Hero MotoCorp expects balanced growth between rural and urban this year

Hero MotoCorp is expecting balanced growth in rural and urban sectors this year on the back of a good kharif season, rising penetration of retail finance options, and strong festival period sales, the two-wheeler maker’s chief growth officer, Ranjivjit Singh, said on Thursday.

He also said that the company was not in an electric scooter “race”, and was focusing on expanding its single product in the segment, Vida V1, to 100 cities during this fiscal year.

Hero MotoCorp is a leader in the commuter motorcycle segment (up to 125 cc internal combustion engine) that is popular in rural areas. Two-wheeler sales in rural areas have been affected during the last few years due to the downturn in the economy amid the Covid-19 pandemic.

“It will be a pretty balanced growth between urban and rural this year. In the last couple of years, it was maybe not as balanced. Now we are going to see the balance coming back,” Singh told reporters. Hero MotoCorp’s domestic sales grew by about 11 per cent to 4.8 million units in FY23.

“We are focusing on growing the core — which means going out and getting more customers — in the commuter segment,” he said.

Hero MotoCorp has stepped up its play in the premium 150-200 cc bike segment with the launch of Xtreme 160R 4V here on Wednesday. The product, which comes with a four-valve 163 cc engine, is the first in a series of premium motorcycles that the company is planning to launch in FY24. TVS Motor is the leader in the 150-200 cc segment with its Apache. According to Society of Indian Automobile Manufacturers data, domestic sales in this motorcycle segment rose 33 per cent year-on-year to 1.05 million units in 2022-23.

In the commuter segment, Hero MotoCorp leads with 70-80 per cent share. Singh said, “Getting a few more percentage points (of market share) in this segment is not going to cut it…and it is not the point. The point is how do we go and bring in new customers, getting more and more first-time buyers.”

Increasing penetration of retail finance options is one way to boost rural customers in this segment who are also feeling the heat of inflation. “Retail finance is a very important part for us. It allows people to break costs into monthly EMIs. That is definitely bringing people to our stores,” he said.

Singh said that the kharif crop had been fruitful this year. “Once the farmers start selling wheat, it will also help our demand,” he said.

Hero MotoCorp plans to attract more customers in the commuter segment by building more value in its products. Singh cited the example of HF Deluxe as a “bigger and bolder” product than its competitors’ and structurally sturdier. “There will be another 125 cc motorcycle that we will come up with. It will be more on the commuter side. It will be a high-volume product,” he added.

Asked when the two-wheeler industry in India could reach its pre-pandemic level, he said it was very difficult to forecast as it hinged on various macroeconomic factors. “Right now, we are getting positive signals,” he added.

In electric vehicles, Hero is not in a race to launch more vehicles. “We want to do it right in that space. We want to ensure that we have the right mix, which is more important than anything, because it is an emerging category,” said Singh.

“In the ICE (internal combustion engine)-run vehicle business, we have been present for about 35 years. There is already a certain momentum in that. We are going to have Vida V1 available at Hero dealerships across cities....It is not a race for us. We want to take it step by step,” he added.