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Hero MotoCorp anticipates a big rebound in two-wheeler (2W) sales in rural India over the next four to eight quarters, driven by favourable factors such as a decent monsoon, rising crop prices, improved employment conditions, and increasing consumer confidence, its chief executive officer (CEO) Niranjan Gupta said on Wednesday.
Amid tepid rural sales, he stated that there is a “strong case” for GST (goods and services tax) on entry-level two-wheelers, which are under 125 CC, to be moved down from 28 per cent to 18 per cent as they are used by “masses”.
“They (2Ws) are not seen as goods or luxury goods.
"They provide mobility to the masses in India. They also help generate a lot of direct and indirect employment.
"So, whichever way you look at it, there is a strong case for at least two-wheelers up to 125 CC to move down to 18 per cent GST,” he mentioned during a media roundtable.
Hero MotoCorp, India’s largest two-wheeler maker, saw its volume sales jump by about 7 per cent to 5.9 million units in 2024.
About 55 per cent of the company’s sales come from rural areas.
On the rural market, Gupta said: “The crop has been decent. I would say the monsoon has been decent.
"The MSP (minimum support price) of the crops has been going up.
"That's why I would say that all the ingredients of rural consumption have moved in the right direction.
"But have you seen the entirety of the rural results? I would say the answer is ‘no’. We have seen green shoots, and the ingredients are there.
"That's why in the next four to six or eight quarters, we could actually see rural areas bouncing back in a big way.”
The second Covid-19 wave impacted the rural areas the most. Medical costs went up and consumer confidence went down.
“Medical costs are what they are and the confidence is slowly coming up.
"Employment, which was lost during the second Covid wave, is slowly coming up,” he mentioned.
Gupta said that the electric scooter market is at a nascent stage and it is too early to declare winners and losers.
“Right now, just 5 per cent of the total two-wheeler market is electric.
"Subsidies are being phased out and the price competition is intensifying.
"It will take at least a couple of years before there is some stability in the electric vehicle (EV) segment,” he stated.
Ola, TVS Motor, Bajaj Auto, and Ather Energy are the top four players in the electric scooter market right now.
Hero, which is at number five position, sold 43,695 electric scooters in 2024, recording a 292 per cent year-on-year (Y-o-Y) growth, according to the Federation of Automobile Dealers Associations (Fada).
Gupta said that in the next four quarters, the company would launch its entire electric scooter portfolio, and spread its charging infrastructure and sales outlets across India.
“We are still not pan-India with Vida (Hero’s electric scooter brand).
"We have more than 10 per cent share in the majority of the 200 cities we are present in.
"However, our overall share is less than 5 per cent as we are not present across India yet,” he mentioned.
“Winners and losers can’t be decided with 5 per cent of the two-wheeler market.
"One company will go up in one month and it will go down in another. This will continue for some time,” he noted.
Companies are right now building the electric scooter category.
“Someone is expanding distribution, someone is expanding service, and someone is building the portfolio. Until it all settles down, we can’t decide the winner,” he stressed.
