Premium MTB & kids' bikes drove higher profitability during pandemic: Hero Cycles' Pankaj Munjal

The brand will roll out digital campaigns in urban & semi-urban areas for MTB, and kids' bikes

“The world is a lot faster now, but still, it’s the steady consistent approach that wins”, Pankaj Munjal wrote on a microblogging site in August last year, alluding to the age-old fable of the rabbit and tortoise.Words of wisdom that hold true today more than ever, when the world has been brought to a virtual grinding halt by the novel coronavirus.

While the COVID-19 outbreak has hurt many sectors, the two-wheeler sector has largely been insulated, and even witnessed growth. The pandemic has firmly put the spotlight on a corona-safe, sustainable and environment-friendly mode of transit- good for good health. And what epitomises it better than the humble bicycle!

Hero Cycles Ltd, the flagship company of Hero Motors Company, was established in 1956 in Ludhiana Punjab, manufacturing bicycle components. HMC, chairman and managing director, Pankaj M Munjal had joined the company in 1988. In 2015, he took over the reins of the company from his father and founder of Hero Cycles, Om Prakash Munjal. Today, the brand is considered the single largest producer of bicycles in the world, producing over 19,000 cycles per day.

A cycling enthusiast himself, Munjal likes to stay ahead of the curve. Being one of the earliest makers of cycles in India hasn’t deterred the brand from evolving with the times. Hero recently dived into the eco-friendly, electric cycles market, with the launch of its Hero Lectro range of e-bikes. With the rocketing fuel prices, e-cycles could well be a pocket-friendly, safe and sustainable transit solution for the young consumer, while also being a turning point in the country's cycling culture.   

IndianTelevision’s Anupama Sajeet caught up with the two-wheelers veteran – Hero Motors Company, chairman and managing director, Pankaj M Munjal for an in-depth conversation on the Indian cycle market, the impact of the pandemic, its latest offering of  e-cycles and the plans to reach out to people through digital campaigns. Munjal also shares his views on the emerging trends, opportunities and challenges in the sector and on the road ahead for the cycle company

Edited excerpts:

On the challenges to the cycle industry due to the pandemic

Initially, there was a constraint in supply and logistics due to the lockdown & other macro factors that led to a restriction on imports. Towards the end of last year, local disruptions prevented the movement of freight trains, causing further supply shortages. However, the government policies helped us to keep going. The challenges for the cycling industry are the same as they were before lockdown -- the issues related to the safety and infrastructure of cyclists. We believe that simple measures like a dedicated lane for cycles and e-bikes can encourage more people to adopt cycling.

On the opportunities presented by the pandemic

The cycle industry posted a quick recovery after the lockdown. In the past one-and-a-half years, Hero Cycles has witnessed a 100 per cent increase in demand. Our traditional bicycles witnessed a 50 per cent increase in demand while the demand for electric cycles went up by 100 per cent, especially among the young people in urban India where cycling emerged as a viable alternative for health, fitness, and recreation when gyms and studios were closed. It presented a major opportunity to motivate the mobile urban youth about the suitability of cycles and e-bikes. The benefit of switching to a more eco-friendly mode of transport was evident by the impact of lockdown on air pollution and improvement in air quality across India.  

On the brand’s market share & growth over the last year

The Indian bicycle market, combining the organised and the unorganised markets, is estimated to produce and sell about 18 million to 20 million units. Hero Cycles has nearly 42 per cent of the share in the organised market. We have seen a spurt in the number of first time cycle users in the past 1.5 years and an improved product mix comprising premium and kids’ bikes with a market share of over 50 per cent now- have driven higher profitability.

On the new emerging trends in the Indian cycle market

Demand for premium kids bicycles, nearly 40 per cent of the demand, grew during the pandemic, driven by fitness and leisure needs. The pandemic has increased the number of people focusing on general health and immunity-building through exercise, while children have opted for cycling as a means of recreation. As a result, we have seen a 100 per cent increase in the demand in the premium MTB (mountain bike), and kids segments. The demand in the export segment grew by more than double.

On the seasonal outlook

With the second wave ebbing, we are seeing markets opening and therefore there is a palpable increase in demand. Demand for cycles does not have any relation with the seasonal variations like monsoons; rather it is the time when leisure activities like people going for trails or weekend rides generally increase, and therefore may drive fresh demand.

On the e-cycles market in India and potential for growth

Hero Lectro e-cycle has an estimated 70 – 80 per cent market share in India. Our wide portfolio of e-cycles ensures that we are catering to all those who may benefit from e-cycles -- right from someone who needs it for daily commute to somebody wanting to have fun and adventure on long-distance journeys. We have introduced many innovations over the last few years such as the connected bikes with an iSmart app, detachable battery, USB charger and many more.

India has immense potential to adopt e-bikes, provided the challenges that impede its growth are taken care of. Lack of adequate charging infrastructure is a problem, though Hero Lectro E-Cycles do not need any dedicated charging infrastructure; one can charge the e-cycle from any regular socket. And that readies the vehicle within a few hours for a 25km plus journey on a single charge. Additionally, Hero Lectro is creating dedicated retail and service channels for E-Cycles with our first-ever Experience and Service centre having been launched recently in Chennai. It is important for our potential customers to be aware of its benefits and make a conscious choice towards e-cycles.

On the way ahead and plans for global expansion

Hero Cycles is looking to add a manufacturing capacity of two million SKD (Semi Knocked Down) bikes per annum immediately, with the International e-Cycle Valley project in Punjab, built at an investment of nearly Rs. 200 crore. The state-of-the-art Hero Industrial Park is a significant milestone in HMC’s journey to becoming a global leader and a critical link between the company’s global engineering and manufacturing chain. While 50 acres of the Valley houses the factory, another 50 acres will have a dedicated Suppliers Park. Hero E Cycle Valley has been envisaged as the manufacturing hub to meet the rising demand for exports, currently done to Germany and the UK. Our plan is to have a large market in Europe and integrate it fully with our manufacturing facilities in India.

On the brand's 2021 marketing roadmap

In the coming months, focusing on both urban and semi-urban areas, Hero Cycles will roll out digital & and on-the-ground activities to continue generating awareness about the products, especially the premium, off-road MTB bikes and kids cycles, as well as their benefits among the youth, in view of the increased focus on fitness and health due to pandemic.

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