India’s roads witness a variety of motorcycles, but one brand that has always commanded respect for its budget and utility-centric motorcycles is Hero MotoCorp. Historically, Hero has dominated the budget segment. However, with a burgeoning premium motorcycle market growing at double the rate of mainstream bikes, Hero is not one to miss the beat.
Top Key Points
- Hero MotoCorp is one of the biggest motorcycle manufacturers in India, but it has focused predominantly on the budget and utility segments.
- The premium motorcycle market in India is growing rapidly, and Hero MotoCorp is making moves to develop a stronger presence in this segment.
- The company has recently launched the Karizma XMR and is partnering with Harley-Davidson to develop the X440.
- Hero MotoCorp is also reportedly developing four more premium models, including two derivatives of the Harley X440.
- The company plans to open 100 exclusive stores for its premium model range and refresh its existing dealer network.
- Hero MotoCorp has invested $120 million in the expansion of its premium models and electric motorcycles.
Hero MotoCorp
Niranjan Gupta, the CEO of Hero MotoCorp, recently shared insights with AutoCar India. “The premium motorcycle market is expanding quickly, and customers now show readiness to explore different brands,” Gupta said. With this evolving trend, Hero is all set to diversify its product line, aiming for a stronger foothold in the premium segment.
The company’s recent launches like the Karizma XMR and their strategic partnership with Harley-Davidson, resulting in the X440, attest to this commitment. But they aren’t stopping here. Hero is currently in the process of developing four more models.
Premium Motorcycle Segment
Two of these will be derivatives of the Harley X440. The other two? They’ll anchor Hero’s “core premium” segment. Outside of these newcomers and the aforementioned launches, Hero’s premium lineup also boasts of the XPulse 200 series. The XPulse 200 4V brilliantly encapsulates the spirit of adventure, while the XPulse 200T embraces the road with its retro appeal.
With a current market share of about five percent in the premium segment, Gupta’s confidence is palpable. “The real game for us is just beginning. Every new bike we introduce contributes to the larger vision we have set. Coupled with a complete premium experience, we believe we can redefine this segment.”
Revenue Opportunity
But what’s a premium bike without an equally premium buying experience? Enter Hero’s ambitious “Hero 2.0 Retail Plan.” The company plans to unveil 100 exclusive stores for its premium range and revamp its existing network of 500 outlets.
And if you’re wondering about the investment involved in such a grand plan, Hero is pumping in a staggering 10 billion rupees (around $120 million). This isn’t just for premium models, but also for electric motorcycles, hinting at Hero’s vision for a greener future.
Diving deeper into Hero MotoCorp’s strategic move into the premium motorcycle segment, let’s discuss how this venture can potentially benefit the brand:
- Tapping into a Growing Market Segment: With the premium motorcycle market in India growing at double the pace of the mainstream segment, it’s a massive revenue opportunity. By introducing models in this category, Hero can ensure they don’t miss out on this revenue stream.
- Brand Image Reinforcement: Historically, Hero MotoCorp is synonymous with budget and commuter bikes. By stepping into the premium segment, Hero can reposition and elevate its brand image, making it appealing to a broader audience.
- Higher Profit Margins: Generally, premium motorcycles come with higher profit margins compared to commuter bikes. This means that even if they sell fewer units in comparison to the commuter segment, the overall profitability can be higher.
- Diversification: Depending largely on one segment can be risky. Diversifying their portfolio ensures that Hero is not overly reliant on just the budget segment.
Consumer Aspirations
- Meeting Consumer Aspirations: As the Indian middle class grows and disposable incomes increase, aspirations change. Many consumers who started with budget bikes might want to upgrade to premium ones. Hero can retain its loyal customer base by offering them options to upgrade within the brand.
- Strategic Partnerships: Collaborations, like the one with Harley-Davidson, not only help in product development but also in sharing technical know-how, expanding market reach, and leveraging the legacy of established brands.
- Enhanced Customer Experience: With plans to open exclusive stores for its premium range, Hero is not just selling a bike; they are selling an experience. This can help in building stronger customer loyalty and brand allegiance.
- Future-Proofing the Business: The automotive industry is rapidly evolving. By investing not just in premium motorcycles but also in electric ones, Hero is ensuring that they remain at the forefront of industry developments.
- Competitive Edge: By expanding into the premium segment and offering a range of options, Hero can effectively compete with other major players who have already established themselves in this segment.
- Boosting Shareholder Confidence: Significant investments, like the 10 billion rupees towards expansion, can boost shareholder confidence. It demonstrates that the company is proactive and is looking at long-term growth and not just short-term gains.
Conclusion
Hero MotoCorp’s move into the premium segment is not just about introducing new models; it’s a comprehensive strategy that can redefine its market position, boost revenues, and ensure sustained growth in the ever-evolving automotive landscape of India.
The roads of India are set for a change. With Hero MotoCorp’s aggressive push into the premium segment, biking enthusiasts have exciting times ahead!
