Hero MotoCorp rides into used two-wheeler business

Hero Sure helps the customer get the best price for his vehicle on the basis of a transparent evaluation process.

Hero MotoCorp, the country’s biggest two-wheeler maker, has made an entry into the used two-wheeler business to offer buyers an option to exchange their old motorcycle or scooter while purchasing a new Hero product.

The Pawan Munjal promoted firm had exited this segment due to taxation related issues several years ago.

The introduction of Goods and Services Tax (GST) last year made the company re-look at this business.

The company has, as a pilot, rolled out the used-vehicle facility at about a hundred showrooms so far under a brand called ‘Hero Sure’.

The previously used vehicle business had also existed under the same brand name but was closed in the early nineties.

“Hero Sure helps the customer get the best price for his vehicle on the basis of a transparent evaluation process.

"About 5,000 vehicles are currently exchanged on an average every month at the Hero Sure facilities,” a Hero MotoCorp spokesperson told Business Standard.

The company said the response received is ‘positive’ and there are plans to go for a rapid expansion of this used vehicle facility to more locations in different parts of the country.

The company has about 6,500 touch points across the nation for sales and service.

So, the number of ‘Hero Sure’ facilities is expected to grow manifold from the current hundred.

The volume of vehicles coming to Hero Sure can multiply rapidly from the current 5,000 every month as Hero sells over seven million units every year.

Country’s biggest car maker, Maruti Suzuki, which operates a pre-owned car network under the ‘True Value’ brand, does about one-fourth of new sales through exchange.

“We have a huge customer base, including more than 10 million active customers in our Customer Relationship Management program - ‘Hero GoodLife’. We intend to leverage this platform to further popularise Hero Sure,” the spokesperson added.

Hero Sure, the company believes, will help to tap the huge potential in the replacement market by facilitating the exchange of used two-wheelers through a transparent process that creates best exchange value for the customer.

Talking about the first used vehicle facility which had to be shut down, Sanjay Bhan, the head of sales and after sales at Hero said, “there were headwinds in terms of the overall taxation regime, etc, which prevented us from going all out. But with the GST in place now the environment is very conducive”.

He said the company sees this segment as an opportunity now because a lot of its customers want to upgrade, they want to exchange, and they want a fair deal.

“And not just our own customers who want to upgrade to newer models but also people out there in the market who want to buy from sources that are genuine and also have the flexibility of getting those bikes reconditioned in some form. So, we do see a lot of upside there,” he said.

The list of states where Hero has rolled out the used vehicle facility includes Tamil Nadu and Gujarat.

“Tamil Nadu is one state where we are doing extremely well, we have got very good response from Tamil Nadu and Gujarat, these are the two states where we focus ourselves on.

"It is quite encouraging and we hope to open up soon in other markets,” said Bhan.

Photograph: Amit Dave/Reuters