The two-wheeler maker bucks the trend yet again with a slight increase in volumes.
A strong brand, the launch of five models, including variants, and an increasing number of dealerships and service stations. That’s what has helped Hero Honda turn in strong sales month after month.
Even as the rest of the automobile industry feels the heat of slowing consumer demand, the Rs 10,332 crore firm has managed to continuously buck the trend. In a month where almost every other auto player has seen volumes drop, the two-wheeler maker has sold more two-wheelers than it did last year in November.
That’s significant because the Diwali festival last year was celebrated in November last year whereas this year it was celebrated in October. To have sold 290,000 two-wheelers after the festive season, on a high base, is truly creditable.
Of course, it is selling more scooters now — around 12,000 a month compared with 7,000-8000 a month earlier, but the numbers are nevertheless strong. While Hero Honda has been impacted by the lack of financing schemes from banks — sales through such schemes have dropped to 40 per cent from 60 per cent about a year and half back — it has managed to make the most of the marriage season.
The firm continues to sell close to a third of its bikes in the northern part of the country and its biggest success has been in the premium segment, where, according to Anil Dua, senior VP, marketing and sales, the company has doubled its volumes and market share over the past one and a half years. That’s a segment which used to be dominated by rival Bajaj Auto. Hero Honda has also done well in the entry segments where new models have been a hit and Dua says the company’s overall market share is now 56 per cent.
With another seven launches (including variants) lined up over the next year or so, the company is all set to gain market share across segments. Hero Honda is expected to end 2008-09 with revenues in the region of Rs 12, 000 crore, an increase of 16 per cent over revenues last year. Despite the high cost of raw materials, the company should be able to maintain operating margins at around 13 per cent and net profit could rise by as much as 27-28 per cent over the Rs 968 crore recorded in 2008-09.
