Hero Honda has posted the best-ever performance in its 25-year history. The company, the world’s largest two-wheeler maker for the past eight years on the trot, has posted a 12% sales growth to 33 lakh units in the first 11 months of this fiscal year, almost single-handedly keeping its sector in positive sales territory despite rivals like Bajaj Auto and TVS Motors reporting negative sales. It is also the only listed two-wheeler maker in India to grow profits and margins — in fact, its profit margins for the December 2008 quarter were the highest ever in the past three years. Its net profit rose 9.24% to Rs 300.42 crore for the quarter while its total turnover rose 5% to Rs 2,881.27 crore.

The company’s decision to utilise tax-free benefits by shifting bulk production to its Haridwar plant in Uttarakhand and freezing all kinds of cash discounts and rebates to customers helped its finances. With marketing as its backbone for generating volumes, Hero Honda is ramping up its sales network to 3,500 from 3,000 now across India by the end of this fiscal year. This is at a time when its domestic rivals such as Bajaj Auto and TVS Motors are cutting down production.

Hero Honda has remained the world’s largest two-wheeler manufacturer in volume terms for eight straight years, and has strengthened its leadership by being the first company to exploit opportunities in smaller towns. India’s rural markets are largely untapped, with less than 9% households owning a two-wheeler against 30% in urban areas. Its strategy of exploring untapped markets in rural and upcountry areas has paid off. The rural market is evolving and growing at a fast pace and gives incremental numbers transpiring into stable growth in sales.

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Hero MotoCorp Share Price

4768.70 -6.80 (-0.14%)
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