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Eyeing a stronger presence in the rural market, two-wheeler major Hero MotoCorp has tied up with Punjab National Bank to sell products through easy financing schemes.
The country’s largest two-wheeler company recently signed an agreement with PNB, which has 6,000 branches and a high number of these are in rural/semi-urban areas. Buyers of Hero two-wheelers can avail finance for up to 90 per cent of the price at the lowest base rate of 12.25 per cent and enjoy a maximum repayment period of five years. Also, the processing fee has been waived for such buyers. For loans of up to Rs 25,000 there will be no requirement of a guarantee.
Confirming the agreement with PNB, a Hero MotoCorp spokesperson said loan fairs and exchange camps are also held by the company’s dealers on a regular basis in up-country and rural markets to push sales.
Rural markets, currently facing a slowing demand, accounts for 46 per cent of the sales for Hero and assumes critical importance in the fight to increase share in the market where it competes with former partner Honda Motorcycle and Bajaj Auto.
The market demand for two-wheelers, particularly motorcycles, is impacted due to a slowing rural economy. In April, sale of motorcycles across the industry dropped 3 per cent year on year.
Hero MotoCorp grew its sales by 6 per cent to 6.63 million units in the year ended March 31, 2015. However, the current year has started with a decline. Volumes declined by 5 per cent in both the months- April and May. Other industry players are also witnessing the pressure.
“The industry has remained sluggish due to the slowing rural economy…We remain cautiously optimistic in our near to medium term outlook”, Pawan Munjal, chairman and chief executive officer and managing director said last month.
Hero MotoCorp is readying a series of new product launches, both in the motorcycle and scooter space, to perk up sales. According to industry watchers, Hero is readying two new motorcycles in the 100-110cc deluxe segment, where it has a dominant presence with almost two-third market share. The company’s dominance in this segment was further cemented by the 100cc Splendor iSmart, claimed to be the world’s most fuel efficient bike with a mileage of 102.5 km per litre. Launched in March last year, the company has already sold over 3,50,000 units of the product.
The two new motorcycles, along with at least two new scooters, are expected to be launched around the festive season. Scooters, unlike motorcycles, are not impacted by rural economy since most sales happen in cities. The Hero MotoCorp spokesperson declined to confirm or deny the launches lined up for the year. “On specific new products, we will share more details closer to the launch time”, he said.
