MUMBAI (Reuters) - Hero MotoCorp Ltd
Hero, which is investing heavily in new technology and export operations, is battling to protect its dominant market share from former partner Honda Motor Co <7267.T> as the overall market stalls.
"The last two quarters have been challenging for the Indian auto industry on account of the delayed monsoons, rising fuel prices and subdued sentiments," managing director Pawan Munjal said in a statement.
Hero sold 1.57 million vehicles in the October-December quarter, down 1 percent on the same period last year. Total expenses rose 5.6 percent during the quarter.
Hero's operating margin during the quarter fell to 12.59 percent from 15.63 percent in the same period a year previously, and 13.86 percent in the previous quarter. Local rival Bajaj Auto Ltd
As high domestic interest rates of 8 percent curtail demand, India's automotive industry association this month cut its motorcycle sales growth forecast for the financial year that ends in March to 3-5 percent, from 5-7 percent earlier.
Since parting from Honda in 2011, Hero has been forced to pump cash into its export operations, which were restricted under the 26-year joint venture, plus new technology tie-ups.
Hero's domestic two-wheeler sales fell 2.0 percent in the first nine months of the fiscal year that began in April, against a 4.1 percent rise in overall industry sales, according to data from the Society of Indian Automobile Manufacturers.
Honda, which has aggressively ramped up its presence in segments traditionally dominated by Hero since the partnership ended, saw its sales rise 37.4 percent in the same period.
Hero said profit for the October-December period was 4.88 billion rupees, below the average market expectation of 5.69 billion rupees, according to Thomson Reuters I/B/E/S. Net sales rose 2.8 percent to 61.51 billion rupees.
(Reporting by Henry Foy; Editing by Dan Magnowski and Mike Nesbit)