Hero Honda Eyes Overseas Market

The Munjals of Hero Honda are all set for a major play abroad. The company is planning to set up factories and assembly operations overseas, apart from developing new models specifically for the foreign markets.

The Munjals, who now have a free run in overseas markets after the divorce with Honda late last year, see a tremendous sales opportunity outside India and say the company is aggressively looking at markets like Latin America, Africa and South-East Asia.

“We now want to go global. As we build up operations overseas, we will look at manufacturing and assembly operations abroad,” Anil Dua, Sr. VP (marketing and sales) at Hero Honda, said.

Unlike rival Bajaj Auto that gets 30% of its sales from exports, Hero Honda got only around 2% of its 5.4 million sales from overseas markets last fiscal. Dua said the company has huge expansion plans to increase this sharemani-fold as the market abroad is close to 50 million units against the domestic two-wheeler market of around 10 million units.

The joint venture between Honda and Mumjals had clauses that prohibited Hero Honda to expand overseas in a big way, when Bajaj and TVS were growing aggressively. After the split, Munjals want to quickly widen their overseas base to cut heavy dependence on the domestic market.

It is learnt that as part of a new branding strategy the company will be renamed as Hero MotoCorp Ltd against the present Hero Honda Motors Ltd (HHML). The company can use the Honda name till June 2014, but it wants to shift to a new brand identity much earlier.

Dua said the long-term plan for the Hero group was to do “manufacturing around the globe” . The company is in the process of evaluating the various markets, after which it will decide whether it wants direct exports from India or a manufacturing or assembly set-up.

Asked about the models for the overseas markets, Dua said while some of the existing brands would be used, the company will also look at an all-new range. “For example, in Nigeria bikes are used as taxis while South-East Asia is a step through market. So we would also have to develop new products for different markets.”

Bajaj Auto is present in over 50 countries outside India , having developed a strong branding in Africa, Latin America and South Asia. The company’s exports grew 34% last fiscal at 9.72 lakh units against 7.25 in 2009-10.

Author – BikeAdvice.in