Hero MotoCorp enters a joint venture with Magneti Marelli

Thursday 05 December 2013, 11:33 AM by

The market for motorcycles in India has seen an enormous upsurge in the last few years or so, with a hefty number of people opting for bikes. Gone are the days when Indians preferred scooters as sales for bikes have increased exponentially. And it is not only bikes from the mass segment that have gained prominence as companies like Harley-Davidson and Triumph are expanding operations in India. Popular two-wheeler manufacturer KTM has already reaped great benefit by entering into a partnership with Bajaj to market for selling its bikes in India. These alliances promote global leaders of two-wheeler manufacturing in the subcontinent and also help the Indian firms to improve operations.

Hero MotoCorp enters a joint venture with Magneti Marelli | CarTrade.com
Hero MotoCorp enters a joint venture with Magneti Marelli

Popular Indian manufacturer Hero MotoCorp and Italian giant Magneti Marelli have collaborated for a joint venture in India with the aim of producing powertrain systems. There have been reports that these firms will invest around $27 million within a span of ten years for the development of new generation powertrains. Hero MotoCorp will hold a stake of 60 per cent in `HMC-MM Auto Ltd`, the JV firm, and will target sales revenues of nearly $200 million in the next decade.

Pawan Munjal, Chief Executive Officer and Managing Director at Hero MotoCorp, said, "We have decided to form a JV with Magneti Marelli for next generation fuel injection systems...a total equity injection of USD 8.5 million in ratio of 60:40 will be invested in the JV over a period of three years." The primary target during this period will be to assimilate an agreement of innovative solutions to install powertrain control of two-wheelers as well as certain three-wheeled vehicles. The main aim would be to increase and optimise the usage of electronics, which would lead to raising the level.

Pawan Munjal said, "We believe that this development will help the cause of Hero products, Hero engines immensely. It will surely improve the drivability of our products. It will also help in meeting environmental regulations as we go forward."

The joint venture will induce important technological upgrades regarding engine production within the group itself, thus reducing its dependence on external providers. Munjal, when asked about details about the venture, said, "The JV is also open to supply to other manufacturers and would not be an exclusive supplier to Hero MotoCorp".

Magneti Marelli s.p.a., originally an Italian company, is an international organisation that designs and produces state-of-the-art systems and components in the automotive sector. Providing services to prominent auto makers in Asia, North and South America and Europe, it has its units in almost 19 countries around the globe.

According to sources, the joint venture will initiate its manufacturing procedures by the end of 2014. At present Hero MotoCorp ZMR and Glamour 125 cc have the system of advanced fuel-injection. Magneti Marelli Chief Executive Officer Eugenio Razelli impressed upon the fact that this venture will help the Indian manufacturer to install the new system in all its products, including bikes and scooters. "We believe in partnerships and we care a lot about this new JV. We hope to be a great asset for the Hero group," he said.

Hero MotoCorp has been one of the largest manufacturers of two-wheelers in the world since a long time with sales of nearly 50 million units. The year 2012 added another feather to its cap with Hero MotoCorp acquiring 49.2 per cent of the equity capital in Erik Buell Racing, a globally popular motorcycle brand.

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