[CrAzY dRiVeR]

As we try to make sense of the recent announcement regarding the partnership between Hero Motocorp and Harley Davidson - there have been multiple queries raised, both for and against the capabilities of Hero Motocorp. All the discussions reminded me that it has been a decade since Hero Motocorp parted ways with Honda - the formal announcement was made in December 2010, to be exact.

Hero Honda was started in 1984 as a partnership between Hero Cycles and Honda. The company was the undisputed market leader in 2010 before the split with the Japanese major.

To make better sense of the future, I guess it is worthwhile to take a look at a decade of Hero Motocorp - everything in between from Honda to Harley Davidson.

[CrAzY dRiVeR]

Sales & Marketshare

Hero Motocorp sold 6,97,293 units in September 2020, as compared to 4,33,641 units for Hero Honda in September of 2010. Thats an increase of sales by 60% from 2010 to 2020. However - in terms of market share - from 38.4% in September 2010, to 37.7% now - they actually lost 1% over 10 years.

Reason - HMSI only sold 1,23,831 units in September 2010, and increased their sales to 5,00,888 motorcyles in September 2020. Thats a 300% increase since the split - resulting in market share increase from 10.9% to 27.08% over the same period.

September 2010 -



September 2020 -



Exports

Hero Motocorp is present in 37 countries across Asia, Africa, and South & Central America. However, exports stood at 18,425 units in September 2020 - 2.57% of total production.

In terms of marketshare - Hero Motocorp had 5.06% marketshare of Indian two wheeler exports in FY2019 - 20.

[CrAzY dRiVeR]

Dependency on HMSI, Royalty Payments

Hero Motocorp had negligible R&D in-house leading upto the split in 2010 - post which Hero continued to pay royalty to Honda for the use of its technology. However, Hero Motocorp forged partnerships with AVL of Austria for engines, and Magneti Marelli for fuelling systems in the period of 2012 -2013, and has been able to successful transition away from Honda over the next 3-4 years.

Royalty payments to the extent of INR 388.96 crores were paid to HMSI, but was finally phased out during 2016-17.



Research & Development

In March 2016 - Hero inaugurated its Global Centre of Innovation and Technology (CIT) in Jaipur, Rajasthan. Built with an investment of Rs. 850 crores - this center is the company's global R&D hub. The first model motorcycle to be designed and developed completely in-house is the Hero Splendor iSmart 110, launched in July 2016. Hero Motocorp also managed the BS6 transition in-house with the help of partners.

Hero also has research centers abroad. The Hero Tech Center Germany GmbH is a wholly-owned subsidiary of Hero MotoCorp Limited and is located at Stephanskirchen, near Munich. Dr. Markus Braunsperger, Chief Technology Officer (CTO) at Hero MotoCorp oversees the operations at the new R&D centre. The center aims to develops products for the world markets, and Hero has also hinted at larger capacity motorcycles being designed from this German R&D center.

According to a media reports, Hero MotoCorp is planning to invest Rs. 10,000 crore in research and development of next generation products, over the next 5-7 years. Hero has also confirmed that electric motorcycles and scooters are being designed for a future launch.





Dependancy on the old Honda product lines

Despite all the R&D happening - Hero Motocorp continues to be extremely dependant on the old product lines established with Honda.

The age old Splendor and HF brands continue to contribute upto 64% of total sales! The only other major contributors to the sales figures are again the old Honda brands of Passion and Glamour, together forming upto 85% of the sales figures. These products continue with minimal changes into 2020 - and as mentioned by the R&D Director himself - the market perception identifies these these products are more Hero Honda than Hero Motocorp.

[CrAzY dRiVeR]

New sub-brands established

Of all the many different sub-brands introduced during the last decade, none really met with any significant commercial success.

1. Maestro - Mediocre - The scooter sub-brand has run the longest, even though the sales numbers are irrelevant compared to its main rival - the Honda Activa. However, the brand has survived from 2012 till date.

2. Duet /Destini - Mediocre - Sales remain comparable to the Maestro, but there is no brand recall. The 'Duet' was also recently replaced by the brand 'Destini'.

3. Ignitor - Flopped. Born from the Honda Stunner, the brand was a flop in terms of sales and shortly discontinued.

4. Xtreme - Flopped multiple times, but brand has survived in a myriad avatars. Originally an offshoot from the famous 'CBZ' brand, but Xtreme has failed to replicate the original. Currently used on a new 160 and 200 range of products.

5. Impulse / XPulse - Impulse was launched to rave reviews and positioning, but poor sales. One of the best attempts from Hero Motocorp, and had the makings of a legendary brand. However, brand was dropped and transitioned to XPulse for the next generation.


Iconic brand names lost

- Karizma



Once the most iconic brand from Hero Honda! Hero Motocorp ruined the brand with a facelift and eventually discontinued.



- CBZ



The original sports motorcycle - Hero tried to transition the CBZ brand to CBZ Xtreme, but thanks a myriad of poorly positioned avatars - the brand doesn't enjoy much recognition in the market. Hero eventually dropped the 'CB'Z name, which was a legacy from the Honda days.

One of the Xtreme avatars -

[CrAzY dRiVeR]

Dependency on rural markets.

With 85% of sales coming from HF, Splendor, Passion and Glamour - Hero is still the favourite with the rural markets.

When the rural markets pick up sales - Hero increases their lead over Honda, whereas Honda depends primarily on the urban markets - thanks to its dependancy on scooters like the Activa.

Hero Motocorp also enjoys unmatched service and sales network coverage in rural areas. The company claims to have over 6000 customer touch points across the country.

Connect with the urban / youth market.

Hero did well to bring back the Impulse/XPulse, because it is the sole product well received by youngsters now. Hero has tried several variations of the Xtreme range over the years, including the best effort of the recent 200S - but none has been successful as such!





Marketshare in scooter segment

Hero Motocorp has been competing in the scooter space since the last 14 years - with brands like Pleasure and Maestro, and more recently - with the Duet and Destini 125 models.

As of September 2020, the brand enjoys 10% marketshare in the scooter segment. In comparison - Honda has been far more successful in invading the motorcycle space -with the CB Shine.

[CrAzY dRiVeR]

Futuristic Concepts that could have been!

Over the years, Hero has displayed some of the best concepts to be produced by an Indian manufacturer - but none of these made it to the market.

1. 620cc Hastur displayed at the 2014 Auto Expo



2. HX 250R displayed at the 2014 Auto Expo



3. 157cc scooter concept - the ZIR, displayed at the 2014 Auto Expo



4. XF 3R displayed at the 2016 Auto Expo -



Wild concepts that actually made it to showrooms.

In the brilliant Hero Motocorp Auto Expo stall of 2014 where the Hastur, HX 250 and ZIR were showcased - the below two concepts were also displayed which finally made it to the showrooms.

1. Hero Passion Pro TR: An enduro version of Hero Passion.



2. Hero Splendor Pro Classic Cafe Racer: A cafe racer version of the Hero Splendor.



Electric Vehicles

Hero Motocorp currently has no electric vehicles on sale, considering Hero Electric is a seperate entity. As per reports, Hero Motocorp is making direct investments into its electric product lineup and created a ‘EMERGING MOBILITY’ BUSINESS UNIT in 2019.

They also own 34.58% of Ather Energy - one of the first movers in the electric scooter space.

[CrAzY dRiVeR]

Hero Motosports.

Hero Motosports has quickly established themselves from 2016 onwards in the endurance races, especially Dakar. They currently have eminent riders like CS Santosh, Joaquim Rodrigues and Sebastian Buhler. The team recently lost a star rider Paulo Gonçalves in the 2020 Dakar rally.

Hero could potentially use this motosports expertise in developing a mid-size adventure motorcycle for the market. More here - https://www.team-bhp.com/forum/motor...e-concept.html (Hero MotoCorp showcases new 300cc+ adventure motorcycle concept)



Partnerships

1. Eric Buell Racing

In 2013 - Hero Motocorp took a 49.2% stake in Erik Buell Racing (EBR) for a sum of 25 million US dollars. Hero had signed a partnership with EBR in 2012 for technology sharing and development of new midrange motorcycles. Hero also partnered with EBR on the Team Hero EBR World SBK team.

The results showed in the 2014 Auto Expo IMHO. However, none of those products hit the market. What did actually launch was an ugly facelift for the Karizma, inspired by Buell designs - which ruined the brand. EBR was also supposed to sell Hero's two-wheelers in USA through its dealership network.

However, EBR finally filed for bankruptcy in 2015. Hero later announced that all the R&D would be moved to its new innovation hub in Jaipur instead.



2. AVL Austria

Hero Motocorp announced its partnership with AVL in 2012 - the partnership helped Hero move away from Honda engines for its bread and butter range of products. Hero also roped in Mr. Markus Feichtner, the former Executive Director of AVL’s India Technical Centre - as the VP of its R&D Hub.

3. Magneti Marelli

2012 - 2013 was the period of partnerships for Hero Motocorp. They also tied up with Magneti Marelli during this period, to develop fuelling systems.

HMC-MM Auto Ltd - was formed with Hero Motocorp holding 60 per cent in the new company while Magneti Marelli will hold the rest 40 per cent. In 2015 - the company also opened a manufacturing plant for the production of engine control systems for two-wheeled vehicles in Manesar.

[CrAzY dRiVeR]

To Summarize -

+ Still the market leader with 37% market share.
+ Sales increased 60% from 2010 to 2020.
+ Stopped royalty payments to Honda.
+ Did BS6 transition of the range on their own.
+ Huge R&D hub at Jaipur with major hub in Germany too. Announced 10,000 crore investments into research over the next 5-7 years.
+ Impulse/XPulse has attracted youth.
+ Still the largest sales and service network with over 6000 touch points.
+ Good inroads into motorsports space within a short period.

- Marketshare fell by 1% from 2010 to 2020, thanks mainly to 300% increase in HMSI over the same period.
- Negligible export marketshare of 5%.
- Still dependant on old established Honda product lines - 85% of sales coming from HF, Splendor, Passion and Glamour.
- Lost major brands of Karizma and CBZ after facelifts and repositioning.
- Most new brands established over the last decade were either flop or met with mediocre response.
- Small 10% marketshare in scooter segment. More rural sales bias.
- None of the good concepts shown by R&D made it to the markets. Wild ones and sticker jobs did!
- No direct presence in electric mobility space yet.


I would personally say that Hero Motocorp did a 50-50 job during the last decade, but then again - it was also the first decade for the company after the split from Honda. Hopefully, the next decade will be much more exciting - and Hero can make better utilization of the partnership with Harley Davidson.

What would you think of the way forward for Hero?

[GTO]

Thread moved from the Assembly Line to the Motorcycle Section. Thanks for sharing!

[Sebring]

It's good to have ambitions, but Hero tying up with Harley could potentially be a cash burn. They should stick to the knitting. Hero is known for the affordable bikes they make and should come up with new products in that space. Dig in with product innovation, and electric bikes with 'affordability' as key value. Harley Davidson's brand value can never rub off on Hero. Stick to the core, I say.

Originally Posted by CrAzY dRiVeR

What would you think of the way forward for Hero?

[Sheel]

Originally Posted by CrAzY dRiVeR

As we try to make sense

This is what comes to my mind after I heard about their JV / partnership. Their products are chalk and cheese.

I too can not stop thinking, which way would they go? Econo-Commuters are strong sellers here and that trend should stay but, I am not sure, how many days / years can the magic of Splendor / Passion & Glamour survive? What post that?

What would that mean Internationally? It will be really interesting to watch the direction this JV takes.

One thing is, the customer of sticker job Passion and tattooed Harley maybe thinking alike .

[srini1785]

A company is only as good as the company it keeps.

During the early 90's Hero was the one which brought mass mobility to india by offering a highly fuel efficient Splendor brand thereby shifting away from 2S bikes. They remained rooted in the philosophy of " kitna dega" type customers and it reflects on the sales charts.

After almost 30 years after Splendor revolution , customer tastes are changing. So now Hero has no option but change themselves. So their investing in R&D, Racing , Xpulse development etc are an indication of their willingness to change their company (customers). Partnership with HD is the latest in such initiatives. Even while maintaining their rural mass market, its trying to evolve and that's good thing.

[ast.ggn]

Originally Posted by Sheel

What would that mean Internationally? It will be really interesting to watch the direction this JV takes.

A little insider info from Harley unit - Single cylinder Street 350 is in the works, will be manufactured and sold by Hero under Harley brand name. Whether it will be for Indian market or exports - yet to be decided.

For the main topic, I would say Hero has done a below average job with exception of few decent launches. They are content with average commuter sales, lost an opportunity to capitalize on some good names (read Karizma), poorly executed prototypes. Service centers are over crowded and look like a busy market. Their SAs hardly have any technical knowledge of the bikes and happy with opening job cards. Let's see what Harley partnership brings on the table.

[car love]

Excellent thread. Thanks. IMHO, besides all this they have a huge uphill climb besides the bread and butter models which they bank on. Primary to this is image. The name "Hero" itself sounds a bit weird to people outside India. Somehow doesn't have brand cache. This was pointed out by a couple of foreigners to me. It sounded Dorky to them. Even here in India, the upwardly mobile crowd, youngsters etc have a problem buying Hero even if the product it good just because of the association to basic products. Bajaj although Indian doesn't suffer from that image issue. It is still considered youthful and cool to a lot of folks. So if the core base (rural) gets hit (unlikely), Hero could be in long term trouble.
Partnerships come and go, they don't really make your brand unless you control the brand. If Harley finds India massively attractive later on they will sever the partnership. That is exactly what happened with Honda.

[surjaonwheelz]

Originally Posted by CrAzY dRiVeR

Dependency on rural markets.

With 85% of sales coming from HF, Splendor, Passion and Glamour - Hero is still the favourite with the rural markets.

Connect with the urban / youth market.

Hero did well to bring back the Impulse/XPulse, because it is the sole product well received by youngsters now. Hero has tried several variations of the Xtreme range over the years, including the best effort of the recent 200S - but none has been successful as such!

HERO should differentiate now, may be call their premium offerings SuperHero and have a different experience for customers.

The Xpulse has caught the fancy of many riders and also as a second bike! With the rally kit on offer one can have some serious training and fun off the road! Some are eagerly waiting for the rumored 300cc Xpulse.

Surprisingly, the street version 200T didn't do that well (it seems). It has that old 'Kawasaki Bajaj Caliber' round headlight looks. This reassures that urban/rural markets love those fairings!