Hero Honda Now Renamed As Hero Moto Corp.


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Honda overtakes Hero MotoCorp in 125-150cc segment

A little over a year since the termination of the joint venture with the Munjals-promoted Hero MotoCorp , Japanese auto major Honda Motorcycle and Scooter India (HMSI) has made strong strides in the two-wheeler segment in India and overtaken its former partner in premium motorcycle sales in the 150-cc segment.

According to Siam (Society of Indian Automobile Manufacturers) data, Hero’s sales in bikes with engine capacity between 125-cc and 150-cc declined by a steep 53 per cent to 80,303 units between April and October in FY13, while HMSI ’s volumes went up by 76 per cent to 134,650 units. Interestingly, HMSI sold 54,347 units more in the 125-150-cc segment than Hero, despite not having introduced any new products in the category. In the corresponding period last year, Honda was trailing behind Hero by 92,861 units. The category contributes over 11 per cent to overall motorcycle sales, but has strong revenue implications as product prices are 45-92 per cent higher than that of a model in the entry-level mass segment, which translates into higher margins for companies.

“Our sales in the segment have been driven by strong demand for CB Unicorn, particularly in southern and western markets. We had back orders last year due to capacity constraints, but now with the increase in production, sales of the model have increased by nearly 90 per cent in the first seven months of the fiscal,” said Yadvinder Singh Guleria , vice-president (sales & marketing), HMSI. Till October in the current financial year, Honda sold 122,894 units of CB Unicorn, compared with 65,007 units sold in the same period last year.

“Two of our volume models, Hunk and CBZ X-Treme, were undergoing a rebranding exercise because of which we had no dispatches in August and September,” Anil Dua , senior VP (marketing & sales), Hero MotoCorp recently told Business Standard.
But a closer look at the numbers reveals HMSI had actually overtaken Hero in segment sales in May this year, and has maintained the lead since. HMSI’s market share in the segment has increased to 20 per cent (April-October 2012) from the earlier 8.9 per cent, while Hero’s has slid to 12 per cent from 19.6 per cent. Of course, Bajaj Auto with the Discover and the Pulsar, continues to remain the market leader in the category with a share of over 46 per cent.

Deepesh Rathore, managing director, IHS Automotive India, said, “Hero still relies on the Splendor and the Passion for sales, HMSI has a fresh portfolio. Earlier, HMSI had distribution issues, but that gap is narrowing now. Hero used to have a lot of repeat customers, some of whom are now opting for HMSI products because of the Honda brand. Long-term, I do see Honda overtaking Hero as the number one two-wheeler maker in India.”

Rathore’s contention is validated by the fact that even in the 110-125-cc motorcycle segment, HMSI has closed the sales gap with Hero MotoCorp to a mere 3,418 units (April-October 2012), compared to 26,542 units in the same period in the previous year.

HMSI’s growth has been led by CB Shine, which saw sales increase by 54 per cent to 358,711 between April and October 2012. Guleria added, “Our growth is being driven by DNA — Demand for our products, Network expansion, and appropriate Advertising and marketing. We started the fiscal with 511 full-fledged dealerships and have added 75 outlets the last in seven months. That is the pace at which we are expanding.”
Despite sales slowing down to a moderate 4.5 per cent in the domestic two-wheeler market, HMSI has managed to clock in a growth rate of 47 per cent between April and September in FY13. The company had sold 1.53 units till October, whereas Hero reported a 1.8 per cent decline to sell 3.41 million units in the same period. To close the gap with the market leader, HMSI has targeted sales of 10 million units by 2020 and could be setting up 7-8 facilities to expand production capacity over the next few years.

Honda overtakes Hero MotoCorp in 125-150cc segment
 
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Hero MotoCorp to invest Rs 550 crore in two new facilities

The country’s largest two-wheeler manufacturer Hero MotoCorp has kicked off construction of its fourth manufacturing plant and a new global parts centre (GPC) at Neemrana in Rajasthan.

The company is to invest Rs 550 crore in setting up the fourth facility and the GPC. Both the facilities are expected to be operational towards the end of FY’14.

Pawan Munjal, managing director and CEO, after laying the foundation stone of these two new facilities, said: “The commencement of work on the new plant is clearly indicative of our intention and strategy for the future. Thanks to overwhelming demand for our products, we have been consistently clocking in excess of 500,000 unit monthly sales on an average. We foresee a revival in market sentiments sooner than later, and when it happens, we will be ready to meet the upsurge in demand.”

According to Munjal, the state-of-the-art global parts centre will be spread over 35 acres at Neemrana and will be highly mechanised and technologically superior, setting a new industry benchmark once it becomes fully operational. The Neemrana plant, spread over an area of 47 acres, will provide direct employment to over 1,000 people, and have an installed capacity of 750,000 units per annum.

The GPC, which is expected to be operational in the third quarter of the next financial year (2013-14), will initially employ 400 people. The GPC will have an automated storage and retrieval system, automated packaging and sorting system, on-line tracking of parts through warehouse management system, lean manufacturing systems and will be built on the green building concept. Last year, Hero MotoCorp had announced an investment of over Rs 2,500 crore in expanding capacity at its existing plants, setting up two new plants (one at Neemrana in Rajasthan and the other in Gujarat) and an integrated technology and R&D centre at Kukas in Jaipur.

Aiming at 10 million capacity

For Hero MotoCorp, the two new plants will help augment its total installed capacity to nine million units in two years, which is in line with the company’s objective of reaching 10 million units in the next five years.

The two-wheeler manufacturer currently has a total installed capacity of 6.15 million units in its three plants at Haridwar (Uttarakhand), Dharuhera and Gurgaon (Haryana). The company will also invest Rs 500 crore in expanding existing capacity, mainly at the Haridwar plant.

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Hero MotoCorp's workers seek Rs 1 lakh per month salary

Workers negotiating a wage settlement at Hero MotoCorp have demanded doubling of monthly salary to near Rs 1 lakh, apart from other benefits like subsidized housing as well as interest-free loans running up to Rs 10 lakh. If met, the shop floor workers at the bike major will perhaps be the highest paid in the auto industry and even among other manufacturing units.

The company management, however, is in no mood to relent, fearing any "radical" change in increment levels will not only make the business of Hero MotoCorp unsustainable, but also that of its suppliers, dealers as well as other units in the Gurgaon-Dharuhera industrial belt in Haryana. An experienced shop floor worker at Hero MotoCorp currently has a CTC (cost-to-company) between Rs 47,000 and Rs 50,000. The labour union, now in process of thrashing out a new three-year wage agreement with the company management, has sought an increment of around Rs 45,000, sources in the Haryana labour department told TOI.

This is among the various demands raised by the labour union in the charter of demands it has presented before the company management and the state labour department. "The increment sought is Rs 45,000, which will be spread over a three-year period. Apart from this, the workers have demanded Rs 10 lakh in interest-free loans," the sources said, adding that currently the workers can avail Rs 6 lakh loan at a nominal 4% rate of interest. In the charter of demands, the workers have also asked for a limitless medical policy cover. They also demanded a subsidized housing facility in the region, which is one of the most-expensive real estate destinations in the country. Other demands include gifts on various occasions, the sources said. When contacted, a spokesperson for Hero MotoCorp declined to comment on the matter. Industry analysts said the demands made by labour unions are often exaggerated since workers want to bargain on them later. "It is like applying for a canon with the hope of getting a revolver," said a senior official who had been head of a large manufacturing unit earlier. "They know that the negotiations will be hard and there has to be a give-and-take."



Hero MotoCorp's workers are not an exception in making tall demands, and a similar wish-list was presented by workers of Maruti Suzuki's Manesar unit during their wage negotiations last year. The workers not only sought a four-fold hike in gross salary, but also cheaper home loans, gifts with every car's launch and holidays beyond those stipulated. And while these lofty demands were not met, the workers still managed to walk home with an attractive deal - a salary increment of nearly 70%, interest-free personal loans and higher medical benefits.

A top Hero official, while declining to comment on specific wage demands, said the company has to keep in mind its own sustainability as well as those related to it while working out new wages. "They have a right to growth, but this growth should be sustainable for the company, for its suppliers, its dealers and the region it operates in," Anadi Pande, VP (corporate planning & strategy, Corporate HR), told TOI. Pande said the Hero management believes in adhering to the "3S philosophy" when working out any such agreements. "It has to be steady; sustainable; and sensible." Hero's Dharuhera plant workers had received an increment of Rs 6,500 in the wage revision in 2011, and this was spread over a three-year period. Pande said that the previous two increments at the plant were Rs 4,000 and around Rs 2,800. "Any radical shift now will lead to a super-radical shift. Is it sustainable?"

Industry analysts said the Hero management is worried that if it gives a higher wage increment to the Gurgaon workers, then there may be demands to re-visit the 2011 wage pact with Dharuhera workers that originally comes up for renewal in 2014. "It may lead to further labour unrest for the company." Another official working in the region said the workers are getting over-ambitious in their demands after hearing the plans of the company management for new investments, including their plans to expand globally.

Hero MotoCorp's workers seek Rs 1 lakh per month salary - The Economic Times
 
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Hero Moto’s Gurgaon workers’ union plan hunger strike from February 28

The members of Hero MotoCorp's workers' union at its Gurgaon unit have decided to go on a hunger strike from Thursday, demanding higher wages after several rounds of negotiations failed to reach any settlement.

So far, the union has held several meetings with the Hero management overseen by the Haryana government's labour department . The strike would be undertaken by the union's office bearers. They will go an indefinite fast from February 28.

"There has been no progress and the Hero management is bent upon forcing its stand of minor hikes only . We have now decided to go on hunger strike to press our demands and a notice has been issued to the company.

Only the union members will take part in the protest and others would continue to work," said a functionary of the union. Gurgaon unit's employees have been demanding higher wages and have been sporting black armbands for the past few months.

Permanent employees are demanding an increment of around Rs 15,000 in monthly salary spread over a period of three years, while the Hero MotoCorp management has accepted an increase of Rs 7,500-9 ,000.

The union and workers of the Gurgaon factory are also being supported by other trade unions in areas as well as workers' union from Maruti Suzuki India and Honda Motorcycle and Scooter India.

Hero Moto’s Gurgaon workers’ union plan hunger strike from February 28 - The Economic Times
 
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Just4her: Hero to expand rural showrooms to 50

What is common between Erode in Tamil Nadu, Hubli in Karnataka, Rewari in Haryana, Raipur in Chhatishgarh, Rajkot in Gujarat and Indore in Madhya Pradesh? Small town India, what we call Bharat? Yes, but the similarities don't end there.

All these towns today boast of swanky showrooms managed exclusively by women, selling scooters. And they are also soon going to be joined by still smaller towns such as Angul, Balasore and Jajpur Road in Odisha, Midnapore and Siliguri in West Bengal and Alleppy in Kerala. Why should boys have all the fun?

Indeed, welcome to the changing demographics in India's non-descript hinterland. Aptly called "Just4her", these women-exclusive showrooms are driving large volumes for Hero MotoCorp's scooter Pleasure - which itself is specifically designed for and targeted at women customers.

The Just4her dealerships are completely managed by women staff, and the showroom itself is designed like a boutique studio rather than a two-wheeler outlet. With its aesthetically-designed interiors, comfortable air-conditioned waiting lounges, and internet connectivity for customers, the showroom exudes warmth and friendliness.

"We currently have around 30 Just4her showrooms spread across the country and we plan to take these up to 50 outlets in about a year's time. When we launched Pleasure a few years back, our initial target was to sell 5000 units a month. Today we sell more than 30,000 units of Pleasure on an average per month," Anil Dua, Sr. VP (Marketing & Sales) at Hero Moto-Corp told ET.

Pleasure is also sold from other Hero dealerships as well. In the first phase, the company had opened around 20 Just4her outlets in cities such as Lucknow, Ahmedabad, Baroda, Rajkot, Nagpur, Naisk, Pune, Kolhapur, Erode and Coimbatore.

In the second phase of expansion, Hero opened these outlets in cities such as Bhubaneswar, Jamshedpur, Guwahati, Raipur, Jaipur, Vishakhapatnm, Hubli, Madgaon and Indore. The company has already appointed new dealers for Just4her showrooms in places such as Rewari, Ranchi, Balasore, Rourkela, Angul, Midnapore, Siliguri, Patna, Chennai, Hyderabad and Mysore.

Just4her: Hero to expand rural showrooms to 50 - The Economic Times
 
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Hero MotoCorp's workers, management struggle to find middle ground

As workers and the Hero MotoCorp management struggle to reach a middleground, the Gurgaon-Manesar cluster is closely watching the outcome of wage discussions between the workers' union and the management at Hero Motocorp. How the talks conclude, will have implications on the entire industrial belt.


Companies in the region have expressed fears of a 'Faridabad-like scenario' that will make the region a high-wages island. The workers' demands, if met, will catapult their average cost-to-the-company (CTC) to a range of Rs 60,000-65,000 per month from the current level of Rs 47,000-50,000, which automotive players in the region say will take the sheen off what has so far been touted as the global advantage of low-cost manufacturing. The Gurgaon-Manesar belt alone churns out almost half of the total cars and two-wheelers produced in the country and companies fear that any abnormal rise in wages could prove detrimental to India's auto industry.

Hero MotoCorp's workers, management struggle to find middle ground - The Economic Times
 
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Hero shifts gears to stay ahead of Honda

Two-wheeler maker Hero MotoCorp has set capital expenditure for 2013-14 at 1,100 crore and put in place a strategy to build upon its leadership position in the domestic market, a top company executive has said.

New Delhi-headquartered Hero MotoCorp, the country's largest motorcycle maker, on Tuesday said it plans capacity addition, new launches and network and brand-building initiatives to stay ahead of competition.

"We are no strangers to competition. We have earmarked a capex of 1,100 crore for FY14 and put in place a multi-focal strategy to sustain and build upon our leadership through new launches, capacity addition, network expansion and brand-building initiatives," senior vice-president and CFO Ravi Sud told ET.

The capital expenditure includes an investment of about 600 crore on its upcoming fourth plant and global parts centre at Neemrana, and 100-150 crore on a state-of-the-art integrated R&D centre at Kukas, both of which are in Rajasthan.

Last week, rival two-wheeler maker and former technology partner, Japan's Honda Motor, upped the ante saying it hoped to attain No. 1 position in the country by 2015 or 2016.

Hero MotoCorp's fourth plant is expected to raise installed capacity by 750,000 units to about 7.65 million when it goes online. The company has set aside another 400 crore for investment in other areas, including IT instruments, the existing plants and its proposed fifth plant in Gujarat, Sud said.

The proposed fifth plant at Halol, for which land allotment is likely to be completed soon, will initially have a capacity of 1.2 million units and will be raised to 1.8 million later. "We are well on our way towards our stated objective of generating annual volumes of 10 million in another five years," Sud said.

According to data from the Society of Indian Automobile Manufacturers (SIAM), motorcycles sales dipped 5% year-on-year in February while total two-wheeler sales were down 2.8%.

For the 11 months to February, Hero MotoCorp sold 5.46 million units compared with Honda Motorcycle and Scooter India's 2.4 million and Bajaj's 2.3 million, SIAM data showed.

An analyst, who did not want to be named, said Hero MotoCorp's nearest rival lack numbers and distribution reach and this could hamper its bid to catch up. "The question of bridging gap with the market leader in the next two to three years is quite a difficult challenge."

On why the company is focusing on market share when its margins have been under pressure, Sud said, "The Indian two-wheeler market has become competitive, and market share, once lost, is very difficult to gain. Margins, on the other hand, are temporary fluctuations and can be managed at an appropriate time."

Sud, who has been the company's CFO for over 14 years, added, "Most companies hold back investments at the time of slowdown and face the consequences of capacity shortage when demand suddenly picks up. So clearly, we are going ahead with our planned investments."

He, however, ruled out use of discounts and freebies to push sales.

According to people familiar with the development, Hero MotoCorp plans to bring out a new line of technologically advanced and environment-friendly two wheelers for both the domestic and global market. The company has commenced exports to new markets such as EL Salvador, Honduras & Guatemala.

Hero shifts gears to stay ahead of Honda - The Economic Times
 
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