Hero scooters to race against Honda

The competition in the motorcycle segment is about to spill over to the scooters' market with Hero Honda Motor Limited (HHML) and Honda Motorcycle and Scooter India (HMSI) chalking out plans to corner a larger chunk of the pie in the fast-growing category.

While Hero Honda (soon to be renamed Hero MotorCorp) is ramping up capacity by over 50 per cent to manufacture half a million scooters in this fiscal, HMSI is readying itself to launch a fourth product after the existing Activa, Dio and Aviator.

Hero Honda has only one product in the segment - Pleasure.

The capacity expansion programme will enable the Munjal-controlled Hero group to close the gap with market leader HMSI.

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HMSI, which sold 893,335 scooters in the country last fiscal, has a market share of 43 per cent.

HHML with sales of 342,991 units in 2010-11 comes a distant third with market share of 16.5 per cent.

Anil Dua, senior vice-president (sales & marketing, Hero Honda Motor Limited (HHML) said: "Our scooter sales have outgrown that of the overall two-wheeler category last year.

Sales of Pleasure have shot up 70 per cent over the previous year. We are now increasing capacity to roll out 2,300 scooters a day from the earlier 1,500 units."

HHML sells around 35,000 units of Pleasure every month.

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The company, however, does not have plans to introduce a second scooter model in the immediate future.

"Five years back scooters accounted for 10 per share in the overall two-wheeler market in India, last year the share went up to 18 per cent.

We have plans to go a long way in the segment with the 'Pleasure'."

The sales growth in the scooters' segment has been evincing interest from two-wheeler makers.

While TVS Motors is conducting feasibility studies to introduce electric scooters in India, Yamaha Motor Corporation is developing a new product in Japan specifically for the Indian market.

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In 2010-11 scooter sales increased by 41.79 per cent to 2.07 million units in the domestic market.

"An increasing number of college-going and working women are opting for gearless scooters for personal transport.

With petrol prices on a rise this category is expected to grow rapidly. Two-wheeler makers are showing a renewed interest in the segment," said Abdul Majeed, leader, automotive practice, Price WaterHouseCoopers (PWC).

Hero Honda is the single largest two-wheeler manufacturer in India accounting for one out of every two motorcycles sold in the country.

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Post the termination of the joint venture Hero Honda between the Munjals and Honda Motor Corporation in December last year, HMSI has been investing to scale up motorcycle sales in India - an area where former partner HHML has a stronghold.

The company recently announced an investment of Rs 1,400 crore (Rs 14 billion) to double capacity to 1.2 million units at its second plant in Tapukara, Rajasthan, and to set up a third plant in Karnataka this fiscal.

Besides, the company plans to introduce core products in the mass commuter segment (100-110 cc) to challenge HHML's dominance.