Hero MotoCorp needs to recover market share in 125cc bike segment: CFO

Hero MotoCorp is considering separate unit for EVs

Hero MotoCorp on Wednesday said that the firm needs to recover its market share in the 125-cc engine motorcycle segment as it sees an opportunity in building a premium portfolio.

Hero MotoCorp's sales in the 111cc-126 cc motorcycle segment increased by 5.65 per cent year-on-year to 452,274 units in April-December of FY23, according to data by SIAM.

However, other players such as Honda Motorcycle and Scooter India, Bajaj Auto and TVS Motor saw a growth of 29.91 per cent, 48.84 per cent and 291.78 per cent, respectively, in the segment during the same period.

"On our domestic internal combustion engine (ICE) business, we are doing well in the short term. We need to recover our 125 cc market share. Our opportunity lies in building a premium portfolio for which multiple launches have been lined up for the next 3-5 years," said Niranjan Gupta. chief financial officer, during the post-results call on Wednesday.

When asked if Hero is open to creating a separate subsidiary to handle its electric vehicles (EV) business Vida, Gupta said all options are on table.

"It (corporate restructuring) is about various considerations one has to take into account such as what stage of launch you are, the taxation, the balance sheet and what is the intent behind doing the restructuring. So, we continue to evaluate all options," he mentioned.

Hero MotoCorp on Tuesday reported a 2.41 per cent year-on-year rise in consolidated net profit to Rs 721.24 crore in the third quarter of FY2022-23 amid weak demand, especially in the rural areas.

Ranjivjit Singh, chief growth officer (CGO), Hero MotoCorp said that the company has made good progress in the 125-cc engine motorcycle segment with the launch of Glamour X-Tec.

"X-Tec has a tremendous amount of acceptability in the market. We are strengthening our 125-cc portfolio as we go forward. In Super Splendour, we will come with an X-Tec variant, and that will give a positive fillip to the entire portfolio," Singh noted.

"Premiumisation is the trend. In our overall portfolio, X-Tec (latest variants of motorcycles) contributes to about 30 per cent. This is helping us strengthen our position in the core market. The 125-cc segment is a work in progress. You will see some new information coming from us by the end of this month," the CGO noted.

Rural areas, he said, have been a bit lower in terms of uptake as compared to the urban areas. "We are seeing green shoots. The demand due to marriage market in Uttar Pradesh, Bihar and West Bengal is coming back. It augurs well for the demand of our entry-level vehicles in the rural areas," he added.