Hero Motors finalises export strategy for overseas markets after Honda split

Tuesday, 12 July 2011 00:00 - - {{hitsCtrl.values.hits}}

MUMBAI: Hero Motor has finalised an export strategy focusing on markets such as Latin America, Africa and South-East Asia, taking its first step towards emerging as a global player after the recent split with its 26-year old Japanese partner Honda.

The BM Munjal-controlled company is making changes in its existing products to suit the needs of these fast-growing overseas markets, apart from identifying homegrown talent to drive export growth.

“There is a common thread between the three export markets. These are high volume and commuter-driven markets and it’s a quick-win for us,” said Anil Dua, Senior Vice-President (Marketing and Sales) Hero Motor.

Dua, who heads the 12-member panel which finalised the export strategy, is also spearheading an exercise to identify potential partners. “We are visiting interested parties and a decision will be taken soon on whether to look for local assembly or export products from here,” Dua said.

India’s largest two-wheeler company has identified Latin America, Africa and South-East Asia as its bikes fit into the preferences of customers in these markets growing at the rate of 10-15%.

The company may also look at launching three-wheelers in these markets.

Nigeria, the largest two-wheeler market in Africa, uses bikes for public transport. While Chinese bike makers sell 30,000 bikes per month in Nigeria, their Indian rival Bajaj Auto has monthly sales of 21,000 bikes.

Bajaj, which made an entry into this market six years ago, is developing a low-cost bike to bolster market share. “We are currently looking at the pricing power in each of these markets. Our focus on mileage and quality in the commuter segment will hold an edge over other Chinese products,” said Dua.

The group currently exports to South Asia, Sri Lanka, Bangladesh and Nepal and accounts for only 2% of its total sales. The joint venture with Honda barred it from exporting two-wheelers to countries where Honda sells bikes and scooters.

Honda is present in markets like Africa and Latin America. The overseas two-wheeler market is about 50 million units against Indian two-wheeler market of 10 million units.

Hero Motor may find the going tough in the near-term, said analysts. “The existing competition from Bajaj Auto, TVS and the erstwhile partner Honda will make it difficult for Hero Honda to make gains from these markets immediately,” said Mahantesh Sabarad, Auto Analyst at Fortune Financials.

India’s largest motorcycle maker has been clocking sales of 500,000 units every month since March 2011. “New launches and refreshes of the existing models have helped keep up the momentum,” Dua said.

The company, which is targeting sales of six million units for the current financial year, will announce the location for the fourth plant in a few weeks. “The current capacity will feed our domestic requirement. The fourth plant will help us with our export plans.”