In a market undergoing deep transitions, Hero MotoCorp and Honda Motor Company are locked in a high-stakes battle for dominance: Who will ride ahead, Autocar Professional explore.
16 May 2025 | 733 Views | By Kiran Murali & Ketan Thakkar
India’s two-wheeler market is at a historic crossroads. Once defined by utility and mass mobility, it is now being reshaped by premium aspirations, electric transitions, and discerning urban consumers. At the heart of this transformation lies a fierce rivalry between two titans—Hero MotoCorp, the long-reigning domestic champion, and Honda, the ...
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India’s two-wheeler market is at a historic crossroads. Once defined by utility and mass mobility, it is now being reshaped by premium aspirations, electric transitions, and discerning urban consumers. At the heart of this transformation lies a fierce rivalry between two titans—Hero MotoCorp, the long-reigning domestic champion, and Honda, the global heavyweight known for its exacting ambition.
With its legacy of rugged reliability and rural reach, Hero has long dominated the roads with models like the Splendor and HF Deluxe. But the ground beneath is shifting. Honda’s aggressive playbook—spanning scooters, midsize motorcycles, and EVs—is rapidly gaining traction, challenging Hero’s dominance not just in cities but also in key semi-urban and rural pockets. As Hero battles leadership churn and the growing need to reinvent its brand for a younger, digitally savvy generation, the question looms large: Can it reassert its authority in a market it once ruled unquestioned, or will Honda’s steady surge mark the dawn of a new era in Indian mobility?
The Empire’s Crumbling Foundations
April 2025 came as a significant surprise to India’s twowheeler industry. Hero MotoCorp, the market leader for over two decades, plummeted to an unthinkable fourth place in domestic wholesale dispatches. Industry insiders attributed the dip to supply chain disruptions and inventory recalibration, which were symptoms of a deeper malaise.The automaker attributed this drop to a temporary production halt from April 17–19 for supply chain alignment, scheduled maintenance and infrastructural enhancements.
Even if one considers this a one-off, Hero’s grip on the market has been loosening; its market share has been consistently slipping. It has fallen from a high of 37.04% in FY21 to 28.61% in FY25. Meanwhile, Honda has been steadily gaining ground, boosting its share from 25.58% to 27.17%, narrowing the gap significantly. The picture is equally stark in absolute numbers. Hero’s domestic sales in FY25 stood at 5.61 million units, a marginal uptick from 5.60 million in FY21, signaling stagnation in a market that grew 9% in FY25 alone. Honda, by contrast, surged from 3.87 million units in FY21 to 5.33 million in FY25. “Hero’s dominance is under siege,” says VG Ramakrishnan, managing partner at Avanteum Advisors LLP. “The market is evolving faster than they can keep up, and Honda is capitalizing on every misstep.”
A Changing Market
Even as Hero's market share consistently slipped, the company was trying to address its weak spots, particularly by forging partnerships with major players like Harley Davidson, Gogoro, and Zero Motorcycles to diversify its offerings and build its portfolio on the electrification and premium motorcycle front. Still, it has been a slow start on the electric vehicle front, with Vida and its diversification into the premium end of the market still stuck in the first two gears.
The bigger problem, perhaps, lies elsewhere. India’s two-wheeler market is undergoing a structural shift: The entry-level 100cc and 110cc motorcycles— Hero’s bread-and-butter segment dominated by models such as Splendor, HF Deluxe, and Passion—seem to have lost their luster. Their share of total twowheeler sales dropped from 37% in FY21 to 28% in FY25, driven by flat volumes in a segment that once fueled industry growth.
To make matters worse, demand in rural India, Hero’s stronghold, has been battered by economic headwinds and vehicle price hikes that have outpaced income growth for price-sensitive buyers. “Hero is tethered to a shrinking market,” says an industry analyst. “Their strength is in entry-level bikes, but that segment is no longer the industry’s engine.” Price increases, driven by rising input costs and stricter regulatory compliance, have hit entry-level motorcycles hard.
A Splendor that once epitomized affordability now feels out of reach for many rural consumers, whose incomes have stagnated amid a sluggish rural economy. “It’s an affordability trap,” Ramakrishnan explains. “Hero’s core customers are being priced out, and the company hasn’t pivoted fast enough to capture the aspirational buyer.” Hero’s predicament is the two-wheeler equivalent of Maruti Suzuki’s struggles in the passenger vehicle market, where weak demand for small cars allowed competitors with stronger SUV portfolios to gain ground. “Hero’s market share erosion is a textbook case of overreliance on a declining segment,” says a sector analyst. “Honda and others are eating their lunch in the segments that matter now.”
Honda’s Meteoric Rise
Meanwhile, Honda has been executing a well-thought-out strategy. The Japanese automaker has dominated India’s scooter segment for over a decade with its Activa model, a cultural juggernaut synonymous with urban mobility. In FY25, Honda commanded a 41.5% share of the scooter market, though TVS Motor Company’s 26.4% share—up from 24.9% in FY24—signals intensifying competition. Honda’s prowess in the 125cc motorcycle segment is equally formidable, with models like the CB Shine, SP125, and Unicorn capturing young, value-conscious buyers.
“Honda has cracked the code on India’s aspirational consumer,” Ramakrishnan says. “They offer reliability with a dash of style, and it’s resonating.” Honda’s ambitions are audacious. In early 2025, Minoru Kato, head of Honda’s motorcycle business, declared that seizing India’s top spot was “within reach.” The company backed it up by briefly overtaking Hero in monthly dispatches three times last year, proving it could challenge the incumbent on its home turf.
Honda’s strength lies in the fast-growing 125cc and scooter segments, the two of which saw volume increases of 12.7% and 17.4% in FY25, respectively. The 125cc segment’s share rose to 18.5% from 16% in FY21, while scooters now account for 35% of sales, up from 30% in FY21. Honda’s success is no accident. The company has built brand equity in segments where Hero struggles.
The Activa dominates scooters with its blend of practicality and polish, while the Shine has become the go-to model for buyers upgrading from entry-level bikes to the 125cc segment. “Honda’s Shine is to 125cc what Hero’s Splendor is to 100cc,” Ramakrishnan notes. “They’ve positioned themselves to capture the market as it shifts upward.” Yet, Honda isn’t invincible. Its foray into the entry-level 100cc segment with the Shine 100, launched in 2023 has yielded modest results, with a 6.8% market share in FY25, up from 6.1% in FY24.
Hero remains the undisputed king of this segment, with a 79% share in FY25, bolstered by its deep rural penetration and brand loyalty. “The entrylevel market is Hero’s fortress,” says an industry veteran. “Honda’s urban-focused strategy doesn’t translate as well in rural India, where Hero’s Splendor is a cultural institution.” Honda has also struggled in the premium 200cc-plus segment, where Bajaj’s Pulsar, TVS’s Apache, and Royal Enfield’s Classic 350 reign. “Honda’s strength is in the middle of the market—125cc to 160cc,” says an analyst. “They’ve ceded the high-margin premium space, which could limit growth if that segment expands.”
Leadership Churn
Hero’s external challenges are compounded by internal chaos. CEO Niranjan Gupta and Chief Business Officer Ranjivjit Singh resigned recently, following Chief Technology Officer Arun Jaura’s exit in 2024. A seasoned finance professional, Gupta played a key role in shoring up the company’s margins. However, in a consumer-facing business that increasingly requires a sharp focus on brand building, marketing, and youth-oriented initiatives, his approach has been seen as more financially conservative. In the entry-level segment, the company limited schemes that could have helped drive demand due to a strong emphasis on margin protection.
Similarly, the company’s branding and marketing efforts were perceived to need greater innovation to better resonate with today’s younger consumers. To be sure, Hero MotoCorp has been home to several strong leaders over the years—veteran marketers like Ashok Bhasin and Anil Dua played pivotal roles in building Hero’s iconic identity as “Desh ki Dhadkan”. “Hero’s leadership in recent years has leaned heavily on professionals from FMCG backgrounds. While they bring strong brand and consumer marketing skills, the lack of deep-rooted experience in the two-wheeler space and riding culture has likely contributed to some of the challenges in executing the company’s premium strategy,” said a former senior executive, familiar with Hero’s organizational structure.
Moreover, some of the leaders who came on board during this period reportedly struggled with alignment issues and limited autonomy, which impacted their ability to drive lasting change. In an effort to boost leadership cohesion, Hero engaged a Singapore-based consulting firm. While wellintentioned, the move had unintended consequences. The firm’s involvement in key decisions—ranging from senior appointments to product strategy—ended up creating friction within the organisation. “Some leaders felt their roles were being diluted,” says a former executive, noting that this may have contributed to internal disconnects.
Vikram Kasbekar, a Hero veteran since 2001, is acting CEO and CTO. But, with no permanent CEO named, the company’s direction remains uncertain. The frequent changes in top management over the past decade have led to a somewhat fragmented approach to strategy execution. “Leadership churn is affecting Hero’s momentum,” says a former executive.
“It’s difficult to execute a long-term brand overhaul without continuity at the top…Hero needs a visionary who can bridge its rural legacy with urban aspirations.” While the lack of a focused and agile leadership contributed to the company’s current stagnancy, it has not been the only factor. Three key thrust areas—partnerships, new fuel trains and global expansion—have not delivered as well as expected, hurting the company’s growth.
Slow-Ramping Partnerships
The first of the three— Hero MotoCorp’s partnership strategy— have yet to deliver meaningful results. The much-publicized collaboration with Harley-Davidson, initiated in 2020, was expected to enhance Hero’s presence in the midsize motorcycle segment. However, early products like the Harley X440 and the Mavrick have seen limited traction in the market.
“The Harley tie-up was supposed to be Hero’s premium ticket,” says an analyst. “So far, it hasn’t lived up to that promise.” Hero’s investments in Ather Energy, Euler Motors, and Gogoro have shown mixed progress. While Hero holds a significant stake in Ather Energy, the EV startup continues to operate independently, without leveraging Hero’s established manufacturing scale or distribution network. Its 32.5% investment in Euler Motors, which focuses on electric three-wheelers, is promising, but still in its early stages.
Meanwhile, the partnership with Taiwan’s Gogoro, aimed at introducing battery-swapping technology in India, has yet to translate into a commercial rollout due to India’s unpredictable regulatory landscape. “There’s ambition, no doubt,” says auto industry expert Ramakrishnan. “But Hero’s EV strategy appears fragmented—there’s breadth in investment, but the overall approach lacks cohesion.”
The Electric Frontier
As India transitions to clean mobility, electric two-wheelers have become the next central competition arena. In 2025, even scooter market leader Honda has moved in with the Activa e and QC1. Though Honda’s initial rollout is limited to selecting cities and the reliance on swappable batteries presents certain adoption hurdles, the company has set an ambitious target of producing 100,000 EVs in the first year and plans to introduce three electric scooters by 2027. “Honda’s global R&D capabilities give it a clear edge in the EV race,” says Ramakrishnan.
Hero MotoCorp, meanwhile, has pursued a dual-track strategy—banking on partnerships while also launching several internal EV initiatives. Yet, despite the efforts, internal outcomes have been modest so far. The company’s sole electric offering under the Vida brand has seen a measured rollout with limited volumes, and the broader product pipeline remains vague. “Hero appears to be relying on others to do the heavy lifting,” says an analyst, pointing to its stakes in Ather Energy, Euler Motors, and Gogoro. “If rivals like Honda or TVS deliver a breakthrough, Hero could struggle to keep pace.”
Global Expansion
Another critical pillar of Hero MotoCorp’s post-Honda solo journey has been the entry to global markets, where it has been lagging rivals such as TVS Motor and Bajaj Auto. After wavering initially, the company has ramped up its international presence and is now selling in over 40 markets and has established assembly bases in Colombia and Bangladesh, adopting a distribution-led partnership model to minimize investment.
Yet, after more than a decade of such efforts, the company is yet to achieve meaningful scale in a growth avenue where Bajaj and TVS thrive. Despite its stated ambition of exporting 1 million units annually by 2020, Hero’s overseas volumes remain around 300,000. Its presence across Africa, Latin America, and Southeast Asia has not translated into dominance, as its commuter-centric product lineup struggles to compete with rivals like Bajaj and TVS, who offer more substantial premium and sports bike portfolios.
The EV-led export push via Vida has also faltered due to weak domestic traction and internal brand disputes. Hero’s cost-conscious overseas strategy has also afforded it limited control over branding, after-sales service, and customer experience—critical levers in building global equity. The result is widespread market presence but little impact.
To revive its export ambitions, Hero must rethink its strategy—focus on market-specific products, invest in brand-building, scale EV operations, and expand local manufacturing. Without this course correction, its global journey risks remaining a missed opportunity. In FY25, Hero’s exports grew modestly but failed to offset domestic woes. “Exports could have been a lifeline,” says an industry veteran. “Hero’s inward focus has ceded global markets to rivals.” In contrast, Honda is better positioned for future export growth.
Enduring Strength
Despite its challenges, Hero MotoCorp possesses formidable strengths that could anchor its lead if harnessed effectively. First, its unrivaled rural distribution network— over 9,000 touchpoints across India—gives it unparalleled access to the heartland, where 60% of two-wheeler sales originate. This network, built over decades, is a logistical marvel, enabling Hero to reach remote villages where competitors like Honda have limited presence.
“Hero’s rural reach is a moat,” says a Hero dealer. “No one matches their ability to sell and service bikes in India’s hinterlands.” Second, Hero’s brand loyalty in the entry-level segment is near-mythical. The Splendor, often called the “people’s bike,” is more than a product—it symbolizes trust, durability, and value. With a 79% share of the 100cc–110cc segment in FY25, Hero’s dominance remains unchallenged, even as the segment shrinks.
This loyalty extends to after-sales service, where Hero’s extensive service network ensures low maintenance costs and high customer satisfaction. “Rural buyers don’t just buy a Splendor—they buy into Hero’s ecosystem,” says Ramakrishnan. “That stickiness is a powerful asset.” Third, Hero’s operational scale and manufacturing prowess provide a cost advantage that competitors struggle to match. With eight plants in India and a production capacity of over 9 million units annually, Hero can achieve economies of scale that keep its entry-level bikes competitively priced. Its lean supply chain and localized production also shield it from global disruptions, a critical edge in an era of volatile commodity prices.
“Hero’s manufacturing backbone is a silent strength,” says an industry analyst. “It allows them to weather margin pressures better than rivals.” Finally, Hero’s recent gains in the 125cc segment—where volumes surged 28% to 694,000 units in FY25, boosting its share from 17% to 19.3%—demonstrate its ability to adapt to growth segments. Models like the Glamour and Xtreme 125R have resonated with younger buyers, showing that Hero can compete in aspirational categories when it gets the product right. “The 125cc success is a blueprint,” says Ramakrishnan.
“If Hero can replicate this in scooters and premium bikes, it could turn the tide.” These strengths—rural reach, brand loyalty, operational scale, and adaptability—position Hero to sustain its lead, but only if it can address its weaknesses in premium segments, scooters, and EVs. “Hero’s foundation is rock-solid,” says an industry insider. “The question is whether they can build a new story on top of it.” “While the headlines often focus on Hero’s challenges, a lot is going on beneath the surface,” says another person closely associated with the company.
Hero still commands over 80% of the 100cc segment and has made notable improvements in the 125cc space, where its market share now exceeds 20%, thanks to strong response for products like the Xtreme 125R. Even in scooters—traditionally seen as a weak spot—the company has quietly gained 2–3% market share in the last few months through refreshed offerings like the Xoom 125 and Destini.
Aside from portfolio changes, Hero has also taken a more disciplined approach to managing its inventory and retail strategy, he said. “Unlike some competitors, Hero isn’t flooding the system with wholesales just to chase monthly numbers. The inventory levels are healthy, around 4 to 5 weeks, and the retail market share remains over 30%, backed by Vahan data. This approach is more sustainable and keeps dealers profitable,” another person close to the company explained.
“The financials are strong, too—quarterly results are improving, margins are healthy, and the company just declared its highest-ever dividend.” He noted that much of this stabilization and strategic recalibration has been achieved under a new leadership structure that relies on continuity and internal talent.
“The new leadership team, led by figures like Ashutosh, Vivek Anand, and Kasbekar, brings a more measured and cohesive approach to Hero’s growth strategy. While there’s been external speculation around leadership churn, much of the transition has been orderly and internally driven,” he said.
“Internal promotions have filled key roles, reflecting the company’s confidence in its talent pipeline. With rural markets showing signs of revival and the festive season expected to be prolonged, the new management's steady hand and focus on execution are expected to help Hero build on its core strengths and regain lost ground.”
Premiumization Challenge
As far as the future is concerned, there is one aspect of the market that Hero must get a grip over if it is to arrest its slide—the relentless consumer march towards higher and higher segments. The era of two-wheelers as mere utilitarian transport is fading, replaced by consumers craving style, features, and performance. This “premiumization” trend has fueled explosive growth in the 125cc motorcycle and scooter segments, while entry-level bikes languish. The scooter segment sold 6.85 million units in FY25, a 17.4% jump, while the 125cc motorcycle segment sold 3.6 million units, up 12.7%.
This shift has revealed Hero’s Achilles’ heel: its inability to crack high-margin segments. However, it cannot be blamed for lack of effort. The company launched several premium models—Mavrick 440, Karizma XMR, Xpulse 200, Xtreme 160R, and Xtreme 125R—and partnered with Harley-Davidson to co-develop bikes like the Harley X440 (rebadged as Mavrick). It established “Premia,” a premium sales channel with 60 stores by late 2024, targeting 100 by FY25’s end, and revamped 700 Hero 2.0 stores to modernize its retail experience.
Yet, Hero’s premium push has flopped. The Mavrick 440 sold just 1,225 units in FY25, hampered by delayed deliveries and muddled positioning against Royal Enfield’s Classic 350 and Honda’s H’ness CB350. Hero’s volumes in the 150cc–200cc segment plummeted 40%, and the Karizma XMR failed to ignite consumer interest. “Hero’s premium bikes lack the emotional connect or performance edge to compete with Bajaj’s Pulsar or TVS’s Apache,” says a brokerage analyst.
Hero’s scooter segment is an even bigger pain point. Volumes slid from 443,459 units in FY21 to 391,419 in FY25, with market share nearly halving from 9.89% to 5.71%. Models like the Maestro, Pleasure, Xoom 160 and Destini 125 have failed to resonate with urban, tech-savvy consumers who prefer Honda’s Activa, TVS’s Jupiter, and Suzuki’s Access.
“Hero’s scooters feel like an afterthought,” says an observer. “They lack the innovation to compete in a style-driven segment.” Today, Hero stands at a crossroads. Its rural network, brand loyalty, operational scale, and 125cc gains provide a foundation to sustain its lead, but it must crack premium bikes, scooters, and EVs while stabilizing leadership. The push for 100 Premia stores and 700 revamped Hero 2.0 outlets signals reinvention, but execution is critical. “ Hero’s brand carries immense equity,” says a dealer.
“It’s too early to write them off, but they must move faster.” Honda, with its focus and adaptable portfolio, is poised to capitalize on Hero’s stumbles. Yet, it faces its own challenges in entry-level bikes and EV scaling. Hero built an empire on affordability; now, it must thrive in an era of aspiration. The stakes are monumental, and the outcome will shape India’s two-wheeler future.