Hero dethroned by Honda in Sept sales; 2nd time in 2 years

Once a partner of the most successful joint venture in the Indian two-wheeler industry, Honda Motorcycle and Scooter India (HMSI) Limited has pipped its erstwhile collaborator, Hero MotoCorp—the largest maker of two-wheelers in India—in registrations, data from the Vahan portal shows.

This is the second time in over two years that the Japanese two-wheeler brand has bettered Hero MotoCorp. The difference between registrations of two-wheelers of the two makers stood around 1.7 lakh vehicles in May.

Hero MotoCorp sold 2,51,939 two-wheelers in September, whereas HMSI sold 2,85,400 two-wheelers, according to the portal. The last time Hero MotoCorp lost ground to its erstwhile Japanese collaborator was in May 2020, during the thick of the nationwide lockdown. However, Hero MotoCorp claims it dispatched 5,07,690 units of motorcycles and scooters in September. This includes 4,80,237 motorcycles and 39,743 scooters respectively. HMSI, on the other hand, claims to have dispatched 4,88,924 units in September. It should be noted that dispatches are different from registrations, as the number of two-wheelers sent by the OEM to the dealers is the dispatches, which is released by the OEMs every month, whereas registrations correspond to the number of two-wheelers sold by dealers to the end-consumer and registered in RTOs across the country on the Vahan portal. It is also worth noting that the Vahan data does not include data from Madhya Pradesh, Telangana, and Lakshadweep.

The company, meanwhile, remains optimistic about customer demand over the coming weeks. "The normal monsoon across most parts of the country and the encouraging farm activity is likely to contribute towards positive customer sentiments," it says in its monthly update. Analysts, on the other hand, have flagged Hero MotoCorp's diminishing prospects as a cause for concern. "Hero's lack of diversification (we estimate more than 80% volumes/profits are from domestic commuter motorcycles) and a weak execution track record on premium motorcycles, scooters and exports does not bode well for the EV transition," reads a UBS report released earlier this year.

According to UBS, the bulk of sales of Hero MotoCorp comes from the two-wheeler brands developed under the Hero Honda-JV, which predominantly includes the Splendor and the Passion brands of motorcycles. Despite multiple launches, Hero MotoCorp was not able to scale either its premium bike offerings nor its scooters and has folded multiple brands over the years. Another report by brokerage firm Elara Capital says that while September usually sees a dip in sales, the amount of ground Hero MotoCorp has lost in market share is alarming. In the states where Hero MotoCorp has a dominant market share (50%)—Uttar Pradesh, Bihar, and Jharkhand—has fallen considerably in September. Elara Capital also mentions that assuming this month was the lowest, the market share in FY 2022-23 would account for 28%.

HMSI says that the auto-industry registered a strong demand force in the second quarter as this momentum continues to rise with the on-going festival celebration. "All our dealerships are witnessing a visible rise in physical walk-ins as well as customer enquiries," says Atsushi Ogata, managing director, president and CEO, Honda Motorcycles and Scooter India. Hero MotoCorp will also be banking on this demand induced by the festive season, as Elara Capital believes that a reversal of fortunes is slated to happen in November, for Navratri and Diwali—both auspicious occasions in India for big-ticket purchases—will be celebrated in October.