Hero vs Honda: Hero gears up for bigger scooter play

Hero MotoCorp and Honda Motorcycle & Scooter India are headed for a showdown in the scooter market with the former partners looking to dominate the high growth segment.

Munjal family-promoted Hero MotoCorp, a leading brand in the motorcycle segment, is set to enter new segments within the scooter category to shore up its market share in the next 24 months.

Hero will introduce models in the 100cc, 110cc, 125cc and 150cc segment to complement its existing two-model line-up of Pleasure and Maestro, which are powered by a 102cc engine.

The company is moving up the value chain just like Honda, which started with a 100cc Activa before moving to 110cc and then to 125cc. Activa is India's biggest-selling scooter with sales of 100,000 units a month. Anil Dua, senior vice-president (marketing and sales) at Hero MotoCorp, confirmed the company's plan to launch new models in the scooter segment. "It will not be right for me to give away the exact dates right now but over the next two years, you will see all these launches hitting the marketplace," he said.

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Hero has a share of 18.4 per cent in the domestic market with sales of 690,079 units in the last financial year.

Honda Motorcycle & Scooter India clocked a market share of 52.3 per cent by the end of May, while its domestic scooter sales settled at 1.90 million units last year.

With scooters not only withstanding the slowdown in demand but also posting a 23 per cent growth last year at 3.6-million unit sales, they are posing a visible challenge to the large economy segment of motorcycles. Last year, the growth in motorcycle sales slowed to 3.9 per cent to 10.4 million units.

"Today, scooters contribute almost a quarter to the entire two-wheeler industry. Over the next couple of years, this number is likely to move up to 30 per cent. Industry is moving in the right direction because scooters are becoming more stylish. They are offering better mileage and they are very good for short-distance commute in congested traffic conditions," added Dua.

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Hero is adding a new plant in Neemrana, Rajasthan, with a capacity of 750,000 units a year, which will begin commercial production this month. This will be followed by 1.5 million units-a-year plant in Gujarat, which is expected to commence production in September 2015.

Honda, one of India's largest two-wheeler manufacturers, is also augmenting production with expansion at a plant near Bangalore and a new plant in Gujarat, taking its total annual capacity to 5.8 million units by 2016.

Meanwhile, Chennai-based TVS Motor, which has regained some share in the scooter segment on the back of new launches, is also looking to spruce its presence in the segment. The owner of the 'Scooty' brand is working on a 'high efficiency' scooter, the concept design of which is already complete.

Besides, it developed a second batch of vehicles of new hybrid scooter with 'Gen4' technology for reduction of emission and improvement of fuel economy. The company had showcased a hybrid scooter at the last Auto Expo.