| |
The secret behind Hero Honda's success
Rural rescue
Around mid-2007, consumer finance companies started to pull the plug on automobile finance. Bad loans had risen with alarming rapidity and they had no option but to reduce their exposure to two-wheelers.
This was bad news for motorcycle makers like Hero Honda. For the industry, up to 70 per cent sales were financed by these companies. Now they developed cold feet. They withdrew their representatives from motorcycle showrooms. (Not more than a quarter of motorcycle sales are financed now.) As a result, 2007-08 was bad for the industry. But Hero Honda found that its sales were flat. This was because of its strong sales in the rural markets - almost 40 per cent of total volumes, say Munjal and Dua. These, mind you, are only estimates.
The company doesn't have a single dealer in villages. All purchases are done in towns and cities. Still, it is a known fact that urban consumers depend more on finance than their rural counterparts. So, the drop in the flow of consumer finance impacted urban customers much more than rural customers. Powered by 
Image: Hero Honda Splendor
Also read:
•
My dream is still a budget airline: Capt Gopinath
| | |
Advertisement
