Xtreme 125R's production capacity to be increased by 60%: Hero Moto CEO

Hero MotoCorp is planning to increase the production capacity of the Xtreme 125R by 60 per cent to 40,000 units per month over the next couple of months in response to high demand, its chief executive officer, Niranjan Gupta, stated on Wednesday.

This is the second time in recent months that the company is increasing the production capacity of this model. In June and July, Hero had increased its production capacity by 150 per cent to about 25,000 units per month.

During the April-July period, the company recorded a 19 per cent year-on-year (Y-o-Y) growth in sales within the 110-125cc motorcycle segment, totalling 227,576 units. This surge is primarily attributed to the successful launch of the Xtreme 125R in January. In contrast, the overall motorcycle sales growth for Hero MotoCorp during the same period was nine per cent Y-o-Y to 1.719 million units, according to data from SIAM.

 

Amid political upheaval in Bangladesh, the company has closed its plant in Jessore, which it operates in collaboration with Niloy Motors. However, the CEO described it as a "short-term disruption."

"Yes, Bangladesh is a setback. Right now, the focus in Bangladesh is on people (employees). We are taking care of our people. Overall, Bangladesh forms around 0.3-0.4 per cent of our total revenues. The operations will resume. The new government has come into place. The plants are reopening. So, it is not something that will have a medium or long-term impact. It is a short-term disruption," he said during a call with analysts on Wednesday.

India's largest two-wheeler maker stated on Tuesday that its consolidated net profit increased by 47.3 per cent Y-o-Y to Rs 1,032 crore in the first quarter of this financial year.

Gupta stated that the margins are in a comfortable range, and therefore, the company would be focusing on growing market share and investments.

He mentioned that in the 100-110cc motorcycle segment, the company launched a revamped Passion model last year, and it has performed well. "It has helped us maintain our formidable market share in the 100-110cc segment," he noted.

In the 110-125cc motorcycle segment, the company is now selling three brands: Glamour, Super Splendor, and Xtreme 125R. "Glamour is being revived, Super Splendor is anchored on mileage, and Xtreme 125R is appealing to the youth as a premium model within the 125cc segment... The 125cc segment portfolio is now quite strong. The plan is to ramp up capacity and continue increasing market share every quarter," he added.

The market share of the company in the 110-125cc segment has seen the sharpest increase, from 13 per cent in Q4 of the last financial year to 20 per cent in Q1 of this financial year, according to Ranjivjit Singh, chief business officer, India Business Unit, Hero MotoCorp. "It has been a dramatic story of sales increase across the three brands that we have in this segment," Singh stated.

Gupta told analysts: "For the Xtreme 125R, we are increasing capacity. We have already gone up to 25,000 units per month. We are taking it up to 40,000 units per month in the next couple of months."

The capacity expansion for Xtreme 125R, according to Singh, is very timely because during the upcoming festive season, this model is expected to be a key point of demand. "This expansion will help us reach across the country," Singh noted.

The positive sentiment the company is seeing in rural areas is reflected in the rising sales across various categories, Gupta explained. "The signs are extremely positive for a strong festive season. We are gearing up for that... We are managing our inventories accordingly," he noted.