Hero Motor. Q1 2019 Global Sales down in double-digit, first time since 2011

Hero Motors reported in Q1 2019  the first double-digit lost since 2011 divorce with Honda, hit not only by the lost in the domestic market, but even by sharply negative scores in export markets, like Ecuador, Sri Lanka and Argentina. The World’s second largest motorcycles company is facing the first difficulties after a long growth reported in the last years.

 

Global Sales

The start of the 2019 was quite negative for the Indian company, reporting the first quarterly sales drop since the 2011 divorce with Honda. First quarter sales have been 1.75 million units, down a robust 10.5%, the worse performance among all the Indian Motorcycles companies and preliminary data regarding April are even worse, with domestic sales fallen 16.4%.

The first quarter negative score was heavily correlated with the lost in India, but all markets have reported difficulties with sales dropped 41.7% in Ecuador, near 10% in Sri Lanka and 11.6% in Argentina.

Indeed, Hero Motor global sales follow two different lines. The first depend by the powerful growth of the Indian domestic market, where the brand is leader in a booming trend; the second is under the responsibility of the Team deputy to develop the international business, fast growing but still marginal for the company performance, compared with domestic activities.

In recent years global sales grew up from 5.3 million in the 2012 to over 8 million units in the 2018. A growth of 2.7 million units in a really short period of time. However, looking at the 2018 performance, the domestic sales counts for 96% with over 7.8 million registrations in India and less than 0.3 million outside India.

 

Company Heritage

Hero is the World’s second largest motorcycles and scooter company. Headquartered in New Delhi, India.

The company was established as a joint venture company between Honda Motor Company of Japan and Hero Group. In the year 1983 they signed a joint collaboration agreement and formed the company. The joint venture between India’s Hero Group and Honda Motor Company Japan has not only created the world’s single largest two-wheeler company but also one of the most successful joint ventures worldwide

In the 2011, the Munjal family holding, Indian Promoter Group, and Honda Motor Co Ltd Japan (Honda) entered into a Share Transfer Agreement to transfer the entire Honda’ shareholdings of 26% in the Company to the Indian Promoter Group bringing an end to the joint venture between the two promoter groups of the company. The acquisition was completed on March 22 2011 and the shares held by Honda were transferred to the Indian joint venture partner. In addition to the Agreement the Indian Promoter Group and Honda also entered into a License Agreement which has given to the company the right and license to manufacture assemble sell and distribute certain products and their service parts under their Intellectual Property Rights.

In July 2011 the company changed their name from Hero Honda Motors Ltd to Hero MotoCorp Ltd.

In 2015 the company commences operation in their first ever plant outside India established in Villa Rica Colombia.

On 10 March 2016 Hero formally inaugurated its world-class `Global Centre of Innovation and Technology’ (CIT) in Jaipur Rajasthan. Built with an investment of Rs 850 crore the CIT will design and develop world-class products for global markets

On 12 January 2017 Hero launched new Glamour motorcycle in Argentina its first-ever global launch of a new product outside India.

In May 2017 Hero commenced commercial production at the second global manufacturing facility in Bangladesh.

On 7 November 2017 Hero unveiled the Xpulse Concept motorcycle as a world premier at the EICMA annual trade show in Milan Italy.

In the 2017 Hero hit the milestone of 75 million motor sold since the 1984.

Operations

Hero Motor owner, President & CEO is Mr. Pawan Munjal.

They actually operate with seven manufacturing facilities based in Dharuhera, Gurgaon, Neemrana (since 2014), Haridwar, Halol and Gujarat (since 2017) in India, plus one in Bangladesh (since 2017 with a capacity of 120.000 units/year) and one in Colombia (since 2015 with a capacity of 80.000 units/year).

These plants together have a production capacity of 8 million two-wheelers per year.

Hero has five joint ventures or associate companies, Munjal Showa, AG Industries, Sunbeam Auto, Rockman Industries and Satyam Auto Components, that supply a majority of its components. Actually employees are few more than 7.000. Remarkable as the number of women is lower than 1%.

Model line up

Actually the line up includes three type of scooters and eleven motorcycles with displacement between 97 and 250 cc. They are:

ModelTypeHPSegmentSegment
Hero Xtreme Rmotorcycle200off roaddual
Hero Glamourmotorcycle125streetnaked
Hero Karizma ZMRmotorcycle223streetsport
Hero Xtreme Sportmotorcycle150streetnaked
Hero Achievermotorcycle150streetnaked
Hero Glamour Programmed FImotorcycle125streetnaked
Hero Super Splendormotorcycle125off roaddual
Hero Passion Promotorcycle125streetnaked
Hero Splendor Plusmotorcycle125streetretro
Hero HF Deluxe Ecomotorcycle97streetretro
Hero HF Dawnmotorcycle97streetretro
Hero Duetscooter110scooterstandard
Hero Maestro Edgescooter110scooterstandard
Hero Pleasurescooter102scootercub

Distribution

The divorce from Honda included limitations to the export and just sales in Bangladesh and Sri Lanka were allowed for the first 6 years. Consequently, only since 2016 the company was able to pursue a global distribution strategy.

However, they are going fast on this track and are full of ambitions. Actually they have opened distributors in Africa and in South America, opening the plant in Colombia (2017) and appointing distributors in all countries.

Actually Hero is distributed in 27 countries, plus India and has a plan to invade the World in few years.

The countries were actually it is distributed are: Bangladesh, Nepal, Myanmar, Sri Lanka, Argentina, Bolivia, Colombia, Costa Rica, Dominican Republic, Ecuador, Angola, Burkina Faso, Democratic Republic of Congo, Egypt, Ethiopia, Ghana, Guinea, Iran, Ivory Coast, Liberia, Kenya, Mozambique, Nigeria, Tanzania, Turkey, Uganda, UAE.

Hero Motor has a sales and service network with over 6,000 dealerships and service points across India.

To know more about, please do not hesitate to contact us!

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