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Hero MotoCorp Reports 20% Decline In Domestic Sales Amid Market Share Pressures
Hero MotoCorp, India's leading two-wheeler manufacturer, experienced a 20% drop in domestic sales in February. The company dispatched 3.57 lakh units, marking the fourth consecutive month of declining dealership dispatches. This trend follows a 2% decrease in January, a 22% fall in December, and an 8% dip in November.
Despite the decline in dispatches, retail sales of two-wheelers showed positive growth during the same period. Data from the Federation of Automobile Dealers Associations (FADA) indicated increases of 16%, 11%, and 4% over the past three months. However, Hero MotoCorp chose to cut back on dispatches despite this retail uptick.
Market Share Challenges
Hero MotoCorp's market share has been under pressure due to ongoing sales challenges. Honda Motorcycles and Scooter India has been closing the market share gap with Hero MotoCorp throughout this financial year. Hero's share of domestic dispatches fell to 28.8% during April-December, down from 30.4% the previous year.
The company's total two-wheeler dispatches, including both domestic and exports, decreased by 17% year-on-year to 3.88 lakh units in February. However, exports saw a significant rise of 33%, reaching 30,772 units compared to last year.
Focus On Premium Markets
Traditionally strong in entry-level motorcycles, Hero MotoCorp is now concentrating on premium motorcycles and scooters. Motorcycle sales dropped by 19%, while scooter sales increased by 14%. The company is also making strides in electric vehicles through its Vida brand, which dispatched 6,200 electric scooters in February.
Automakers often reduce dealership dispatches when inventories surpass average levels or when market conditions appear uncertain. Despite recent declines, Hero MotoCorp remains optimistic about long-term growth prospects for the two-wheeler industry.
Inventory Management
The management confirmed that inventory levels at the end of December were aligned with their target of maintaining four weeks' worth at dealerships. This strategic approach aims to balance supply with demand effectively.
Data from FADA also shows a decline in market share to 29% in 2024 from 31.3% in 2023. Despite these challenges, Hero MotoCorp continues to adapt its strategies to maintain competitiveness within the evolving market landscape.
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