice-president, sales and marketing, Honda Motorcycle and Scooter, said after July, by when it would have expanded its third plant in Karnataka, the company could repeat such sales if market conditions remained the same. 

Honda has set itself a target of selling six million two-wheelers in 2017-18, 20 per cent more than a year ago. Hero last year sold 6.6 million and this is expected to rise because of a normal monsoon and new vehicle launches.

“There is a sustained expansion in scooter demand. The rural outlook has improved and macroeconomic factors are strong," said Guleria. Over 63 per cent of Honda’s two-wheeler sales in April were scooters.

Hero and Honda dissolved their 26-year partnership in March 2011 and Hero’s journey since has been marked by higher profitability but declining market share, a function of its overdependence on motorcycles. Against flat growth in motorcycle sales, scooter sales have been climbing in the double digits for three years, benefiting Honda.

Scooters formed 32 per cent of the 17.58 million two-wheeler market in India in 2016-17. Motorcycles have a 63 per cent share and mopeds five per cent.

Hero dominates the motorcycle market with a 51 per cent share. Honda leads in scooters with 57 per cent.

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