Hero MotoCorp Ltd (HMCL) is planning to launch at least three new scooters in the next couple of years as the country’s leading two wheeler brand seeks to grow stronger in the fast growing scooter market with widened portfolio supported by enhanced capacity.
Its proposed new scooters are to be rolled out in mass market 110cc (Dash), 125cc and 150cc categories. The company has also enhanced its scooter production capacity to 75,000 units a month from 60,000 units earlier as it was facing some constraints in capacity. The scooter capacity will go up further to about 100,000 units a month with the upcoming launch of its Neemrana plant, according to information provided by the management during the investor conference call.
“The Management indicated that the scooter segment enjoys healthy profitability with EBITDA margins on Pleasure scooter in double-digits,” said Yaresh Kothari, auto analyst at Angel Broking.
With scooter volumes are expected to sustain momentum with double digit growth amid increased competition, HMCL also seeks to grow at the same level. Also, share of scooters in total two wheelers in the country is expected to increase to 30 per cent in the next two years from 25 per cent now. Strong demand for scooters is driven by the rising acceptability of automatic scooters in Tier 1 cities and increasing penetration.
In FY14, Hero’s scooter volumes grew by 25.5 per cent at 6.9 lakh units, aided by the success of ‘Maestro’. With a share of 19 per cent in scooter market, it occupied the second position after Honda (53 per cent).
Analysts pointed out that Hero can outgrow the scooter market by its differentiated positioning based on customer understanding, strong reach and focused marketing.
