India’s largest motorcycle manufacturer, Hero MotoCorp, has declared its first profit improvement for more than a year, in second-quarter financial results to 30 September. However, this growth was somewhat illusory.
Hero’s sales revenue in the period was 11 per cent up to £574m. Net profit rose by nine per cent to £48m. Unit sales volume grew by six per cent.
But the company admitted this year-on-year comparison was misleading. In the equivalent quarter of 2012 it had scaled back production and cut wholesale shipments to reduce excessive dealer inventory. This year, with much lower dealer stock levels, Hero ramped up shipments ahead of India’s September-December festive season when consumers consider it auspicious to buy big-ticket items such as powered two-wheelers.
Reacting to the currently stagnant Indian domestic bike market, in which it holds a 41.5 per cent share (down from 42.7 per cent a year earlier) and faces ever-fiercer competition from Japanese brands, Hero is urgently trying to build export sales. But it doesn’t expect to reap significant benefits until the next full financial year. At the moment, Hero exports only two per cent of production, only a tenth of overseas sales achieved by nearest indigenous rival Bajaj, which exports 37 per cent of its wares.