Once a partner, now rivals, Honda Motorcycles and Hero MotoCorp relations have impacted the Indian two-wheeler space greatly. How and why?
The two-wheeler sales numbers for September 2022 have ignited like a forest fire, all-over. Why not! Hero, earlier Hero Honda and later Hero MotoCorp, has been the numero uno two-wheeler brand in India for over two decades now! Forest Fires can never really be doused. But it is still important to appreciate the market beyond just some monthly sales numbers. Importantly, we need to realise that one of the primary aspects of ‘market-share’ is ‘market’; and the market consists of the ‘marketer’ as well as the ‘consumer’.
Over a decade back, Hero and Honda parted ways. The dominant thinking in India being that if a truck and a scooter have been involved in an accident, the fault must be pinned onto the truck; no matter what, people love to take pot-shots at the ‘big’ guy. People have written Hero’s epitaph since then. Now for ten years, relentlessly. No wonder, with Honda numbers crossing that of Hero for the month of September, let alone epitaphs, digging of graves too, has started in the right earnest!
It is, of course, possible, and not really a remote one that the monthly numbers could well be a reflection of the new King having taken birth! Only time will tell, as they say. But, it would be reasonable to at least put on the table all the perspectives, not just the supply-side ones.
To look at tomorrow, let’s go back to yesterday. How and why did Hero (Honda) become the king about two decades back? Lots to say. There can never be just one or two factors. But primary, if not the only one, was the advent of four-stroke!
The quick torque that the four-stroke helped generate and, more importantly, the mileage four-stroke engine gave to the delight of value-conscious Indian two-wheeler customers, particularly as compared to the dowdy Bajaj Scooters, literally filled the market with the motorcycles, shut the scooters up and made everyone forget everything else.
So, we need to realise and appreciate that, the paradigm shift is one of the key factors – in this case, Tech – that can bring a paradigm shift in the Market, notwithstanding whatever the numbers!
Now, let’s come back from yesterday, but just a decade further. When Hero and Honda parted ways in 2011, all – yes, each and every – product came from Honda. But still, for the last ten years or so, Hero sans Honda continued to lead. Well, yes, the brands built with Honda products, viz., CD, Splendor, Passion and Glamour, did remain with Hero. But, like Tech was a primary factor in the year 2000-01 in Hero Honda taking over from Bajaj Scooters, there’s another factor that kept the Hero flag flying. The On-Ground Footprint!
Contrary to the expectations of the epitaph writers, the number of Channel partners leaving Hero to join Honda didn’t reach two digits. Out of well over 3,000 touch-points, not even ten crossed over! We need to appreciate that apart from the products, the other key aspect for two-wheeler customers, particularly in small-town and rural India, is the ‘dealer’. Still, as of 2022, the scenario isn’t much different.
Fast forward now to 2022. Yes, Honda has zipped past Hero. But how and why? Like – again, not the only factor – it happened in the late 90s to early 2000s, the Indian Families’ love for Scooter propelled Honda – with Activa, for instance – closer and – now – ahead of Hero, while Hero struggled to put its house in order, post the divorce with Honda. At the same time, the Rural Indian market has been sluggish. The Pandemic, in particular, has impacted small-town and rural Indian badly and has also made her a lot more circumspect, particularly when making a big-ticket investment decision, which two-wheeler buying is.
So, in my view – though only time will prove me right, or perhaps, wrong – the history tells us that, well, history repeats itself. The September, 2022 might not be a blip. An industry as integral to a Market like India, cannot be one-horse race, after all. 40%+ or even 30%+ share that Hero has had, is indeed not-natural. But, let’s not the epitaph-writers turned grave-digger dig the entire Earth up to bury Hero.
Hero isn’t dead as yet. Honda is not a new hero, as yet! The blip isn’t a trendline.
The On-Ground Footprint remains with Hero. Small-town and Rural India is poised to bounce back and….Hero seems to putting its house in order. It already had made massive investments in R&D setup – for instance, its Kukas-based CIT – as well as, Manufacturing – for instance, the new-age Neemrana facility apart from other Plants. Now, it has Leadership in place, as well. iSmart technology for its key brands came from Hero itself. Having burnt its fingers (or is it wheels!) with some ‘gora’ product and design entities, Hero has all the learnings, importantly the hard way, which mostly leads to deeper learning!
Most importantly, not the only one, but the key factor is going to be Tech again. Which the epitaph-writers-cum-grave-diggers seem to ignore for some reason. Honda, for instance, has no apparent plans for EVs. Hero, on the other hand, not only has a substantial stake in one of the leading EV-Two Wheeler brands, viz., Ather….
….but has partnered with one of the global EV leaders, Gogoro (fortunately sounds similar to ‘Gora’, but isn’t one!), as well.
On top of that, Hero has not just had plans but has actually launched VIDA, its EV-Scooters range.
When Hero and Honda parted ways, Hero had about 45% market share. But, when Hero, TVS and Bajaj launched motorcycles, along with Honda, Suzuki and Kawasaki, Bajaj – actually Bajaj Scooters – were literally the entire market holders! Plus, India loved Scooters. Yet, Motorcycles and particularly Hero changed the market upside down. Four-stroke was the paradigm shift in Tech that brought the paradigm shift in the Market two decades back. Let’s realise the September numbers aren’t the paradigm shift. The Tech…EV-Tech is! History repeats itself…or is likely to!
Yes, Honda has indeed done fabulously well. Yes, Hero or anyone cannot continue to hold a 30%+ kind of market share. Yes, these monthly numbers will keep riding on a roller-coaster. Yes, Forest Fires cannot be doused completely. But the depth of the grave…err…depth of the understanding of the Indian two-wheeler market needs to be a little better!