Hero MotoCorp, one of the strongest players in the Indian two wheeler market, has raised the prices of its bikes, with a minor range of Rs. 500 to 1000. The company has taken this step soon after it declared its results of the financial year 2011-2012 on 2nd May 2012. In contrast to the expected profit of 6.15 billion the company has managed a profit of around Rs. 6.03 billion and has thus fallen short in achieving its target. However, the company has accepted that the decline in gains is because of the steep rise in the input costs. Further, the depriciation in local currency and increasing wages has also added to the downfall in the company's profits.
Hero MotoCorp Raises Prices by Rs. 500 to 1000
According to reports, around 15 percent of the company's parts are brought through imports and this has led to high import bills for the final quarter of the fiscal year. Thus the company now aims to make up for the downfall by increasing the two-wheeler sale and controlling the input costs for the financial year of 2012-2013. To further increase the sale figures, Hero MotoCorp plans to bring in 400 new touch points for the FY 2012-2013 and align them with all the new launchings. Also , the prices of all the motorcycles have been increased by Rs. 500 to 1000 to make up for the increasing input costs. These steps are expected to allow the company to achieve better sales and defend its operation margin.
The company has now set a target to achieve 7 million sales units for the FY 2012-13 and has started working on improving the production capacity. Hero MotoCorp currently has a share in the Indian two wheeler market of 46 percent. This share, however, may decrease as HMSI is all geared up with its new strategies and is introducing a new bike on the 15th of May. Similarly, Bajaj is also a tough challenger as it recently launched the Piaggio in the two wheeler market.