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Hero Honda launches Super Splendor
Hero Honda's latest offering carries an ex-showroom price of Rs 42,231 in Pune. The company expects to sell 30,000-40,000 units every month.
India's biggest motorcycle maker, Hero Honda Motors Ltd, launched a new 125cc model on Thursday to take on rivals and said it saw margin pressure continuing in the world's largest market after China.
The auto maker, in which India's Munjal family and Japan's Honda Motor Co each hold a 26 per cent stake, said the Super Splendor, has a new engine and would carry an ex-showroom price of 42,231 Rupees ($966.4) in Pune.
It is priced almost at par with the 125cc Discover from Bajaj Auto Ltd, the No. 2 motorcycle maker, and TVS Victor from TVS Motor Ltd, the third-biggest producer.
"The company is obviously expecting consumers to shift from the 100cc Splendor to the 125cc Super Splendor, as the price differential is not much," said Kalpesh Parekh at brokerage ASK Raymond James.
The Delhi-based auto maker expects to sell 30,000-40,000 units of the new bike every month and overall sales to rise 15 perc ent in the year to March 2006, officials said.
"The plan is for at least 15 percent growth for next year," Atul Sobti, Hero Honda's director for business operations, told reporters at a news conference in Bombay.
India's motor cycle industry is expected to grow 12-14 per cent annually, said Ravi Sud, vice president of finance. But margins will continue to remain under pressure on higher prices of raw materials such as steel.
Shares in Hero Honda were up 1.7 pe cent at 559.50 Rupees, while the benchmark Bombay index surged to a record 6,781.25 points by mid-afternoon.
Indian vehicle makers have been hit in the past year by an increase in input prices, while a highly competitive market has prevented them from passing on the higher cost to consumers.
Hero Honda, which is known for its sturdy, fuel-efficient bikes, has a 52 per cent share of the the Indian market. It has driven a motorcycle boom in the country, helped by rising incomes, new launches and a shift to bikes from scooters.
But its rivals are launching new models to dent its dominance of the $4 billion market of nearly 5 million bikes a year.
