Hero Honda on the 4-wheeler bandwagon

Hero Honda, the largest motor cycle company in the country, is now eyeing the four wheeler segment.

Hero Honda is the market leader in the two wheeler vehicles in Indian market. It is the market leader for more than last 5 years. It is because of its consistent performance with introduction of good and upgraded products each time and good service. The company understands the consumer behavior in the two wheeler segment and is successful in most of its bikes.

Every company sets vision for the future. They not only compete at the present market condition but prepare themselves for the future market. They compete for the future market without knowing what can be the conditions then. But they predict and make their strategies accordingly. With increasing per capita income the consumers are shifting to four wheelers from two wheelers. Last year the 4 wheeler market crossed the 1 million units. So the market size is increasing.

Now, more and more foreign companies are entering in the Indian market. Maruti is the undisputed leader in this market with a market share of more then 50%. There is a huge market for other players if they are able to give better product then Maruti. Tata has plans to introduce Rs. 1 lack car in next two years. If Tata is successful in its plan it will further increase the 4-wheeler market.

If we look at the Indian 4-wheeler market, we can find that it is different from the other developed market. Indians prefer diesel car over petrol car. Small cars are preferred unlike big cars in the western countries. So the foreign players will take time to understand the market conditions prevailing in the country. But domestic players know the market pulses better. It will not be a difficult task for them to come out with the product as per the expectations of the Indian consumer.

This is a good strategy adopted by Hero Honda. Now the competition in the 2-wheeler market is increasing. So the profits are decreasing at equal rate. It is better to diversify the business so that the company remains profitable and give a good return to its stake holders.

Source: Business Line