It’s cleary evident that TVS and Honda are gaining market share from Hero and Bajaj in two-wheelers due to increased scooters sales. Activa and Jupiter are single-handedly driving growth for both the respective cos. Hero is struggling for growth in the scooters segment and has to fix this soon.
Although the YoY monthly sales growth looks good (120%), scooters only form 8% of overall sales for the co. Interesting times ahead! Expecting major launches from Hero and Bajaj
Disc - invested
Hero Motorcorp is advertising its sales of 500000+ units but not advertising the growth rate. Its yoy growth is about 5% while Honda posted a growth of 11% and tvs posted a growth of 21%. Honda CB shine grew 74% yoy eating into Hero’s Splendor and HF deluxe pie. these motorcycles are Heromotorp’s bread and butter models.
Hero Motocorp’s major push seems to be on Scooters and exports now. This has been mentioned by Mr. Munjal in some recent interviews. But I don’t see scooter sales to be enough to offset the lack of growth in motorcycles.
Another major problem lies with their premium motorcycle lineup. Hero has lost the plot post CBZ and their premium motorcycles are not exactly desired by the urban youth. The Karizma in all its iterations has been a failure. The xpulse200 is interesting and the 200R looks beautiful but their tech is not competitive.
Ather bet seems to be the silver lining for Hero in the immediate future.
Hero monthly sales data looks positive and there’s a cream on the top - increased stake in Ather to 34.81%. Entrackr reports that the valuation of Ather is down from 1572 crores to 1405 crores (~10% haircut from Series-C)
Volume degrowth for FY-21 over FY-20 is ~10% (is 14% for Bajaj Auto, 12% for Eicher)
Hero has a significant stake in Ather
Hero motorcycles operating margins are lower than both Bajaj and Eicher although better than TVS.
Also, one definitely considers numbers when buying a premium motorcycles. Hero’s 160cc and 200cc are low on power figures vs competition and also lack a strong recall.
Their plans of jumping on 500cc bandwagon is also late to the party. I would rather vote them using the 750cc engine from Harley Davidson to take on Royal Enfield. Others can disagree.
Athers is their only dark horse. A complete acquisition or more stake right now will make sense. Once Ather starts posting profits, it’s valuation will keep on increasing. Tie up with Gogoro is a big plus.
Pleasure and destini are in the top 10 scooters sold in April 21 but Hero needs to pull up their socks on the sales front overall.
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The obvious way forward with EV taking over ICE engines.
But while ev takes wings, Hero should work on expanding Hero fincorp which is already a functional business. Credit cards and personal finance can be a natural next step expanding into ev recharge and service/ repair rewards. They can also acquire a business like citibanks credit cards ( if price is right) as it will be the right fit.
With a meagre part of the pie for Hero Fincorp, Hero motocorp is still a single business of ICE 2 wheelers.
Seems there is a possible conflict now with both “Hero Electric” and “Hero moto corp” coming in the same space of EV. Need to see how this pans out in near future.
Is Hero Electric a separate Entity ??
I was under the assumption that it was a subsidiary of Hero MotoCorp.
Yes, a seperate and unlisted pure play entity
Though I agree brand name is important, what matters is the existing dealer network of Hero MotoCorp will be a key strength. Not sure how Hero Electric is going to execute its strategy to cover its potential customer base. Hero MotoCorp might leverage its existing brands without adding “Hero” to it. My guess would be like Splendor Electric or something like that or may come up with a more catchy brand name to reflect their differentiated offering. Let us see how all these pan out. One thing for sure, if electric vehicles click, Hero MotoCorp might do a “Splendor” to create a mass market segment out of it.
Why Not buyout Ather completely.?
Ather has a strong brand name right now beating the likes of even Hero electric and Okinawa.
Everything apart from the brand name is available with Hero MotoCorp including capacity and tech from Gogoro.
Perhaps this is why the Munjal family has been consistently investing in Ather. Hope the company clarifies what this can mean for Hero’s own EV foray.
Interestingly, all Ather models currently are Fixed Batteries, so it will be good to see how would Hero commercialize the Gogro partnership in India.
