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Hero Cycles ramping up premium bicycles play

Friday, 29 June 2012 - 10:30am IST | Place: Mumbai | Agency: DNA
The company that currently manufactures 19,000 bicycles is setting up a new plant close to its existing plant in Ludhiana, Punjab, which will make 4,500-5,000 units a day.

Hero Cycles, world’s biggest bicycle maker, is expanding its premium bicycle manufacturing capacity to cash in on the growing popularity of such bikes in India.

The company that currently manufactures 19,000 bicycles is setting up a new plant close to its existing plant in Ludhiana, Punjab, which will make 4,500-5,000 units a day.

Most of the new capacity will go into making premium bicycles that Hero sells under the Urban Trail brand. The company, however, did not share the investment figures for the new plant.

Hero, which is a market leader with 45% share in the mass-market segment, sees growing potential in the premium segment that is currently being dominated by players including Firefox, Suncross and LA. The market for basic cycles has been stagnant with a growth of 6-7%, while the premium cycle segment is growing at 24-28% compounded annual growth rate. Hero, which forayed into the premium segment in February with UrbanTrail, will introduce a range of adult and kids high-end bicycles in October. Currently, the company has 17 products in this segment. It will launch nine products this year.

It is targeting to sell over 70,000 premium bicycles annually in the domestic market. “We will be a significant player this year and a dominant player next year,” said Pravin Patil, president, strategic initiatives & Urban Trail.

“There are a lot of players in this segment, but there is space for all, largely because the market is growing,” he said.

The company will also set up 30 exclusive Urban Trail stores to boost sales and brand visibility. It will also set three experience centres, where a customer can experience cycling.

About 15 million bicycles are sold in the Indian market, out of which the premium bicycles account for just 2% share. In the next fiscal, around 300,000 premium bicycles are expected to sell in the market.

Hero is also setting up a manufacturing facility for producing aluminum frames for the premium bicycles, which are currently being imported.

It is also planning to get into exports with new brand – Hawk –and has started exporting to 6-7 countries under it. It is also looking at the US and the European markets. It has also tied up with Wal-Mart for the supply of bicycles on a global level.




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