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