[Gansan]

Originally Posted by norhog

Lets see if this discussion has any effect on its stock prices, which I believe is the true indictor of a company's performance.

It will definitely have no effect! No investor is going to read our forum before investing in the stock! But the indication from many financial advisors is not to buy at current prices and wait for 52 week low; or to sell and exit now.

The company has deep reserves and is also selling nearly 3 million units a year of one particular model alone. Even assuming they make only Rs 5k per unit, that is huge money! It will be sufficient if the other models merely break even or even if one or two make losses.

But is it sustainable indefinitely, is the question, hence the concern. They were not proactive about EVs, probably considered them a passing fancy. So Hero Electric was given to another branch of the family. The brand is doing well now, but there is no way to get the name back. Buyers of the Ev actually think it belongs to Hero Motocorp and are happy! It is going to take a long time for Vida to make any discernable impact. The "largest two wheeler maker" crown could be lost to Honda India in a couple of months, the difference between them is so narrow.

They have a stake in Ather, so probably could have an arrangement to sell and service the scooter through their huge network, at least in rural towns where Ather centres are not present.

[timuseravan]

Hero were the leaders in introducing relatively performance motorcycles with CBZ and Karizma. I had a first gen Karizma which i sold to a friend who still has it and has put more than 1lakh KM over 15 years. It still works well.

Hero is suffering from a variant of resource curse. The splendor and the distribution network they inherited from hero-honda generates so much cash that it overwhelms any other initiative.

And major blame surely lies with Mr.Munjal. He seems to be more interested in playing the jet-setting golf-playing tycoon than in running the company.
In a country where 99% of the population would have hard time distinguishing between golf and hockey sticks, they select Woods as their ambassador?

[saitvsk23]

Originally Posted by timuseravan

Hero were the leaders in introducing relatively performance motorcycles with CBZ and Karizma. I had a first gen Karizma which i sold to a friend who still has it and has put more than 1lakh KM over 15 years. It still works well.

Hero is suffering from a variant of resource curse. The splendor and the distribution network they inherited from hero-honda generates so much cash that it overwhelms any other initiative.

And major blame surely lies with Mr.Munjal. He seems to be more interested in playing the jet-setting golf-playing tycoon than in running the company.
In a country where 99% of the population would have hard time distinguishing between golf and hockey sticks, they select Woods as their ambassador?

Like Hero Honda did back then to get the majority of cricket players to endorse their product, they still can do it, with India's team comprising of "better than ever before" players. They proudly endorsed them on their sport gear. Heck, Sehwag's bat used to carry Hero Honda's logo proudly on it. They were team sponsors for Delhi Daredevils and Mumbai Indians too, sometime ago.

They got Virat Kohli to endorse that measly 160cc imposter commuter bike. Should've saved him for something special.

Either ways its very evident that they're not gonna make a move anytime soon, and here we will be, holding flowers for their funeral, all in good spirits. Sometime in the next 2 decades or so. And we will still be here.

[pranavshet]

Originally Posted by saitvsk23

They got Virat Kohli to endorse that measly 160cc imposter commuter bike. Should've saved him for something special.

Either ways its very evident that they're not gonna make a move anytime soon, and here we will be, holding flowers for their funeral, all in good spirits. Sometime in the next 2 decades or so. And we will still be here.

Bro, I have something to share with you. Recently in an interview with ET NOW, their CFO Mr. Niranjan Gupta said that they should focus more on nonproduct revenue ie merchandise, spare parts business etc. Currently non product business contributes 12-13% of revenue. He said the aim is to make it 20% of total revenue.

I don't know why they are not focussing on core product business. They should invest more in product development. One cannot build a merchandising business if it doesn't have products to match it. It would be very difficult to sell merchandise along with a splendor when compared to selling it along with karizma.

I really dont know how they will upgradethat 97.2 cc engine to next set of emission norms. The BS-6 Transition has affected its reliability a lot. Hero definitely needs transformational strategic change to weather the storm otherwise it might be history.

I'm sharing the interview on youtube for your insights.

https://www.youtube.com/watch?v=tQ1bg37ib

Till then ride safe guys.

[timuseravan]

Originally Posted by pranavshet

It would be very difficult to sell merchandise along with a splendor when compared to selling it along with karizma.

Not difficult but impossible. Hero seems to be living in some parallel world. Do they think anyone is going to flaunt their "Hero Super Mega Splendor Active Plus+" t-shirts or jacket

We may be seeing another a PAL Fiat or Motorola in action here.

[pranavshet]

Originally Posted by sri_tesla

It's a very good time to start this thread about the future of Hero Motocorp but surprisingly all the posts till now are missing the elephant in the room, which is "Electric vehicles".[/list]

Sir, You just hit the nail on its head. Given that electric vehicles will be replacing most of the commuter-oriented motorcycles, the hero is least prepared for this shift in market preference.

I don't know how long will they be able to update that 97.2cc engine. In comparison to sophisticated electric scooters, the splendor would be outgunned both on performance & fuel & maintenance costs. Its core advantages would become its cons.

It has been 2 months since the brand Vida was launched but they haven't scaled up the production. They are not even reporting sales for that. What's going on? Hero is sitting on a capacity of 9.5 million units per annum. Can't they plan the production of at least 10k units a month? This is pathetic, to say the least. What's the point of showing a product if you are not able to serve it to your customers?

If they try to save splendor they will be disrupted. If they disrupt by bringing in powerful electric scooters & powerful high displacement motorcycles they would survive to fight for another day.

The next year is very crucial for them. It will set the tone for the next 5-10 years. Either they will have to disrupt or get disrupted.

For now the ball is in hero's court.

Would love to know your views on the same guys.

Till then ride safe & take care guys.

[srini1785]

Doesn't Hero Motor and Hero Electric belong to two different Munjal brothers?. I thought that the elder controlled Hero Motors while the younger had the electric business and they had a Non-Compete agreement for the Electric/ICE segments. That may explain why Hero Motors did not enter EV segment for a long time.

As many have pointed out just painting an engine black and changing the name from Splendor, Splendor Plus, Super Splendor plus, Splendor ++ does not do the trick. Investment into R&D seems to be not a priority. I remember they had bought a Swiss design company to act as the Design Center. I guess that did not pay off.

As far as the breakup with Honda is concerned, I know how them Japs hold the Jugulars of their partners. Even changing the Milling machine on the shop floor needs their Principals "Approval". No wonder TVS and Suzuki parted ways. Only that TVS prospered because there was some learning while in Hero's case there wasn't.

[pranavshet]

Respected members,

I don't why but I can draw parallels between the post-split era of Hero & Kinetic from Honda.

Let's take a sneak peek into history.

Part I

The year 1997-98

Honda is in 2 JVs simultaneously, with Kinetic for scooters & Hero for motorcycles.

One JV is floundering while the other one is booming. But the irony was that they were both basically one platform-reliant JVs. For instance, Hero Honda relied on the famed 97.2cc while the Kinetic Honda relied on 2 stroke honda engine coupled with CVT.

Both JVs didn't have the luxury or capability to negotiate with honda on the engine technology transfer or new platforms. All they were allowed to do was launch the existing platform in new clothes ie new variants. Example: Passion as improved splendor & marvel as improved kinetic honda.

The only exception to this was CBZ in the year 1999. That was a halo product back then which was only amplified by the launch of Karizma in the year 2003.

The firodias lacked the patience or relationship management skills to manage hondas which Munjals executed to some level of satisfaction.

The disputes between hondas and firodias were twofold for which both parties were to be blamed.
a) Honda denied kinetic honda with any new technology transfer.
b) Firodias didn't invest in improving the quality of existing products or the sales network. There were lots of quality issues at the components level.

Honda blinked first by offering firodias a handsome premium to divest out of the JV. Kinetic honda being sentimentally close to Mr. Arun Firodia, refused the offer. Instead, he put in a counteroffer to buy out honda's stake in JV.
Honda obliged by selling a stake to Firodias at a discount of 50%.
The split happened in the year 1999 and by the year 2000 Kinetic was on its own.

In the year 2000 Hero Honda became the world's largest 2-wheeler maker under a single brand( Single make) as well displaced Bajaj Auto as India's leading 2-wheeler brand. HeroHonda also caught the imagination of youth by launching CBZin year 1999.

Fast Forward year 2001: Elephant in the room: Honda starts HMSI its own operations. Hero Honda is literally arm twisted by honda in getting NOC for setting up its wholly-owned subsidiary. ( Reference made in an interview with Ravi Sud the ex-CFO of Hero Honda )

Link of the interview attached below.

The year 2001-02: Kinetic launches challenger and GF 125 as its first two motorcycles. The less I say about it the better it is. The challenger and GF 125 were vibrators on two wheels. Absolutely no quality control whatsoever.
Challenger was basically a reverse-engineered version of the cd 100 motor. They added oil cooling to it but it didn't have any positive effect on the performance.

The tale of GF 125 is even more horrendous. It was designed by Hyosung. Kinetic didn't have control over its design/ spares. The owners were left wanting spare parts and the manufacturing quality of kinetic was highly questionable. Though it was the first bike in India to be equipped with 3 valve motor its performance was just not up to the mark.

It was followed up by boss 115 endorsed by Kapil Dev. It was nothing but a somewhat improved version of challenger. Still Kinetic just didn't invest in quality and that did it the most damage. Its failure of initial products could be attributed mainly to low-quality components & poor build quality. The quality of workmanship was horrible.I don't know if QC department even existed in kinetic back then.

The somewhat decent product to come out of kinetic stable was nova. Though it was not free from glitches it was somewhat okayish.

Herohonda & HMSI In year 2002-03:. Hero honda launched ambition 135, hero honda Karizma and hero honda dawn. The joy was a failure for hero honda and they launched an improved version by saying it dawn. Ambition as a brand was not properly developed or marketed by hero honda. Or was thre pressure from honda not to as it launched honda shine in the year 2006 subsequently. If you observe the engine layout of shine & ambition there is striking similarity. That 133 cc block on ambition was a gem.

HMSI was going all guns blazing. The activa had become hit among the masses. The quality and reliability was legendary, to say the least. It was brilliant and it just worked. It gave a hammer blow to kinetic. It destroyed it's cash cow ie zx (KiHo).

Kinetic just didn't have the capability to retaliate even if it had the intention to do it. Kinetic just didnt learn from Bajaj or TVS ie. to invest in it's own R&D capabilities and not to be dependent on external design houses or engine developers forever. Simply having control over the vehicle development process makes you nimbler.
All its motorcycles simply bombed in the market.

Year 2004-2007: In this period Hero Honda did nothing significant. It just launched plenty of splendor and passion variants. It destroyed the original CBZ first by launching * variant by tunning it for mileage & then by launching xtreme.

It just ignored the brand ambition. That could have taken care of premium commuter segment. It was discontinued in that period. The refresh that it got was making it look like another CBZ which it was not.

The only good launch was that of hunk.

As far as HMSI is concerned it launched another legend ie unicorn 150 & shine 125. It also launched Dio & Eterno during this period. Though eterno 150 was good product it failed in the market.


I will continue to write post 2007 era in another post.

Would love to know your views on this. Till then take care & Ride safe guys.

[Shreyans_Jain]

Difference being twofold

- Hero MotoCorp has managed to create a nascent yet growing export market for itself, focusing on the Latin American and African markets. Everyone needs budget efficient commuters

- Munjals have MUCH deeper pockets than the Firodias.

Fact is that Hero MotoCorp has made attempts, but nothing has clicked as such. Success is relative and it is difficult to justify diverting resources, especially when a single legacy product contributes an overwhelming % of sales. This is where the role of the next generation comes into play.

They have made a great investment in Ather, and have ventured into EV segment with their own Vida brand. If this takes off, things will start looking very different.

[pranavshet]

I want to draw a parallel as to how post-split both Indian companies have lost vision as to what they are doing.
Somewhat correlating to events that happened in kinetic time to what is happening to hero.

I intend to incorporate facets of Bajaj TVS & RE in relation to Hero & HMSI.

Guys, I would be grateful if you give me input on this.

Indian motorcycle history post the 1990s has been spicing up with Indian players raising the game.

Some of the decisions corporates take come to bite them back or reward them 10-15 years down the line.

[SmartCat]

One way of to see if a company is in trouble is to look at their revenue trend.

Maruti, despite all the obituaries written on it, is doing extremely well. That's because over the last decade, revenues have gone up from Rs. 37,000 crores to Rs. 106,000 crores.



In the two wheeler space, both Bajaj Auto and TVS Motors are seeing a rising trend in revenues. But Hero Motocorp is not doing THAT well. Revenues are stagnant at around Rs. 30,000 cr per year over the last 10 years.



So Hero Motocorp's future is worrying but not critical yet. From here, they can go either way. But if revenues start falling, it could be beginning of the end for Hero Motocorp.

[1.2TSI7DSG]

I think of Kinetic & Hero's JVs as bets on technology.

Kinetic bet on 2-stroke, Hero on 4-stroke. 2S phased out, and no effort to migrate the ZX to an activa-like engine.

In 2022, we are betting on Electric vs 4S - what will last and how long will it last? I believe that Hero got out of the Engine JV at the right time. They should focus on partnerships with electric makers like Revolt, Ather, Ola, and a plethora of electric scoots and bikes that are already making their mark. The path to migration will be turbulent and if they move well and fast enough, they will take it ahead.

The other trend was around the availability of second-hand bikes. I was passing through a slum the other day and was pleasantly surprised to see a number of 150 cc bikes in the common parking. When I had a discussion with a shopkeeper on why a 150 cc pulsar and not a splendor, he said- good quality 5-year-old 150 cc bikes are available at less than a new 100 cc bike cost. On top of that, a 150 cc served both short and long trips for him (50 kms approx), which is a pain on the 100 cc. 150 cc bikes are equally reliable. Fuel efficiency is compensated by the lower investment at the initial and a good price at the end of the second ownership.

[supermax]

Kinetic Honda when launched was super stylish and overnight became a must-have, despite the terrible ground clearance. The powerful engine meant that it was more powerful than any TVS or Luna, and had the benefit of being gearless, but the aforementioned lack of ground clearance meant that one had to slow down to almost standstill, or risk smashing the engine cover on the ubiquitous humps on Indian roads.

The other big disadvantage was that it had no underseat storage whatsoever (could at best have a bottle of 2T oil and maybe a plastic cover with insurance/RC/PUC). The Bajaj Supers and Chetaks had ample side storage as well as a humongous lockable front storage box, in addition to a handy helmet/bag hook. Servicing costs were also rather steep, anything from indicator to starter relays costing as much as 200 INR and needed special tools and expertise to install, back when Bajaj spares could be bought in paan thelas, and any neighborhood mech could fix it with his eyes closed.

Despite all of these flaws, the K Honda rolled on. The Bajaj Sunny was a not at all a worthy competitor, and quickly disappeared into nothingness, but the Scooty from the TVS stables started the blood-letting. The Scooty in fact had a better power to weight ratio than the better provisioned K Honda, so the peppy ride quality won many over, and the fact that it had a humongous underseat storage space meant that it not only won over the campus crowd but also the homemakers and working women. The mileage figures delivered by Scooty also blew the K Honda out of the water. The Activa might have driven the final nail in the coffin, but it was Scooty which really delivered the most grievous body blows.

[lionheart_mm]

Originally Posted by pranavshet

Respected members,

I don't why but I can draw parallels between the post-split era of Hero & Kinetic from Honda.

Let's take a sneak peek into history...

Unicorn and Shine were not that successful at launch, but they slowly gained momentum after facelift.

I bought the first Unicorn facelift from the Honda showroom in my region and a lot of people asked me why I bought it when Pulsar is much cheaper and has way more features like digital instrument cluster and LED tail lamps (features that were considered premium back them). I told them to test ride my bike and they were stunned by it's refinement.

[rakesh_r]

The Ki-ho Dx was the first “automobile” my father bought, or one can say our first step towards owning an automobile. It was well ahead of its time (automatic, self starter, auto choke, reed valve…etc). It had a centrally mounted engine, as opposed to the side engined layout on the Chetaks and Vespas. I used to stand on the foot board while clutching on to the name plate just above the headlight. My dad used to work on the scooter all by himself, cleaning and setting the carb, setting the brakes and other minor stuff.
Apart from the low GC, the other flaw (later rectified) was, the tip of the exhaust used to face the side of the rear tyre. After sometime, the side of the rear tyre used to get smeared with soot and oil from the exhaust. This not only made the tyre dirty, but also posed as a hazard as the tyre used to get slippery. I remember my dad attaching a nice and sturdy make shift rubber hose at the tip to divert the exhaust.
Although we had the scooter for less than 2.5 years, we have had lot of memories attached to it. From work commute (Malad to International airport, dad was an AME) or family outings, that included countless visits to Esselworld, grocery and miscellaneous shopping trips, be it summer or riding on flooded streets of Mumbai, the scooter never gave up on us. Later we bought a Kinetic Honda Marvel which was a disaster, ended up scrapping it altogether.