Hero Honda, world's largest two-wheeler manufacturer, is all set to do a nano in the bike market.
The company which controls 60 per cent of the market share is now focussing on ultra low cost bike to be priced around Rs 20,000, that could easily alter the dynamics of the market.
The R&D department at Hero Honda is working overtime to bring a new range of bikes to the market that will sport smaller displacement engines.
But the real scoop? These are motorcycles that will be priced at about Rs 20,000 and the timing could not be better as arch rival Bajaj readies its ‘Made in China’ cheaper bikes for first the African and then Indian market.
Anil Dua, marketing head of Hero Honda, said, "We are considering several options. This is one of them."
Hero Honda is planning two engines—one a 75cc and the other 110cc. The project is indigenous, which means unlike other Hero Honda products, it has no Honda R&D. The bikes will be rolled out in a 12-18 month timeframe.
Hero Honda sources indicate that margins on the new products will be strong despite the low price tags, since a number of components will be shared with highly depreciated products like Splendor. This also indicates bigger economies of scale for the company. In the past, the stiff cost targets of such an ambitious product line were also hampered by steep input prices.
However, with the cost of raw materials easing and a further drop expected, the company now has enough elbow room to negotiate both pricing and margins to try out such segments. This is just the kind of confidence that has made Hero Honda the darling of the analyst community off late.
Rajesh Jain, an investment advisor, said, "Growth is there irrespective of recession and lack of monsoon and they will do better in forthcoming quarters as well."
Meanwhile, Hero Honda is also likely to move the manufacturing of some of its premium segment products like the Karizma and Hunk to its Haridwar plant to take advantage of tax breaks there. This would also free up capacity for the new small bikes at Gurgaon and Dharuhera.
source: NDTVPROFIT
The company which controls 60 per cent of the market share is now focussing on ultra low cost bike to be priced around Rs 20,000, that could easily alter the dynamics of the market.
The R&D department at Hero Honda is working overtime to bring a new range of bikes to the market that will sport smaller displacement engines.
But the real scoop? These are motorcycles that will be priced at about Rs 20,000 and the timing could not be better as arch rival Bajaj readies its ‘Made in China’ cheaper bikes for first the African and then Indian market.
Anil Dua, marketing head of Hero Honda, said, "We are considering several options. This is one of them."
Hero Honda is planning two engines—one a 75cc and the other 110cc. The project is indigenous, which means unlike other Hero Honda products, it has no Honda R&D. The bikes will be rolled out in a 12-18 month timeframe.
Hero Honda sources indicate that margins on the new products will be strong despite the low price tags, since a number of components will be shared with highly depreciated products like Splendor. This also indicates bigger economies of scale for the company. In the past, the stiff cost targets of such an ambitious product line were also hampered by steep input prices.
However, with the cost of raw materials easing and a further drop expected, the company now has enough elbow room to negotiate both pricing and margins to try out such segments. This is just the kind of confidence that has made Hero Honda the darling of the analyst community off late.
Rajesh Jain, an investment advisor, said, "Growth is there irrespective of recession and lack of monsoon and they will do better in forthcoming quarters as well."
Meanwhile, Hero Honda is also likely to move the manufacturing of some of its premium segment products like the Karizma and Hunk to its Haridwar plant to take advantage of tax breaks there. This would also free up capacity for the new small bikes at Gurgaon and Dharuhera.
source: NDTVPROFIT
0 comments:
Post a Comment