Hero MotoCorp’s attempts to crack the premium bike segment once again by bringing back the Karizma motorcycle after a nine-year hiatus has not enthused investors, even as it continues to cede market share and has slipped to fourth position in the market capitalisation ranking.
After pulling it out from showrooms in 2014 due to poor demand, the Delhi-based company relaunched the Karizma with actor Hrithik Roshan earlier this week, priced at Rs 1.72 lakh. Hero’s stock has fallen 2.5% since the launch of the new bike.
Hero’s market share in the domestic two-wheeler segment hit a new all-time low at 28.95% by the end of July, as per data shared by the Society of Indian Automobile Manufacturers. Total volumes of its budget bikes (up to 110cc) , which make up nearly 80% of its sales, fell 12% year-on-year. Its premium motorcycle (150cc-200cc) volumes crashed by 44% during the same month.
“We believe weak demand trends, coupled with increased competitive intensity in the commuter segment, will weigh on growth prospects of its core portfolio. In our view, it will be challenging for the company to gain meaningful share in the premium motorcycle and scooter segments, given weak brand positioning and strong customer affinity toward established brands,” said Kotak Institutional Equities in its latest report.
Despite repeated push through multiple product launches, Hero’s presence in the scooter segment, which controls 32% of the 17 million-strong domestic two-wheeler market, has remained minuscule at just 6%. A relatively much smaller player, Yamaha, overtook Hero in July in the scooter race.
Hero’s presence in the electric two-wheeler (E2W) space has also been lacklustre. Since unveiling its maiden products nearly a year ago, Hero’s market share in the E2W space was less than 2% by the end of July, according to data supplied by FADA.
After announcing a tie up with Taiwan’s Gogoro 30 months ago to develop a battery sharing infrastructure in the country which will power Hero’s electric two-wheelers, the project is yet to see the light of the day. Both companies refused to speak on the proposed plans even as mails sent to them remained unanswered at the time of going to press.
With the help of new launches and product iterations, Bajaj Auto, TVS Motor Company and Royal Enfield have ramped up their presence, chipping away Hero’s market share. With the two-wheeler market leader struggling in most segments, the performance is visible in the company’s market capitalisation.
After overtaking Hero MotoCorp in market capitalisation in July 2023 for the third time ever, TVS Motor Company, which also sells three-wheelers, has rapidly stretched its lead over the maker of Splendor motorcycles. The market capitalisation gap between the two companies stands at Rs 9,500 crore as of end of August 31.