The financial year 2009 was a fruitful one for Hero Honda, India’s largest manufacturer of two-wheelers, as it achieved sales of more than 3.34 million vehicles. This year, the company is confident of hitting the 4-million mark in sales well before the end of March. In an interview with Swaraj Baggonkar, Hero Honda Managing Director Pawan Munjal talks about the company’s plan for new bikes. He also highlights the necessity of stimulus packages, which were introduced by the government in December 2008. Edited excerpts:
How do you hope to perform in the coming year?
Next year, we would be gunning for a performance that’s similar to the one we have had this year. With such a low penetration in the market, there are great opportunities. We have to look for growth.
But your focus has largely been on the commuter segment...
We have had a few launches in the premium segment — we have seen the launch of four models recently. We have actually grown very well in that segment. But, of course, the number for entry-level models will be much larger, due to the general demand.
How much of your margin comes from the premium class?
We look at a consolidated bottom line. The pricing is done in that manner. When the stimulus package came, we used it very effectively on our full range. While we passed on the full benefit to the consumer on some models, the quantum of benefit was held back in other cases.
What sales growth do you expect by the end of this year?
We will be doing handsomely more than the target we had estimated earlier. We have sold more than a million units in each of the earlier quarters and we are confident that we will achieve sales in excess of four million units by year-end.
How many new products can we expect from the company?
We will continue with the same pace of product launches as we maintained in the past. We will launch about eight-ten products next year, which will include upgrades and new products.
What impact do you see if the stimulus package is withdrawn?
Our general view is that it should not be taken away. It has really helped improve the economy and the demand and we definitely don’t want to go back to a slowdown phase. We feel it’s too early to withdraw it.
Does the rise in commodity prices worry you?
It is a cause of concern for us. However, it does not push us to tamper with our prices, for now.
What is the update on the low-cost bike you are developing?
It’s very early days. We are studying the feasibility of that.
