Hero Moto Corp Case Study

Topics: Bajaj Auto, TVS Motors, Bajaj motorcycles Pages: 14 (4406 words) Published: February 9, 2013
Table of Contents

1.Introduction3
2.About 2W Indian Industry3
3.2W Product Segmentation4
4.Details about Top layers and Market share8
5.Hero Moto Corp:Introduction,Strength and Challenges11
6.Strategies adopted By Hero Moto Corp14
7. Pricing Policy of 3 major players…………………………………………………………………… 17 8. Strategy for next 5 years………………………………………………………………….………….17 9. References……………………………………………………………………………………………19

1. Introduction:
The Automotive industry in India is one of the largest in the world and one of the fastest growing globally. India manufactures over 18 million vehicles (including 2 wheeled and 4 wheeled) and exports more than 2.3 million every year1. It is the world's second largest manufacturer of motorcycles; there are eight key players in the Indian markets that produced 13.8 million units in 2010-11.At present the dominant products of the automobile industry are Two Wheelers with a market share of over 75% and passenger cars with a market share of about 16%. Commercial vehicles and three wheelers share about 9% of the market between them. The industry has attained a turnover of more than USD 35 billion and provides direct and indirect employment to over 13 million people. The Indian two-wheeler industry has come a long way since its humble beginning in 1948 when Bajaj Auto started importing and selling Vespa Scooters in India. Since then, the customer preferences have changed in favor of motorcycles and gearless scooters that score higher on technology, fuel economy and aesthetic appeal, at the expense of metal-bodied geared scooters and mopeds. These changes in customer preferences have had an impact on the fortunes of the players. The erstwhile leaders have either perished or have significantly lost market share, whereas new leaders have emerged.

2. About Indian 2W Industry:

The Indian two-wheeler (2W) industry recorded sales volumes of 13.4 million units in 2011-12, a growth of 14.0% over the previous year. In a year wherein growth in other automobile segments particularly, passenger vehicle (PV) and medium & heavy commercial vehicle (M&HCV), slowed down to single digits - marred by demand slowdown due to northward movement of inflation, fuel prices and interest rates - the 14% growth recorded by the 2W industry remained steady. However, the momentum in the 2W industry’s volume growth too has been losing steam lately as evident from the relatively lower volume growth of 11.0% recorded in H2, 2011-12 (YoY) against a growth of 17.1% recorded in H1, 2011-12 (YoY). The deceleration in growth is largely attributable to the motorcycles segment which grew at a much lower rate of 7.8% (YoY) in H2, 2011-12 vis-à-vis 16.4% in H1, 2011-12; even as the scooters segment continued to post 20%+ (YoY) expansion during both halves of the last fiscal. With this, the share of the scooters segment in the domestic 2W industry volumes increased to 19.1% in 2011-12 from 17.6% in 2010-11. Overall, ICRA expects the domestic 2W industry to report a volume growth of 8-9% in 2012-13 as base effect catches up with the industry that has demonstrated a strong volume expansion over the last three years at cumulative annual growth rate (CAGR) of 21.8%. Over the medium term, the 2W industry is expected to report a volume CAGR of 9-11% to reach a size of 24-26 million units (domestic + exports) by 2016-17, as we believe the various structural positives associated with the domestic 2W industry including favorable demographic profile, moderate 2W penetration levels (in relation to several other emerging markets), under developed public transport system, growing urbanization, strong replacement demand and moderate share of financed purchases remain intact.

Table : Trend in Sales Volumes of the Indian 2W Industry |  | Volumes (Units, Nos.)| YoY Growth (%)|
Domestic | 2010-11 | Q1 | Q2 | Q3 | Q4 | 2010-11 | Q1 | Q2 | Q3 | Q4 | | | 2011-12 | 2011-12 | 2011-12...


References: http://www firstpost.com/business/heros-lesson-theres-lots-in-the-honda-name-436844.html
http://www.business-standard.com/india/news/hero-motocorp-signs-dealeuropean-company/185679/on
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