Just a quick post today but couldn't resist passing on this story about the wooing of female scooter riders in India from Bloomberg News
Hero Fights Honda to Sate Female Scooter Demand: Corporate India
By Siddharth Philip - Dec 2, 2013 3:43 AM ET
Hero MotoCorp Ltd. (HMCL), India’s largest motorcycle maker, plans to unveil additional models in February to woo women customers for its scooters and fight Honda Motor Co.’s surge in the two-wheeler market.
Rising demand for personal transport in India’s villages and small towns, especially among women, is spurring the 18 percent growth in the nation’s scooter sales, Anil Dua, New Delhi-based Hero’s senior vice-president for sales and marketing, said in a Nov. 27 interview in the city. Hero also aims to tap the expanding 125cc motorcycle segment, Dua said.
Tokyo-based Honda Motor Co. is seeking to overtake Hero MotoCorp Ltd. after ending a joint venture with the Indian company in 2010. Photographer: Prashanth Vishwanathan/Bloomberg
“My clear mission is to grow faster than the market,” said Dua. “The only two segments that are growing at double digits are scooters and 125cc.”
The two categories offer Dua some respite from a slowdown in Indian economic expansion that has reduced demand for the 100cc bikes, which account for about 73 percent of Hero’s sales. In scooters, Dua is seeking to close the gap to Honda (7267), which sold more than 1 million units in the segment for April through October versus Hero’s 393,468. Scooters are seeing a resurgence, spurred in part by purchases by working women.
Tokyo-based Honda is seeking to overtake Hero after ending a joint venture with the Indian company in 2010, banking on a lack of public transportation in rural areas of the country of 1.2 billion people. Honda, the world’s biggest motorcycle maker, became India’s second-largest two-wheeler seller in the year ended March.
Hero and Honda also want to take advantage of customers moving up to 125cc bikes from smaller runabouts as incomes rise, a shift being driven by increasingly aspirational Indian consumers, according to Emerging Markets Automotive Advisors.
“Scooters will help Hero offset increasing competition in motorcycles,” said Yaresh Kothari, an analyst with Angel Broking Ltd. in Mumbai. “While scooters are growing fast in urban and semi-urban markets, people are gradually moving to higher capacity motorcycles, and the 125cc segment offers a good mix of looks as well as fuel efficiency.”
Hero has climbed 9.3 percent this year, compared with the 7.6 percent increase in the S&P BSE Sensex Index. (SENSEX) The stock, which Kothari rates at neutral, rose 1.2 percent to 2,077.55 rupees at 1:30 p.m. in Mumbai.
Hero, which targets a doubling of its sales to 12 million units by 2020, expects to spend about 1.5 percent of annual revenue on research and development, Dua said. The company will introduce the first models with Hero-developed engines at the New Delhi Auto Expo motor show in February, he said.
Research and Development
“When we split up with Honda, we had no R&D capabilities of our own,” said Dua. “Now, we are filing patents and are adding new technology to our motorcycles.”
Hero’s second-quarter profit rose 9 percent to 4.8 billion rupees ($77 million) from 4.4 billion rupees a year earlier.
The company sold 41 percent of the 8.53 million two-wheelers sold in India in the seven months through October. Sales of its 100cc bikes dipped about 3 percent in the period from a year earlier.
The company has two scooter models -- starting at about 43,000 rupees for the Pleasure and Maestro, targeted at women and men respectively. Honda offers three scooter models, starting at 45,506 rupees, according to the companies’ websites.
“Hero MotoCorp is banking on its revamped existing brands to claw back some of its lost market share,” wrote Surjit Singh Arora, an analyst at Prabhudas Lilladher Pvt., in a note dated Oct. 23. “Hero has made a strong comeback in the recent months on the strength of its strong brands and distribution.”
The average motorcycle engine displacement in India has risen to 125.61cc for the first 10 months of 2013, compared with 116.3cc in 2005, according to a Nov. 27 report by New Delhi-based Emerging Markets Automobile Advisors. Two-wheeler sales in India are expected to be about 22 million units in 2018, driven by motorcycles as well as scooters, according to the report.
“There’s a huge penetration potential in India,” said Dua. “We have been bringing out new models at a pace of once or twice a year. That pace is going to accelerate.”