Will Hero's Splendor get back its spark this Diwali?

New Delhi: The festival season could well change the fortunes of the world’s largest two-wheeler company, Hero MotoCorp. Though analysts have been unanimous in virtually writing off Hero’s largest selling bike Splendour, there may still be a lot of steam in this brand.

Sources close to Hero told Firstpost today that the world’s single largest selling bike is expected to see dispatches of over 1.5 lakh units in October and perhaps similar numbers in November.

In September, Splendour dispatches were down to 116,271 units. So Hero is ramping up production of its largest selling model by 29% month on month.

In fact, the company’s internal target is to sell over one million bikes and scooters in the two festival months of October and November this year, the widespread slowdown in the two-wheeler market notwithstanding. It plans to dispatch over five lakh bikes and scooters to its dealerships this month alone.

More from Business

Hyundai India’s Rs 27,870 crore IPO oversubscribed by 2.28X, largely driven by institutional investors How Indian fintech startups are driving Malaysia’s UPI-like digital payments revolution

In August and September, when the market was down considerably, Hero did massive inventory correction which meant that Splendour deliveries to dealers were significantly down in these two months.

And rivals have been literally making hay while the sun shines over Splendour’s less than anticipated sales numbers in these two months.

But now, they may also have to pull up their socks to beat intensifying competition from Hero’s winner. But is Hero’s optimism over the festival season too optimistic? Are sales not slowing down at the district and village levels too?

[caption id=“attachment_487434” align=“alignleft” width=“380”]  But is Hero’s optimism over the festival season too optimistic? Are sales not slowing down at the district and village levels too?[/caption]

Impact Shorts

More Shorts

Tata Harrier EV vs Mahindra XEV 9e: Design and road presence compared

As Trump weaponises tariff, Fed sees a bigger worry: Not jobs, but rising prices in America

The sources quoted earlier said the last quarter (July to September) was bad for the entire industry but Hero’s stock correction was a one-time exercise and the December quarter is expected to hold up much better.

They said not only is demand expected to pick up for Splendour, other models such as the Passion never really felt the effects of the slowdown and would continue to bring in the numbers. They also said dispatches of Maestro scooters will touch 50,000 in October. That Hero’s performance last quarter has been lackluster is evident. Motilal Oswal’s Jinesh Gandhi and Chirag Jain said in their note to clients on Monday that Hero’s September volumes declined 26.4% compared to last September and 8.8% from August this year at 404,787 units.

The analysts noted that this is the fourth consecutive month of “negative surprise” and that volumes have declined by about 3.2% between April and August this year compared with the same period last year.

But sources in Hero said the buying sentiment was coming back to the market and sales will pick up substantially around the Navratras (which fall in the second half of this month).

These sources also denied any discounting on Hero bikes, saying “not a penny has been spent in the last five years by Hero on product discounting”. So all of Hero’s plants are going to run at full capacity for October as well as November.

The sources also said the biggest impact of the slowdown in the September quarter was felt on Splendour sales because this is the largest selling bike in Hero’s portfolio and maximum inventory correction was done in Splendour dispatches.

But the Motilal Oswal analysts quoted earlier do not quite share Hero’s optimism for the festival months.

“Our channel interaction indicates inventory levels of more than 6 weeks with dealers. Considering the high channel inventory, we believe Hero MotoCorp has limited scope to further build up inventory for the festive season …. Demand pick-up in festive season would be critical for achieving its 4-5% volume growth guidance for FY13. However, initial signs of festive demand have not been encouraging.”

And in a note to clients, Centrum’s Ajay Sethia said on Monday that he expects Hero MotoCorp to register a drop of 12% in annual sales and and 18% in September quarter sales over the June quarter this year in revenues. So will Hero surprise everyone this Diwali?