Competition catching up with Hero Honda

Mumbai: Price wars and new product launches from rival manufacturers are threatening Hero Honda''s leadership in the two-wheeler market. The company, which has 54 per cent market share, is now feeling the heat in the economy and executive segments as other players have been introducing popular new models.

The company currently enjoys market leadership in both the ''economy'' and ''executive'' segments, which are now witnessing intense competition, say industry analysts.

It is expected that a series of new models is likely to be launched by the competition in the next three or four months, aiming at the company''s top products, ''Splendor'' and ''Passion'', in the executive segment and ''CD-Dawn'' in the economy segment.

Further, the company has not been able to make the required dent in the premium segment despite launching new variants of ''Ambition'' and ''CBZ''. Analysts speculate that its 54 per cent market share makes the company more vulnerable to erosion of market share and it is unlikely to see more than 15 per cent volume growth during this fiscal.

With Hero Honda and Bajaj offering steep price cuts and discounts for various models, the two majors are locked in a fierce price war going on in the two-wheeler market. Hero Honda has already announced a price cut of Rs1,000 on its ''Splendor Plus'' and ''Passion Plus'' models, while Bajaj and TVS have announced discounts on their lower-end models.

The company is also under threat from its joint venture partner Honda Motors of Japan, which entered the motorcycles market on its own in September last year.