BUSINESS

CLUB

INTRA-BCLUB
CASE
CHALLENGE
2023
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Hero MotoCorp

“From the dawn of the day

The Indian two-wheeler industry has the most units sold among all the motor vehicles in India. The
rise in the number of working women and the rising trend of automobile ownership, particularly
among middle-class customers, are the main drivers of this. The market's growth is also being
accelerated by the increased demand for tiny mobility solutions brought on by issues including a lack
of parking spaces and excessive traffic. The rising popularity of two-wheelers due to their many
benefits, including their comfortable riding, particularly over short distances, simple bank financing
possibilities, improved affordability, etc., is also painting a favourable picture for the market.

Market Growth

The market for two-wheeled vehicles in India is anticipated to grow from an estimated value of USD 16,007.84
million in 2022 to USD 26,638.49 million in 2028, a CAGR of 9.88%.

Exhibit 1: Market growth prediction till 2028

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Exhibit 2: Market share of companies in FY 2021-2022

Exhibit 3: 2 Wheeler Original Equipment Manufacturers market share

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EV Two wheeler Market

The market for electric scooters and motorcycles in India was valued at USD 893 million in 2022;
from 2022 to 2030, it is anticipated to increase at a compound annual growth rate of 27.30%,
reaching USD 6,161 million. Due to the increased demand for zero-emission vehicles, favourable
government laws, the growing desire for energy-efficient commuting, and rising fuel prices,
two-wheeler manufacturers have been forced to look into alternate power sources for their
two-wheeled models. Moreover, central, state and local governments have recently implemented a
number of programmes to control the pollution caused by vehicles, including purchase rebates, tax
exemptions, and financial incentives for the buyers of EVs.

In the upcoming years, electric scooters, particularly those with a medium top speed (40–80 km/h),
will rule the market. Sales of electric scooters in this speed range are being boosted in India by their
wide availability, low cost, and feasibility as an alternative to traditional gasoline-powered mopeds.
With a market share of more than 80% in 2022, 48V batteries are the most widely utilised power
source in this industry. Moreover, the percentage of electric two-wheelers using 60V batteries is
anticipated to increase over the next several years due to the growing desire for faster speeds and
longer driving distances. The market for bikes will gain over the forecast period as manufacturers are
anticipated to introduce a number of electric motorcycle models in the nation in the upcoming years.

Exhibit 4: Indian Electric Scooters Market

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Adventure Bike Segment

Adventure bikes are becoming increasingly popular as these bikes offer almost everything that other
motorbikes do, with more capabilities and practical uses. According to the Motorcycle Industry
Council, dual-purpose motorcycles had a sales growth of 22% from 2019 to 2020.
Adventure bikes can go off-road as well as provide easy and comfortable rides on the highway.
The global adventure motorcycle market is expected to grow at a CAGR of 8.7% from 2023 to 2028.
The market is expected to be driven by increased participation in sports and adventure activities.

In India, the ADV motorcycle market experienced exponential sales in India from 2018 to 2022, and
predictions show that sales will grow during the next five years.

Current players in the Global Adventure Motorcycle Market are:-

Manufacturer 2016 2017 2018 2019 2020 % Market

Honda 4,712,729 5,456,364 5,884,893 4,802,880 3,524,668 25.20%

TVS 2,475,229 2,714,557 3,146,627 2,691,905 1,947,439 13.92%

Bajaj 2,021,576 1,849,208 2,382,541 2,202,055 1,631,948 11.67%

Royal Enfield 620,611 752,875 837,669 690,839 520,460 3.72%

Yamaha 786,468 786,787 796,234 634,744 492,987 3.52%

Suzuki 316,979 464,546 627,983 715,739 488,253 3.49%

KTM 30,798 43,885 46,261 63,381 53,460 0.38%

Piaggio 33,229 63,342 79,629 67,965 45,872 0.33%

Kawasaki 1,546 1,518 2,665 3,295 1,205 0.01%

Harley-Davidson 4,232 3,304 3,110 2,495 1,005 0.01%

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India’s Two Wheeler Sales in the First Nine Months of FY 2023 How the Two Wheeler
OEMs Stack up in the
Month Domestic Market Sales (in units) %
Market Share (%)
Apr-Dec ‘22 Apr-Dec ‘21 Change Growth Apr-Dec ‘22 Apr-Dec ‘21

Hero MotoCorp 39,21,309 35,37,640 3,83,669 11% 32.00% 34.75%

Honda M&S India 33,22,746 25,58,379 7,64,367 30% 27.10% 25.13%

TVS Motor Co 19,19,283 15,09,615 4,09,668 27% 15.65% 14.82%

Bajaj Auto 13,90,698 13,01,984 88,714 7% 11.34% 12.78%

Royal Enfield 5,42,818 3,60,905 1,81,913 50% 4.42% 3.54%

Suzuki Motorcycles India 5,39,027 4,39,868 99,159 23% 4.39% 4.32%

India Yamaha Motor 4,45,888 3,64,928 80,960 22% 3.63% 3.58%

Okinawa Autotech 82,880 48,836 34,044 70% 0.67% 0.47%

Ather Energy 53,709 15,465 38,244 247% 0.43% 0.15%

Piaggio Vehicles 35,254 38.840 -3,586 -9% 0.28% 0.38%

India Kawasaki Motors 2,761 2,803 -42 -2% 0.02% 0.03%

Triumph Motorcycles India 830 950 -120 -13% 0.01% 0.01%

Chetak Technology 195 - 195 - 0.00% -

Mahindra Two-Wheelers 96 3 93 3100% 0.00% 0.00%

Exhibit 5: Manufacturer Sales Trends and Market Share

Premium Bike Segment

A CAGR of 7.33% is predicted for the Indian two-wheeler market, which is expected to increase from
21.19 million units sold in 2019 to 24.89 million units sold in 2024. With the growing demand for such
bikes in the Indian market, a sizeable portion of this may come from high-end, high-performance
models. Many young riders aim to upgrade their two-wheelers to a higher-performance one, which
could boost the Indian premium two-wheelers segment to the next level.

By 2023, it is anticipated that the luxury motorbike market in India will increase to $161 million, with
youthful riders likely to play a significant role in this growth. The increased popularity of superbike
clubs and communities, rising per capita income, expanding motorcycling culture, and accessibility to
a large selection of high-end bikes from many international manufacturers, like KTM, Triumph, Suzuki,
Yamaha, etc.

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Hero MotoCorp

Hero MotoCorp is the largest manufacturer of two-wheelers in India as well as the world. Having
joined the motorbike industry as a joint venture between Hero cycles and Honda, known as Hero
Honda, it released its first motorcycle back in 1984 and quickly became a major player due to its
bikes' cutting-edge fuel efficiency, low cost, and manufacturing quality. The joint venture, however,
came to an end in 2011, and it split to form HeroMotoCorp 2011. It held a market share of about
34.51% by FY2022, just above other competitors like Honda(24%) and TVS (15%), with a YOY growth
of 11%. It logged 12% Yoy Sales Growth In April 2022, selling 4.19 Lakh units compared to the
corresponding month of the previous year (April 2021), when the company reported sales of 372,285
units.

Hero has also become a trusted and reliable brand in several foreign nations. It dominates several
overseas markets and has also set up a manufacturing plant in Columbia. Hero's core business is
motorcycles, which account for 92.36% of all sales for the company. Hero's best-selling motorcycles
are the Splendor, HF Deluxe, Passion, Xtreme, and Xpulse, among others, while only 7.64% of all sales
are made up of scooters.

Hero Domestic Jan-23 Jan-22 Growth YOY %

Splendor 2,61,833 2,08,263 25.72

HF Deluxe 47,840 85,926 -44.32

Destini 125 10,975 3,049 259.95

Glamour 9,766 24,473 -60.09

Pleasure 7,354 13,195 -44.27

Passion 3,601 11,759 -69.38

Maestro 3,008 5,743 -47.62

Xpulse 200 2,427 3,132 -22.51

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Hero Exports Jan-23 Jan-22 Growth YOY %

HF Deluxe 2,448 3,596 -31.92

Splendor 1,936 4,030 -51..96

Hunk 1,643 10,642 -84.56

Glamour 672 2,772 -75.76

Xpluse 200 472 1232 257.58

Maestro 50 312 -83.97

Destini 32 58 -44,83

Pleasure 0 274 -

Exhibit 6: YoY growth% of different bike models

Hero’s Position in Premium and Adventure Bike Segment

Hero MotoCorp is the world's largest two-wheeler company and has been at the forefront of creating
new categories for mobility. The company's strategic move to launch Impulse, India's first adventure
bike in the 150cc segment in 2011, created the adventure market in India. Building on this success,
Hero MotoCorp launched Xpulse 200 in 2019, India's first 200cc adventure motorcycle, which
targeted young and thrill-seeking riding enthusiasts who seek a comfortable and capable riding
companion for adventure excursions. This move has helped the adventure motorcycle market in India
grow by over three times in the last three years, highlighting Hero's strong position in this segment.

Hero Motocorp, once the pioneer of the premium segment with Karzima and ZMR, has re-entered the
segment with the launch of Xtreme 160R, which has the best in class 0-60 kmph and its Stealth
Edition launched in October 2021 and quickly caught the consumers' attention and is gradually
occupying a unique space of Drag Racing. The premium motorcycle segment is pegged at around 2.5
million units per annum in India, and Hero's strategic move to re-enter this segment shows the
company's commitment to innovation and creating new categories for mobility.

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Hero MotoCorp has a strong position in the Indian two-wheeler market due to its success in both the
adventure and premium bike segments. The adventure bike segment in India has grown significantly,
and Hero MotoCorp has played a vital role in this growth. The company launched India's first
adventure bike in the 150cc segment, the Impulse, in 2011, creating the adventure market in India. In
2019, Hero MotoCorp launched India’s first 200cc adventure motorcycle, the Xpulse 200, which
targeted young and thrill-seeking riding enthusiasts seeking a comfortable and capable riding
companion for adventure excursions. Led by Xpulse, the motorcycling adventure segment in India
has grown by over three times in the last three years.

In addition to its success in the adventure bike segment, Hero MotoCorp is making significant strides
in the premium bike segment in India. The premium motorcycle segment of 150cc and above is
pegged at around 2.5 million units annually in India. Hero MotoCorp was once the pioneer of this
segment with Karizma and ZMR. However, the company recently faced increased competition in this
segment and temporarily exited the market.
However, Hero MotoCorp is now back in the premium bike segment with the launch of the Xtreme
160R, which has the best-in-class 0-60 kmph and a list of next-gen "first in the segment"
technologies. The Stealth Edition of the Xtreme 160R, launched in October 2021, has quickly caught
consumers' attention and is gradually occupying a unique space in Drag Racing. Hero MotoCorp has
made it clear that it intends to multiply its focus on the premium segment, with the plan to launch
four new models in 18 months. The company covers three segments, the XPulse 200, XPulse 200T,
and Xtreme 200S, all built on a common platform. This focus on a common platform allows for
efficient production and helps the company to cater to different types of riders with varying needs.

Overall, Hero MotoCorp's renewed focus on the premium bike segment and its success in the
adventure bike segment put it in a strong position in the Indian two-wheeler market. By catering to
the needs of a diverse range of riders, from adventure enthusiasts to performance riders, Hero
MotoCorp is well-positioned to continue to grow its market share in India.

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Questions

1. Devise a new approach for Hero in this relatively new segment of adventure bikes to spread
awareness among consumers and convert them to buying hero bikes. Also, analyse various
reasons which affect the decision of any consumer while buying an adventure bike

2. The premium segment of the motorcycle segment is controlled by a few players, and
consumer retention for those brands is high. Devise a plan(Go to market strategy) for Hero
moto corp to break the clutter and redefine market landscapes and become the brand of
choice of the GenZ generation, regaining its position in the market

3. Focusing on the consumer segment of GenZ’s Hero can also go into the segment of EV
motorcycles. Research and Analyse the EV motorcycles market and help Hero choose whether
opting for EV will help the company grow in the future and increase its market share in the
long run. What voltage batteries should Hero use as their power source to meet not only the
present demand but also tackle the future market demand of higher speed premium bikes?
Back your arguments with appropriate facts and data.