India’s Hero MotoCorp eyes more premium bike launches

By Nandan Mandayam

BENGALURU (Reuters) -Indian motorcycle maker Hero MotoCorp on Thursday doubled down on its bets on the premium segment after a tie-up with Harley-Davidson showed early promise, even as it missed first-quarter profit estimates on lower sales volumes.

Two-wheeler makers including Hero have been struggling to return to pre-pandemic sales volumes, as costlier entry-level offerings deter buyers in the key rural market from making purchases.

However, Hero’s bet on the premium segment with the locally-produced Harley-Davidson X440 — with 25,000 bookings received in about a month — indicates it is keen to tap customers who are ready to pay more for “the right brand.”

“We will see more launches of new models in this segment over next few quarters, as we intend to win big in premium segment,” CEO Niranjan Gupta said in a statement.

The company’s profit for the quarter ended June 30 rose 32% to 8.25 billion rupees, as a price hike in April helped offset a 2.7% drop in sales volumes.

That was, however, short of analysts’ estimates of 8.86 billion rupees as per Refinitiv data.

Revenue from operations rose 4.5% to 87.67 billion rupees, while earnings margin before interest, taxes, depreciation and amortization rose to 13.8% from 11.2% a year before.

A normal monsoon and an upcoming festive season augur well for demand, the company said. “Overall, we see a positive scenario on demand side, especially for second half of this year and onwards.”

Rival Bajaj Auto has also ramped up its premium segment launches with UK’s Triumph, as it aims to take on market leader Royal Enfield in a space that sees one of the highest margins in the two-wheeler industry.

Hero will start production of the X440 by September and begin deliveries the following month, it has previously said.

The company would pay its American partner a royalty fee from sales of the world’s cheapest Harley, though it is yet to disclose a number.

(Reporting by Nandan Mandayam in Bengaluru; Editing by Varun H K)