Slow to shift gears, Hero struggles in fast-changing 2W market

HERO MOTOCORP'S REIGN as the country's biggest manufacturer of two-wheelers may soon come to an end.

- NITIN KUMAR

Over the past decade, the company has seen its market share shrink from 40% to 29%. Now, Honda Motorcycle and Scooter India (HMSI), with a share of 27%, trails Hero by just a few hundred thousand units.

The cause for Hero's descent is its slow entry into the high-margin scooter and electric segments. At a time when the industry reported a 23% rise in units sold between FY15 and FY25 to nearly 20 million units, Hero's sales fell 13% to 5.6 million.

Indeed, Hero's reluctance to take its eye off the sub-110 cc category and focus on premium opportunities is surprising, especially since this segment has been losing share. As Rajat Mahajan, partner and automotive sector leader, Deloitte India, points out, the price-sensitive commuter segment or the 90-110 cc segment accounted for 67% of the market in 2014, but that's now down to 47-48%.

But Hero continued to derive nearly 80% of its 5.6 million unit sales from this segment; excluding scooters, the share was slightly higher at 85%. In the current year too, Hero is looking to outpace the industry's 6-7% growth in FY26 by focusing on the entry-level segment whereas experts believe it should be exploring the potential in high-growth areas like premium bikes, scooters, and electric two-wheelers.