Bajaj Auto hot on Hero Honda's trail

Market leader Hero Honda has lost more than 3 per cent of its market share in the motorcycle segment to its nearest rival Bajaj Auto in April 2006.

As per the statistics available with Society of Indian Automotive Manufacturers (SIAM), Hero Honda's share in the domestic motor cycle market came down to 44.1 per cent in April 2006 from the company's average monthly market share (AMMS) of 48.1 per cent in 2005-06.

In contrast, Bajaj Auto's share in the domestic motor cycle market has gone up to 34.1 per cent in April 2006 from 30.8 per cent AMMS in 2005-06.

Bajaj's market share grew from 30.1 per cent in the first quarter of FY06 to 32.6 per cent by the fourth quarter. On the other hand, Hero Honda's market share fell from 49.1 per cent in Q1 to 46.2 per cent in Q4 of FY 2006.

"Bajaj's good performance in April is on account of good sales performance of the recently launched Platina, a premium entry level product. A real assessment of the market share could be gauged only by the first half of the financial year," said P S Sunder, general manager, marketing, Hero Honda.

S Sridhar, vice-president, marketing and sales, Bajaj Auto, said, "Bajaj's success is credited to well planned launches of new variants, prompt marketing strategy, efficient R&D, and above all, ability to take risk. Hero Honda has resorted to offer huge discounts in selective markets this calendar to maintain its market share. The strategy has backfired."

Hero Honda's sales growth has also been declining. The company has sold 2,50,366 motor cycles and scooters during April 2006. This is 6.34 per cent more that it had achieved in April 2005.

Bajaj Auto, on the other hand, has sold 188,518 motor cycles in April 2006, an increase of 37 per cent over 137,858 bikes it had sold in April 2005. Hero Honda's market share has constantly been declining over the last two years "" from 54 per cent to what is seen today.

"Hero Honda has a larger base than Bajaj. It has to align its product strategy in agreement with Honda Motors and Scooters India (HMSI), its technology partner. The company is in a correction phase and needs sometime to get back its pace," said S Ramnath, auto analyst at Mumbai-based SSKI Securities.

The market share of TVS Motor, the third largest motor cycle manufacturer, has grown to 14.6 per cent in April 2006 from 13 per cent in the previous financial year.

Bajaj's motorcycle sales has outgrown the industry rate of growth at 21 per cent in April compared to Hero Honda's 3.4 per cent growth. "Bajaj will capture more market share this financial year. The company is estimated to grow at 22 per cent against 14 per cent by Hero Honda," said a Mumbai-based auto analyst.