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Bike majors ride into profit zone
BS Reporter in New Delhi
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July 02, 2008
New models together with aggressive financing options seem to have started paying rich dividends for the two-wheeler companies, which were down in the dumps just a few months back.

Hero Honda, the largest motorcycle manufacturer in the country, posted an impressive 16 per cent growth in June this year over the previous corresponding month.

The company sold around 3 lakh units in June (2.5 lakh units). Despite being the No 1 company in the entry segment where it derives much of its volume growth over its peers, the launch of the premium (125cc and above) models have helped spike sales in the first quarter of FY09.

The motorcycle major launched new models across all segments. The launch of CD Deluxe in the entry segment (less than 75cc); Glamour, New Splendor NXG, Splendor + and Passion Plus in the deluxe segment (125cc and above) and Hunk and CBZ X-treme in the premium segment (150cc) appear to have helped the company post robust growth this year.

The company's strategy of launching new models to sustain customer interest,  initiating tie-ups with financing companies and spreading wings to newer markets such as mandis and even to colleges seems to have bear results.

"Our strategy to tap into new markets in the semi-urban, rural and upcountry areas has contributed to expanding the two-wheeler market and thereby trigger growth for the industry. We remain cautiously positive about the future as our sales performance comes amid continuing uncertainty over interest rates and the overall credit squeeze that the industry is going through," said Anil Dua, senior V-P (marketing & sales), Hero Honda.

Pune-based Bajaj Auto [Get Quote] with its key strategy of focussing on high-end models (125cc and above) has helped it post a growth of eight per cent in June. It sold 1,75,903 units last month (1,62,730 units).

The manufacturer of top-end motorcycles traditionally had been the largest exporter of motorcycles. Its 125cc  brands such as the Pulsar, Avenger and XCD DTS contributed to the bulk of its sales. The company plans to launch more models this year.

On the back of a revamped Flame 125cc launched this year, TVS [Get Quote] Motors  posted a nine per cent growth in June. The company sold 51,409 units last month. The Apache RTR 160 continued to contribute towards its growth. The company plans to launch a fuel-injection variant of the Apache RTR soon.

TVS Motors is the second largest exporter of motorcycles from the country and its exports surged 64 per cent (15,000 units) in June.

"Most motorcycle majors who seemed to have shrugged at providing credit  options earlier are now seriously considering it either through a tie-up with financiers or by setting up finance companies to provide credit to buyers," says Piyush Parag, analyst, Religare Securities.

"The strategy also involves launching newer models to delight customers with high-end biking experience. With all these strategies, motorcycle majors will be able to sustain growth in FY09 which will be better than that in the last 2 years, but not superlative."


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