In a first-of-its-kind initiative, the country’s largest bicycle manufacturer, Hero Cycles, is exploring tie-ups with micro finance companies to offer financing solutions to customers.
“We have initiated talks with local micro finance companies. Currently, you can make a token deposit of a few hundred rupees and avail of financing solutions for purchasing a motorcycle. But financing is not offered for bicycles. We want to go deeper into India by bringing our products closer to our customers”, said Pankaj Munjal, managing director, Hero Cycles.
According to industry estimates more than 70 per cent of motorcycles are bought through financing schemes.
If the talks materialise, financing options would be put in place for purchasing bicycles within a month.
Munjal added, “The solutions would be made across our range of products. There is a growing green consciousness among consumers today and being eco-friendly, the bicycle segment has a huge potential to grow sales rapidly.”
The company declined to specify the incremental sales it expected from making available financing options to customers. “Last year our bicycle sales grew by around 14 per cent. This year, we are expecting strong double digit growth numbers in the domestic market”, Munjal said.
Around 12-13 million bicycles are produced in the country every year. However, sales are mostly driven by domestic demand, since Indian manufacturers do not have significant global presence at present. Hero Cycles, which registered sales of 5.2 million units in the last financial year, has a market share of around 43 per cent.
Hero Cycles’ plant in Ludhiana has the capacity to produce 5.5 million bicycles per year. The company sells its products through 3,000 dealerships across the country.
Recently, Hero Cycles had entered into an agreement with Pantaloon Retail to sell premium products at Future Group’s stores.
Munjal had earlier said the company was working on launching a range of light-weight carbon fibre bicycles to meet the demand for premium products in the segment. These bicycles, which would be introduced shortly, are expected to be priced above Rs 40,000.