Hero scripts pricing war to take on Bajaj

NEW DELHI: Hero Motocorp Ltd plans to play the pricing strategy for its upcoming 200cc motorcycle, as India’s largest twowheeler maker seeks to challenge Bajaj Auto Ltd’s dominance in the market for premium bikes in the country.

Details of the pricing are not available immediately but the Xtreme 200R, to be introduced nationwide in about two months, is expected to cost slightly more than a 160cc motorcycle.

This may allow Hero—the market leader in entry-level motorcycles —to lure customers from Bajaj Auto, which has been dominating the premium motorcycle market for over two decades. The new product will compete with Bajaj’s Pulsar and TVS Motor Co.’s Apache models, among others.

Senior executives of Hero said in an analysts’ call on Friday that the Xtreme 200R, which will mark Hero’s re-entry into the premium segment, will be priced competitively, indicating the company may chase market share.

“The management indicated that it will price the new product in the 200cc segment aggressively, which means that they will adopt the same strategy that Bajaj has adopted in the entrylevel motorcycle segment to gain market share,” said an analyst with a foreign brokerage who didn’t wish to be named. “Also, Hero has nothing to lose in the premium end and they are trying to hit Bajaj where it will hurt the most, that is, the premium segment. So, I think this strategy makes sense, though realizations will be subdued initially.”

Hero has already announced that the Xtreme 200R will cost ₹88,000 in the North-east and West Bengal, where it has been introduced initially. Hero will also introduce by September two 125cc scooter models to regain market share. It lost 3 percentage points market share in scooters in the last fiscal mostly because it only had 100cc and 110cc scooters.