With Harley tango, Hero has X-factor to take on Enfield
On Tuesday, the stock hit a two-year high of ₹3,039.9 on the NSE and closed at ₹3,035.1, a gain of 4.7% from the previous day’s close.
Hero MotoCorp has launched X440, a 440-cc bike jointly developed with Harley-Davidson at a sticker price starting from ₹2.29 lakh, which is just ₹1,000 more than the highest-selling 350cc Royal Enfield Classic 350 from Eicher Motors. The prices of other comparable bikes such as Honda H’ness, Benelli Imperiale, Jawa Perak, Jawa Bobber and Bajaj Dominar 400 are in the range of ₹2.1 lakh to ₹2.3 lakh per unit.
“Harley is an aspirational brand, and consumers in the 350 cc segment will find this pricing very attractive,” said Nomura Financial Advisory in a note.
The new launch is expected to help Hero penetrate the higher-power bike segment, which has been growing faster than the overall two-wheeler category.The market size of bikes over 250 cc was about 800,000 units in FY23. Over the past decade, the sales volume of the 125-250 cc bike segment has remained listless while the volumes of the above 250 cc segment have grown fourfold.”While we await real-world feedback for the product, it ticks all the right boxes on paper to make it successful,” Motilal Oswal Securities said about the X440.With the entry of X440 and the launch from Bajaj-Triumph, Royal Enfield is not only susceptible to loss in market share in the medium term but its high gross margin of around 43% also makes the segment attractive for other players, analysts said. This concern reflected in the performance of Eicher Motors stock, which fell by 6% on the NSE to ₹3,410.8 on Tuesday.
The newly-launched X440 will be sold through Harley Davidson stores and select Hero 2.0 outlets to offer a premium experience to customers. Hero plans to open 100 premium outlets by the end of the current fiscal year. The biggest challenge will be to maintain the blended operating margin with bikes having a relatively lower volume than its core product portfolio while providing the Harley product quality at competitive rates on a sustainable basis.
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