Bajaj vs Hero Honda: Bajaj with the upper hand!

Hero Honda vs Bajaj Auto

Seemingly the struggle with erstwhile Japanese partner Honda over the Joint Venture has costed Hero Honda both market share as well a profitability is the dog-eat-dog Indian motorcycle market. The biggest gainer of the Hero Honda-Honda struggle has been Hero Honda’s arch rival and consistent number two of the Indian motorcycle market, Bajaj Auto Limited. While Hero Honda managed to slightly improve it’s volumes, overall profitability has declined.

In other words, Hero Honda is making less money on each bike it sells even though it is managing to sell more bikes than ever before. On the other hand, Bajaj Auto is not only showing a sharp upward surge in volumes but also is making a lot more money per bike than Hero Honda. While Hero Honda seems to be doing just fine at the moment, it’s long term story could be very, very different.

This, as a slew of motorcycle manufacturers including Honda and Suzuki are all set to enter the ultra competitive Indian 10occ commuter motorcycle market and one that happens, the going will only get tougher for Hero Honda as it will not only have to fend off it’s high growth arch rival Bajaj Auto, but also the other formidable new entrants like Honda and Suzuki. Those who have been constantly observing the commuter motorcycle market will know that Hero Honda has virtually not innovated in terms of product for the past many years.

It has been solely milking the 97.2 cc horizontally inclined SOHC engine that Honda’s founder Soichiro Honda originally designed, in a variety of motorcycle frames that include the Hero Honda Dawn, the Hero Honda Passion and the Hero Honda Splendor. These three motorcycle models together bring in almost half of Hero Honda’s volumes as well as profits. Only recently has Hero Honda introduced an electric starter to two these models and until then, preferring to churn out newer stickers, paint shades and other minor visual changes.

Bajaj on the other hand moved out of the 100cc motorcycle market citing that the growth levels in the segment had hit the saturation point, only to make a hasty comeback finding Hero Honda growing from strength to strength. Ever since, Bajaj Auto launched the Discover 100 motorcycle with a lot of features that similar Hero Hondas cannot match. For example, the Bajaj Discovr 100 comes with a 5 speed gearbox and styling that is much more sportier than comparable Hero Hondas, at a cheaper price tag to boot.

These changes which have increased the aspirational value of the Discover 100, coupled to the low purchase price and high mileage have ensured that the Bajaj Discover 100 has been a stellar success for Bajaj Auto, with consistent high growth. So, with Honda going it alone leaving Hero Honda with virtually a non existent Research and Development department, the coming times indeed present a very serious challenge to Hero Honda. That said, Hero Honda’s formidable pan-India sales and service network along with the Hero group’s homegrown component manufacturers still continues to be it’s biggest advantage.

For now though, it is advantage Bajaj Auto as Bajaj has an established Research and Developed department that has actually produced best selling motorcycles like the Pulsar and the Discover series. Whether Hero Honda will be able to retain it’s numero uno status in the Indian market or whether Bajaj Auto is the new crown prince all set to usurp the number one position in the Indian motorcycle market. This, only time will tell.

Via DNA with Image Courtesy BSMotoring

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