According to a recent report, Hero MotoCorp Ltd. will be concentrating on export markets. In the April-June quarter of 2012, the company will start exporting scooters and motorcycles. Hero broke up its 27-year-old partnership with Honda Motor Co. Ltd. of Japan, which restricted it from exporting products to many foreign markets.
In an interview, Pawan Munjal, Hero’s Chief Executive Officer and Managing Director, said, “We will start exporting very soon, maybe in the first quarter of the next financial year,” He further added, “We have identified some distributors in Latin America and Africa.”
At present Nepal, Sri Lanka, Bangladesh, and some Latin American countries are the main export destinations of Hero, but these only contribute to a small part of the 6.5 million vehicles sold by the company every year.
According to the data of the Society of Indian Automobile Manufacturers (SIAM), the company exported 1,14,581 motorcycles and scooters in 2010-11. By 2016-17, Hero plans to sell one million motorcycles and scooters and generate $1 billion revenue.
On the condition of anonymity, a senior official of the company said that Hero is also spotting locations abroad for setting up assembly plants. According to him, if volume is sufficient, then the company will establish an assembly unit.
As per the Joint Venture (JV) signed with Honda in 1984, Hero Group was unable to export motorcycles to large markets where the former had its assembly plants. However, after doing away with the alliance, the company established Hero International Business to focus solely on exports.
As per a senior regional leader and auto expert at consultancy Ernst and Young, South Africa, the two wheeler market in Africa is around one million units per year. In the region, Hero will compete with Bajaj Auto Ltd. which is the only Indian motor cycle company exporting to the region. In the entry level motorcycle segment of Africa, Bajaj has 30% market share, while rest belongs to Chinese manufacturers.
The company has reported to have identified 50 overseas markets across the globe. Hero will begin its export operation from Africa and later move on to West Asian and Latin American markets.
Sector analysts Jinesh Gandhi and Mansi Verma at Motilal Oswal Securities Ltd, a Mumbai-based brokerage firm mentioned in a report, “It is excited about the Latin American market, but expects lead time of at least two years before it can enter them due to dual-fuel usage”. In Mexico, Brazil, Argentina, and Chile, where ethanol-blended fuel is used, present range of Hero engine may not perform well according to Gandhi. At least one million motorcycles and scooters were sold in Brazil in 2011. According to Motilal Oswal analysts, Hero will not be able to make profit from exports at the start of this venture at least.
In an official statement Pawan Munjal said that the company will be present at famous motor shows for brand building purpose. He added, “Last year, we were present at Milan Motor Show and this year we’ll be going to Brazil, which is also famous for motorcycles.”
