May 16, 2022 Last Updated 08:53 AM EDT

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Honda's sales rise in Indian markets, but Hero still ranks No 1

Apr 13, 2016 08:00 AM EDT

Honda, the Japan-based automaker, widened its sales portfolio to a robust 4,500 touch points from nearly 800 outlets. Honda's market share increased to 26% from 15% at the end of March 2011, when the automaker terminated its partnership with the Indian-based motorcycle maker Hero.

The increase in market share was helped by growth factors like advanced network systems, the wide range of products and the developing scooter industry. However, Hero still remains a dominant seller of motorcycles in the country.

Sales from Bajaj Auto propelled the automaker's largest gain. Bajaj's market share dropped to 11.5% from 20% in the Indian motorcycle industry. Meanwhile, Hero's share faced a downward slide to 39% from 44%, hurt by volatility in rural sales and consecutive unusual monsoons that adversely affected two-wheeler sales in the country, Business Standard reported.

Hero invested roughly Rs 850 crore in opening a new R&D plant near Jaipur in March. The two-wheeler maker aims to employ 600 engineers at the new facility by 2016 end. Markus Braunsperger, chief technology officer, will control operations at the Jaipur centre. In addition, Hero's growth strategy also includes the launch of Maestro Edge and Duet, exclusively for Indian markets. The launch mirrored hero's desire to gain from the growing scooter market.

Maestro Edge and Duet fuelled sales in Hero's scooter unit to 9% in 2015 and elevated its share near to 20% in most periods after September. According to Pawan Munjal, chief executive officer and chairman of Hero, raw materials prices combined with efficient growth plans boosted the company's balance sheet.

Honda also claimed that it has invested the money, which it had earned from Indian markets, in widening its business portfolio. Y. S Guleria, senior vice president of Honda's marketing unit, said, "While we have expanded to 4,500 points. Any new network needs to create its own connect with the local population before it starts performing at an optimum level."

Currently, Hero shares are trading up 58.15 points at Rs. 3034.70, an increase of 1.95% from its past closing price of Rs. 2976.55 on the Bombay Stock Exchange. The stock reached a high end of Rs 3047.85 and a low end of Rs 2973.10 during the trading session, livemint reported.

Meanwhile, AutoGuide reported that Honda has recalled 2004 to 2007 Accord model for having the wrong airbag installed into its system. Honda noted that the recalled cars have a traveller front airbag version, which is designed for vehicles in South America. The versions were wrongly installed during the manufacturing process in the US and that it does not obey federal rules.

The global automotive industry is struggling to boost its sales performance amid the sluggish economy around the world. Honda and Hero implement various business strategies to gain customers' confidence.

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