Zweirad-Major presents the first electric product on July 1st
The country’s largest two-wheeler maker, Hero MotoCorp, said it expects the two-wheeler industry to recover in the current fiscal year as economic activity picks up and high grain prices boost rural incomes.
In view of the positive macroeconomic indicators, the company expects double-digit growth in the sector for the current financial year.
“Macro indicators are looking really good, GST earnings we’ve all seen it’s at an all-time high in April, E-Way bills are up, I’d say all sectors of the economy have opened up,” Hero said MotoCorp CFO Niranjan told Gupta in an analyst call.
Grain prices are high, they are increasing rural income, the monsoon forecast is decent and so on and so on, and it is also clear to see that while COVID has not gone away, everyone has now learned to get on with their livelihoods and therefore are recovering consumer confidence and spending are slight and even solid, he noted.
“We’re already seeing signs in April and have no reason to believe why the two-wheeler industry can’t grow double-digits in fiscal 2023,” said Mr. Gupta.
Notably commenting on the company’s growth prospects, he said, “We will be launching multiple products and variants during the fiscal year and with all the actions already taken, we are confident of gaining market share and thereby staying ahead of the industry.”
For the 2021-22 financial year, Hero MotoCorp reported consolidated profit of £2,329 billion, down 21% from £2,936 billion in 2020-21. Operating income fell to £29,551m from £30,959m in FY21.
Mr Gupta said the entire two-wheeler industry wants to get back to the peak of FY19 as soon as possible.
“We need to look at the fundamental underlying factors that contribute to the long-term growth of the two-wheeler industry. All these factors are intact and I will repeat these, whether it is under-penetration, the need for mobility, whether it is a penthouse that has happened in the last 3-4 years, the large pool that is developing , which should actually increase the need for replacements even more,” he said.
Also, better financing options could drive revenue growth, he added.
“So I think the fundamental growth levers remain intact. We’ll have to see how quickly it goes,” Mr Gupta said.
Listing the challenges, he remarked: “One area of concern for all industries is cost inflation, which we all know is now being triggered by the geopolitical situation. Of course this is a precautionary measure but we are no strangers to commodity inflation, we have seen cycles in the past and recently too.”
The company will continue to manage this space through a combination of sensible price increases, cost savings and, of course, broad-based portfolio growth, including premiumization of certain models, he added.
Speaking of the company’s electric product launch, Mr. Gupta said the two-wheeler major will launch its first model on July 1, 2022.
“We want to ensure through rigorous testing that the product we bring to market has the right quality and safety parameters, as we have always done in the past. For us, the customer comes first and business follows,” he added.