It is the first time in its long journey that Hero Honda recognized the stiff fight endured by Bajaj auto over market share. Hero Honda is now under pressure to secure its position as number one and is facing a threat from its partner Honda for an anticipated exit from the tie-up. Hero Honda has been losing its ground in 75-125cc segment making it to just 68.9% during the period of April-August which was 81.8% during the corresponding period of 2009-10. In particular, there has been a slid in 100cc sector where Bajaj has penetrated with its Discover and Pulsar at a price range of Rs40000.
Hero Honda suffered a setback after the arrival of Discover 100cc from Bajaj, making the latter’s share increase by 19.5% with the sale of 5,05,724 units which was 1,99,790 units in the previous year. However, Hero Honda has got six ranges under 100cc comprising Splendor, Splendor+, Passion Pro, Passion Plus, Splendor NXG, CD Deluxe, CD Dawn. These models brought a sale volume of 17,87,869 units in the 100cc segment which received a sale of 25, 95,516 units . The corresponding sale during last year was 16,78,750 for Hero Honda in the overall sale of 20,51,656 units.
In addition to Bajaj, Hero Honda is witnessing a rivalry from HMSI which introduced its CB Twister, which saw a sale of 77,447 units during this fiscal from a mere 2 units last year. Hero Honda’s internal pressure comes in the way of production constraint which it is trying to overcome gradually by any means. Though the company has three facilities – Gurgaon, Dharuhera and Haridwar- the net production capacity is just 50 lakh units per year. Hence the search is on for erecting the fourth plant, for which it has inspected sites in almost 10 states across the country. Though the process is going on for more than six months, Hero Honda is yet to come across the suitable location.
Hero Honda has been receiving pressures not only from Bajaj but also from other corners in two wheeler segment, reported its annual report for last year.