Future Strategy for Hero without Honda

Hero

Hero Honda Motors (HHML) World's largest two-wheeler manufacturing company

Three manufacturing facilities: Dharuhera

Gurgaon

Hardwar

Incorporated in 1984 as a joint venture (JV): Honda Motor Company of Japan

Hero Group India

Hero Munjal brothers brand for their flagship company Hero Cycles Ltd.

Both parties owned 26% each in the JV and the technology sharing agreement is renewed every 10 years.

Industry:

Two Wheelers: 76.23 %

Society of Indian Automobile Manufacturing 2011

Two Wheeler market:

Motorcycle leading

Major Players Hero Honda Bajaj Auto TVS Yamaha Suzuki Enfield

New Harley Davidson

Total Executive class

Economy segment Premium segment

Separation

Reasons: R & D capability sharing by Honda Pollution norms Royalty being paid by Hero to Honda: 4-5% Honda Motors

• Separate brand increasing market share

Refusal of Hero Honda to merge the spare parts business with HMI

SWOT• Strength

•Good Quality•Leader 52%•Extensive Dealer network 550•3500 service centers•Strong marketing

Opportunity•Exports market:• Not explored yet as JV

constraint•No Royalty: 4-5%

Weakness•R&D: Dependent on Honda•Capacity constraint: 5.2million•Financial weakness: Low cash as heavy dividend•No overseas market

Threat •Market competition: • Honda, Bajaj

•R&D : Pollution norms

Stakeholders Suppliers:

350 component suppliers

Connection with the Munjal family but supplying parts to Honda as well

Honda started looking for new supplier base

Distributers: Unique intangible resources that it has; superior brand image & reliability

perception of its brand is the outcome of these intangible & tangible key assets

Key would be the close relation based on trust and long term relationships

Future strategies Product Branding

Splendor

Passion

Karizma

Already started work with JWT marketing communications

Corporate Branding Hero Cycle: May have negative impact

Separate as subsidiary with separate brand name

Marketing focus: Major Sports events

Targeting young consumers

Quality Image: Huge investment required for image as quality producer or transfer of

image

International presence: Sponsor/Participate Moto – GP

Global Branding

Build Indigenous Research & Development 3 years for capability development

In-house Develop indigenous products Scale up Hero Global Design

Possible Technological tie-up or Acquisition MV Augusta – Italy Megelli motorbikes- UK

Global markets Huge potential

Bajaj upto 30% of sales

Major markets: African continent

South East Asia

Middle East

Establish channel partners Distribution Marketing

Possible Impact on industry Market

Increased Competitiveness

Price war or Variant flooding

Consumer More options

Better quality

Past experience Bajaj + Kawasaki : Doing well (Still together for premium segment)

TVS + Suzuki: TVS prospered, Suzuki struggling

Thank You