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BMW bike sales whimper to a crawl

Faced with an embarrassingly low sales figure of one or, at the most, two units a month, Hero Motors has been forced to slash the prices of its upmarket BMW bikes by over 57 per cent.

The bikes, which were launched with much fanfare carrying an expensive price tag of Rs 450,000 per unit, are now going for Rs 190,000. "This is a last ditch effort by the company to clear the inventories and finally abandon the project altogether," company sources claimed.

However, Hero Motors' Managing Director Pankaj Munjal, when contacted, said, "We had got some duty benefits from the government and decided to pass it on to the customers and hence the price corrections."

The benefits, he said, were on account of optimisation of duties. "We have now put a benchmark on the pricing and volumes. We feel there is a reasonably good market for the bikes at this price," Munjal added.

The bikes are available on road (with duties) now for Rs 225,000. The premium bikes are being imported from Munich, Germany.

But he asserted that the company has no plans to abandon the project. "Though we have been able to sell just about 100 bikes in the past two years, we intend to continue selling the bikes in India."

Munjal claimed that the entire inventory has been cleared now and Hero Motors has again approached BMW AG of Germany for a fresh lot. "We are planning to renew the agreement and have also held talks with BMW on this account. But we have given a clear benchmarking on the price. We have decided on the margins and duty structures and there is no question of hiking the prices again," he added.

At this stage, Munjal said, talks have been initiated with the German company and both the partners are going ahead with the paperwork.

He was confident that with the new pricing, sales of these bikes will look up. In spite of an abysmally low sales figure, the motorcycle project is "alive and not dead."

Regarding setting up a separate business unit to manage the BMW bike project and sharing equity with the German major, Munjal said, "We have not reached that stage as yet. The present volumes are not good enough to even moot the idea of setting up a separate company. Once the volumes grow, we will start thinking on these lines."

Regarding the company's new product -- Challenger -- in the moped category, Munjal said the two-wheeler will be available commercially by May this year. The test marketing results for the vehicle have been very encouraging, he said.

Challenger is an 80cc, three gear, auto lube vehicle which will be available with an auto start option. The moped will be priced 15 per cent more than Bajaj's M80. "The premium is for better design and better performance," said Munjal.

Hero Motors, part of the Rs 20 billion Hero group, is all set to indulge the farmhouse kids with its latest offering -- Hero Wheelie, a motored four-wheeler targetted at the six to 14 years of age group.

Designed on the lines of the moon buggy used by astronauts on the lunar landscape, the Wheelie is powered by the Hero Puch's 49cc petrol engine. The Wheelie, he said, is now commercially available in Delhi.

This offroad vehicle carries a price tag of around Rs 25,000 and has a fuel efficiency level of 55 to 60 km a litre. The vehicle will be available in a self start version with automatic transmission.

Wheelie will be produced at the company's Ghaziabad plant. "The investments were not much as we were using the available production lines of Puch. The engine is the same, all we wanted is a new design. So in terms of figures, it does not come up to a big amount," he said.

The vehicle will also be exported to a few countries across the globe, he said.

UNI