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BW Businessworld

Hero MotoCorp Focuses On Innovations In Search For New Markets

Its new research centre outside Jaipur boasts of world class engineers, design studio, prototype manufacturing and validation unit among its facilities

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India's auto industry is going through many changes. Foreign brands are gaining a foothold in the country and many domestic companies are going global. To stay ahead in the race, automakers have started relying heavily on research and development.

Recognising these industry trends, India's largest two-wheeler manufacturer has taken innovation and technology to a new level with its Rs 850 crore, 247-acre integrated R&D centre on the outskirts of Jaipur.

Hero MotoCorp, when it was known as Hero Honda Motor Ltd, had the big advantage of receiving technical assistance from its Japanese partner. Since the group's demerger in 2010, Hero was devoid of the technology required to develop a product.

To bridge the technical gap, Hero MotoCorp has now inaugurated its massive R&D facility, which includes a 16-km-long test track with 45 different surfaces. At present more than 500 qualified personnel are working in the centre.

The research centre boasts of world class engineers, design studio, prototype manufacturing, validation unit among its facilities.

BW Businessworld visited the centre in Rajasthan and had an interaction with Hero MotoCorp Chairman and CEO Pawan Munjal.

Strengths
The maker of popular Passion and Glamour bikes is aware that near-term growth in the premium commuter segment(150cc-250cc) is not possible. It is the entry-level commuter segment that will remain the primary focus for the top market player.

"First of all, we will strengthen our position where we are already strong, which mainly includes the 100cc to 125cc class. Secondly, we look at gaining the market share in the premium commuter category of 150cc and above motorcycles," said Markus Braunsperger, chief technology officer at Hero MotoCorp.

The company feels that the government's decision to give more emphasis on rural economy in the Union budget will help its sales outside cities.

"I think the amount of focus the Budget has put on the rural sector, is very encouraging. I am sure it will help revive the rural sector," said Munjal.

Hero hopes to sell 12 million units by 2020 and the rural economy is expected to drive its sales push.

Competition
Hero MotoCorp has been the undisputed champion in the 100-125cc category but it hasn’t made any impact on the growing premium segment, which compromises of 150-250 cc engine in India.

Its market share in the segment is below 20 per cent compared to its main rival Bajaj whose share in the segment is around 50 per cent.

Though Hero had several launches in the past like Extreme, Impulse and Karizma, but no model is doing as well as the rival Pulsar. The segment also witnessed a number of new entrants which have gained market traction in recent years. These models comprise Suzuki’s Gixxer variants, Honda’s CB Unicorn range, Bajaj-KTM’s 200 Duke and RC 200.

Industry experts say Hero MotoCorp is aware of the high level of competition in the segment and is working hard to develop motorcycles which can offer additional or improved features than the existing models in the 150cc and above class.

The new R&D centre is expected to help Hero grow its share in the category.

"At present, our market share in the premium segment is small. We have shown our intent and direction of heading into the premium segment and we are doing a lot of work on those products. Sooner than later, you will be seeing those products coming out of Hero stable not just for the Indian market but also for the global market," Munjal said.

Global Market
"We are in 28 countries already. This month we should be starting in Nigeria and very soon we should be going into Mexico," Munjal said.

Hero started exporting to foreign markets two years back, and plans to focus on new markets in Africa, Latin America and Central America. Exports account for almost 12 per cent of Hero’s sales.

The company is all set to launch its products in Nigeria, Ghana, Liberia and Guinea. Hero's products already sell in other West African countries such as Burkina Faso, Ivory Coast, Democratic Republic of Congo, Angola and Madagascar.

Hero wants to grow its presence to 50 countries by 2020.


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