Hero Moto's 200 Million Sales Target By 2030 Is A Million Miles Away

India's largest two-wheeler maker Hero MotoCorp Ltd. reached the milestone of 100 million (10 crore) sales in 2021 after 36 years of operations and set the lofty target to reach the next 100 million in just nine more years.But the lingering effects of Covid-19, severe affordability crunch after a series of price hikes and the inevitable EV disruption may be casting a shadow of doubt on this ambitious project. The Delhi-based company continues to wait for the much-delayed recovery of the two-wheeler market.“When we started from Dharuhera (in Haryana), it was a long journey and now we have produced the first 100 million units. In the first 29 years came the first 50 million and in the next seven, we touched another 50 million. I can definitely say sitting on the 21st day of the 21st year of the 21st century that the next 100 million units will come in less than 100 years,” Pawan Munjal, chairman and chief executive officer of Hero MotoCorp, was quoted as saying in an Economic Times report.“We are now geared up for the next decade and next horizon, as we eye the next 100 million by the end of 2030,” he wrote in the FY23 annual report for shareholders, reiterating his target..“All I can promise is that, while the first 100 million was achieved with the production of motorcycles and scooters, the next 100 would certainly be an all-new, innovative and greener body form,” Munjal said.Nearly two years after setting the goal, Hero MotoCorp had clocked cumulative sales—overall sales since the company's inception—of over 111 million units by the end of FY23.The 4.9 million units it sold in FY22 were the lowest in 12 years. While sales rose nearly 8% to 5.33 million units in FY23, the number was still lower than the 5.4 million units sold over a decade ago in FY11.This leaves the company with an uphill task of maintaining average annual sales of at least over 12 million by the end of the decade, which is more than double the average annual sales in the last five years.The two-wheeler maker aims to generate 15% of its sales from global markets by 2025. In FY23, this number stood at 3.2%.The twin challenge of muted demand in the domestic market and weakness in the export markets is likely to limit sales in the coming years despite expectations of a gradual recovery..The company, which started as a joint venture with Japanese auto giant Honda in 1984, became popular for making affordable and reliable motorcycles like Splendor and Glamour. It parted ways with Honda in 2010, freeing it to venture out of the country for sales.With the next 100 million sales target, Munjal also announced plans to launch 10 products every year, including upgrades of existing vehicles and electric vehicles.The company built its foundation on the no-frills motorcycles—a segment that was the hardest hit after the implementation of new emission norms and surge in commodity prices, that led to price hikes that were disproportionately higher than the increase in income levels of buyers.It has left the industry reeling due to the gap in the buyers’ purchasing power and the cost of vehicles.“Definitely, there is a concern as it is a price-sensitive market (two-wheelers). The price levels of the entry-level motorcycles or scooters have gone up significantly because of various reasons,” Vinod Aggarwal, president at the Society of Indian Automobile Manufacturers, said..As a result, the domestic two-wheeler sales dropped 25% to 1.59 crore units in FY23, from the peak sales of FY19. The overall drop in industry volume affected Hero MotoCorp the most as the fall came at the expense of the mass segments, where the company was the dominant player.Its limited presence in the premium and scooter market led to market share loss, which continued even in the year-ended March. Hero MotoCorp’s market share dropped to 32.07% in FY23 from 34.35% in the previous fiscal.“In the first quarter, two-wheeler sales grew 10-11% (to 41.41 lakh units). So, if you assumed that there will be similar growth in the full year, the industry sales will be around 1.8 crore units,” Aggarwal said.Huge gap in the current industry sales and peak sales of FY19 indicate that overall volume may not reach that record level even by the end of FY25 at the current pace of growth.To be sure, Hero MotoCorp sold 7.8 million vehicles even in that record year, a long shot from the 12 million annual sales it needs to achieve the 200 million milestone by 2030..Bajaj And Hero May Have Brands, But It Is Culture That Fuels Royal Enfield

Hero Moto's 200 Million Sales Target By 2030 Is A Million Miles Away

While India's largest two-wheeler company aims to generate 15% sales from global markets by 2025, it barely reached 3.2% by FY23.

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