Hero gains market share in entry level bikes on higher rural buying, lower finance rates in FY25
HighlightsHero MotoCorp gained 600 basis points in entry-level motorcycle market share in FY25, driven by rural demand revival and easing credit conditions. The company aims to scale its EV business under the VIDA brand, targeting breakeven at 25,000–30,000 monthly units in the next two years. Hero also entered the electric 3-wheeler space in FY25 with a 34.1% stake acquisition in Euler Motors.
New Delhi:
Demand in the entry level motorcycle segment has seen a revival and
Hero MotoCorp
plans to make the most of this phenomenon. Hero has the largest share of the entry level pie and claims to have gained 600 basis points (6per cent ) market share in this segment in FY25. It is interesting that Hero has underlined the return of demand in the entry level motorcycle business, its bread and butter, in the last fiscal. The same trend has not been seen in the entry level car market for example, with Maruti Suzuki lamenting the continued decline in the sales of entry level cars recently. Like the
entry level bikes
, such cars are also typically bought by first time buyers and have had a historic appeal in smaller towns and the hinterland. Maruti Chairman R C Bhargava had said that 88per cent of India was not participating in the car growth story and this was the primary reason for decline of entry level cars.
Also Read: Hero MotoCorp completes acquisition of 34.1% stake in Euler Motors
But for
Hero MotoCorp
, the last fiscal has brought cheer. Executive Director and Acting CEO
Vikram Kasbekar
said in a call with analysts after the Q4 FY25 results that the company has seen 'a strong bounceback' in the entry level segment and that it has 'outperformed' the 125 cc category of motorcycles last fiscal.
We've been growing market share on Vahan sequentially every month in this calendar year already…Increasing dominance in entry level and as that market share has gone to 65per cent , up 6per cent growth Y-o-Y.Vikram Kasbekar
Hero has attributed this turn in fortunes to various factors: resurgence in rural buying due to good monsoon rains and consequent increase in farm incomes, reduction in financing stress for this segment of buyers and easing of lending rates by the RBI (which led to lower instalments for customers).
Kasbekar said in reply to a question that in the March quarter, Hero gained 600 basis points (6per cent ) in market share in the entry level motorcycle segment.
To another question on a decline in the industry volume in the 100 cc segment in the last two quarters of FY25, Kasbekar acknowledged that the 100 cc and the entry category has been under stress due to stress 'at the bottom of the pyramid' for the last few years. 'In quarter four, I mean, we had seen an impact across categories, not only in this. I mean, if you look at the delta shift from how these segments were growing versus how quarter four behaved, you saw a blip across categories. So we really can't single out the 100cc category just by itself. That said, I mean, we are a very dominant player in this category. In the 100cc, we operate with almost a 90per cent market share. Year on year, we have had a 600 basis points increase in terms of entry market share. So here our job is to expand the category and this is where we are going to be focused upon,' he said.
Also Read: Hero MotoCorp's CHRO Rachna Kumar joins TVS Motor
Hero reported the highest revenue and profits for FY25 and plans to continue growing market share in the current fiscal, led by entry-level and 125cc motorcycles.
'We've been growing market share on Vahan sequentially every month in this calendar year already…Increasing dominance in entry level and as that market share has gone to 65per cent , up 6per cent growth year on year. The growth in the 125 cc segment with product interventions, process improvement is something that's been helping us go forward,' Kasbekar said.
We will continue to improve on our profitability as we go forward… I continue to really drive the business with a lot more efficiency.Vikram Kasbekar
EV breakeven in two years
In the electric vehicle business (VIDA brand of electric scooters), Kasbekar said the company gained market share during the March quarter and reached 7per cent . He said the EV business is on a sustained growth curve held by investments behind the brand, brand building, pricing intervention and launch of the Vida V2 scooter. 'In 30 markets, cities, we have grown by 20per cent and in 60 cities we have grown by 10per cent .' With volume growth of 200per cent in FY25, EBITDA for the EV business also improved to 95per cent from -155per cent in the previous fiscal. Kasbekar said while Hero's priority would be scaling up the EV business, breakeven will happen only at 25000-30,000 monthly sales volume and this could take a couple of years.
In the 100cc, we operate with almost a 90per cent market share. Year on year, we have had a 600 basis points increase in terms of entry market share.Vikram Kasbekar
'So as we really look forward, our priority is very clearly to grow volumes, to scale up the business and to really grow market share. Having said that, we will continue to improve on our profitability as we go forward… I continue to really drive the business with a lot more efficiency. What will really make this business profitable is the scale up, which we talked about…also what I want to really add is that at a 25,000- 30,000 levels of volume per month, we hope that this will break even. Which in our view is a couple of years away.'
During the fiscal, Hero also entered the electric three wheeler market by acquiring 34.1per cent stake in Euler Motors.
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