Revenue growth could be higher than the volume growth, driven by 125cc+ segments and higher average selling prices.
10 Feb 2024 | 5350 Views | By Kiran Murali
Riding on the premiumisation trend, India’s largest two-wheeler maker Hero MotoCorp projects the industry’s revenue to grow in double digits during the next financial year. Revenue growth could be higher than the volume growth, driven by 125cc+ segments and higher average selling prices.
“We expect the industry to grow ...
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Riding on the premiumisation trend, India’s largest two-wheeler maker Hero MotoCorp projects the industry’s revenue to grow in double digits during the next financial year. Revenue growth could be higher than the volume growth, driven by 125cc+ segments and higher average selling prices.
“We expect the industry to grow in double digits on revenue in the coming year. The premium segment has been outstripping the growth. There is premiumisation in every segment,” Hero MotoCorp Chief Executive Officer Niranjan Gupta told analysts in a post-earnings conference call today.
Autocar Professional learns that at the SIAM Looking Ahead Conclave held in January, major two-wheeler makers have projected the two-wheeler industry volume to grow in the range of 7-10% during 2024-2025 (FY25) with better performance expected in the 125cc + segment.
Bajaj Auto Executive Director Rakesh Sharma recently said industry volume in the current financial year is projected to grow 8-10% and the share of 125cc + motorcycles is likely to outpace the share of entry-level motorcycles in the next three years. As per the SIAM data, domestic two-wheeler sales in 2022-23 were at 1.59 crore units.
Over the last couple of years, growth in the 125cc + segment has outpaced the overall sales as there has been a maturity in terms of demand for models with higher capacity amid the growing aspiration of India’s young consumers. This has helped automakers improve their margins with better average selling prices on the back of a richer product mix.
The entry-level and commuter segments, which were once the major volume drivers, were the most impacted by the pandemic, and their recovery has been slow amid weakness in the rural market following an increase in product prices and borrowing costs.
Hero MotoCorp noted that some green shoots are visible in the rural demand with inquiries picking up. “At the bottom of the pyramid, heavy capex trend, digital inclusion and the hospitality industry are lifting sentiments. We see positive signals from the rural sector as well, and we see the growth picking up in that segment in the coming quarters,” he added.
On the back of new product launches, particularly in the 125cc + segments, Hero MotoCorp expects its revenue growth in FY25 to be higher than the industry, thereby improvingtoauits market share.