As Hero & Honda gear up for their Solo Rides in The Indian Market, Honda will be The Biggest Contender for Hero’s Numero uno Position
India, for a very long time had been known as a market for scooters on the global charts, especially when Bajaj Priya and Super ruled the Indian roads. An executive from Bajaj Auto even said in the mid-70s that the company doesn’t require a marketing department, as the waiting period was running into several years. They would have perhaps even welcomed a person who could help them bring down the demand!

In fact, when the visionary Brijmohan Lall Munjal made the idea public of launching a four-stroke motorcycle for the Indian market back in 1984, many industry experts laughed at the idea; assuming that the Indian consumer will reject the product outright. The perception changed in the next decade, some time after Hero Honda launched its CD 100, coupled with the immensely popular and unforgettable ‘Fill it Shut it Forget it’ campaign in 1985. In the years that followed, Hero Honda did the ‘Suzuki act’ in the motorcycle segment with follow-up launches like Sleek and CD 100 SS. The product went on to become a best-seller in the country and the critics had to simply stop laughing.

More to the present time, on August 26, 2010 at Taj Palace Hotel, New Delhi, the senior Munjal must have relived a few days from history, when SIAM’s 50th annual convention was in its last leg before the long day was called off. The theme of the session was crystal ball gazing for the Indian automotive industry, and the panel had eminent names of the industry like Anand Mahindra, Vice Chairman & MD, Mahindra & Mahindra, Abhay Firodia, Chairman, Force Motors, Ravi Kant, Vice Chairman, Tata Motors and Venu Srinivasan, CMD, TVS Motors. As the session was in its question and answer round, Madhur Bajaj, Vice Chairman, Bajaj Auto pointed out that it is somehow difficult to predict the future. As an example, Madhur forwarded the example that in the early 1980s, no one could have predicted that scooters will be replaced by motorcycles. Before Madhur could complete his statement, Abhay Firodia gesticulated towards the much respected Brijmohan Lall Munjal, Chairman, Hero Honda Motors (sitting next to Madhur Bajaj on the same table), giving a repartee, “He predicted it!” And the Munjals had also acted on the same in a brilliant manner, by forging one of the most successful JVs in Indian corporate history with Honda Motor Corporation in 1984.
However, just four months after that SIAM convention, it was announced that Honda will sell its 26% stake in the JV at Rs.739.97/share and both the players will be gearing up for solo rides in the domestic circuit. After the announcement was made public, Hero Honda has been working on its new brand identity, exploring new markets for exports and firming up plans to set up its R&D base in India over the past few months. The company has already roped in the globally renowned agency Wolff Olins to work on its new brand identity and positioning, as it will be very critical for its long-term success. For the less informed, Wolff Olins has worked for Airtel and Tata Docomo in the recent past. Moreover, Hero would now like to export to markets like Africa, Latin America et al, which the company was not able to pursue before due to its agreement with Honda. On the other hand, its arch rival Bajaj Auto exports close to one-third of the total production annually, and this leaves a huge window of opportunity for the market leader.

On the other end, by already establishing its presence with Honda Motorcycle and Scooters India (HMSI) in 1999, Honda has moved on to the top gear already by announcing its plan to catapult itself into the top three in the next two years and on top of the Indian two-wheeler industry by 2020. “In India, year 2011 marks the beginning of a new era for Honda. With new aggression, Honda has set up plans for rapid expansion to serve customers better. Our target is to be No. 1 in India in the next 10 years,” claims Naresh Rattan, Head of operations (Sales and Marketing), HMSI.

Clearly, Hero Honda, with its dominant position in the two-wheeler space is going to remain the market leader for many more years to come, but as mentioned, Honda is not in any hurry to climb onto the coveted position anytime soon. And one should not forget that the Japanese auto major has already established its presence in the scooters segment with over 43% market share against strong competitors like TVS Motors and Hero Honda, who follow the segment leader with a 21% and 16% market share respectively. Going forward, HMSI has plans to expand its presence in the commuter segment with the launch of a 100cc product that will help it climb a few steps on the volumes front. 4Ps B&M presents to you the first ever comparative analysis between Hero & Honda and whether Honda can turn into the biggest competitor to Hero’s pole position.

Distributing it right?
Just days after Hero Honda announced the exit of Honda from the JV; the Munjals called key dealers from across the country to share the way ahead with the dealer fraternity of Hero Honda. “There were many questions that were answered at the event. It was more of a confidence building session for the dealer community of Hero Honda as many dealers were not sure about the future after the split between the two partners,” said a person who was present at the event. Hero Honda shares a very strong bond with its dealer community and a lot of credit for that goes to Brijmohan Lall Munjal.

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Source : IIPM Editorial, 2011.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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