Hero MotoCorp Bets Big on Financing, Aims for Double-Digit Growth: CEO

19 Feb 2024 , 01:42 PM

Hero MotoCorp, the global leader in two-wheeler manufacturing, is placing a significant emphasis on the vehicle finance sector as a key driver of profitability and growth, according to its CEO, Niranjan Gupta.

During a post-earnings analyst call, Gupta highlighted the pivotal role of vehicle financing in driving growth, emphasizing its importance not only presently but also in the foreseeable future. He noted that vehicle financing is rapidly becoming critical, with 60 to 65% of two-wheeler sales currently being financed, up from 40-45% in previous quarters.

Gupta emphasized the company’s efforts to enhance the penetration of financing by collaborating with various financial players. Hero MotoCorp has recently piloted its E-finance platform, aimed at streamlining the loan processing experience for customers. Gupta mentioned plans to scale up this platform further in the fiscal year 2024-25, underscoring its potential to simplify and expedite the financing process.

Presently, 60-65% of Hero MotoCorp’s lineup is financed, with 30% of that being supported by Hero FinCorp, an associate company and NBFC. Gupta reiterated that financing would be a significant growth driver in the coming years, emphasizing the importance of ease and cost-effectiveness in financing options.

In addition to its focus on financing, Hero MotoCorp has announced plans to expand its retail footprint with the launch of 500-plus ‘Hero 2.0’ stores and over 100 exclusive ‘Premia’ stores. Gupta revealed that the company has already established 300 upgraded stores and aims to open 100 more by the end of March.

Looking ahead, Gupta expressed optimism about the two-wheeler industry’s growth prospects, anticipating double-digit revenue growth in FY24. He attributed this growth to various factors, including increased demand for executive and premium segment motorcycles, government infrastructure spending, digital inclusion initiatives, and growth in the hospitality industry. Gupta highlighted the growth potential across different segments, including both premium and non-premium categories, driven by evolving consumer aspirations, particularly in rural areas.