In a first for any Indian automaker, Hero MotoCorp plans to enter the US market in 2015 with its entry-level bikes and scooters in the 100cc to 125cc range like Splendor and Passion. As part of its aggressive international plans, the Munjals-promoted company will also enter another key two-wheeler market – Brazil in 2016, while at the same time starting its first fully-owned overseas manufacturing plant in Columbia on a $70 million investment.
Pawan Munjal, Hero MotoCorp’s MD & CEO told FE at the sidelines of the opening Ceremony of the FIFA World Cup 2014 that in the US the company will be distributing its products through Erik Buell Racing (EBR), its technology partner, after initially importing them from India. Hero had purchased a 49.2% stake in EBR, a niche sports bike maker, in 2013 for $25 million, and is likely to take its holding up further.
“Our products are already going through homologation in the US, and that takes a long time. There is usually a small window for launch, so while we have showcased our products at a motor fair already we will formally launch only next year since we do not want to hit the market in the winter season,” he said.
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He added, “In the developed markets like the US, we are right now thinking of launching our current range of smaller displacement bikes, before we add the more powerful superbikes to our range in the future. We feel there is a market for such smaller bikes, especially in the cities, and we might co-brand the product with EBR. In the future, we could raise our stake in EBR as well as the need arises”.
Elsewhere, for the South American market, Hero has already started work on a $70 million manufacturing plant in Colombia, its first fully-owned factory overseas that from next year will supply to most of the region till another factory in Brazil comes up at a later date. In Brazil, where it will start sales in 2016, the company is currently talking to potential partners for distribution support.
“Initially, we will import our products to Brazil from Columbia. Brazil is different, since it uses ethanol as a fuel, so we are working on substantial modifications to our engines with AVL (another technical partner). We aim to launch our products here in 2016, around the Brazil Olympics and will target the huge regional market. Its a tough and a very evolved market with well-established players,” he said.
Since its split with Japan’s Honda Motor Corporation in 2012, Delhi-based Hero has been focusing aggressively on overseas markets where operations had been restricted before. In the past year, the company has started exports to around 18 new countries like Peru, Ecuador and Guatemala in South & Central America, besides countries like Kenya and Ivory Coast in Africa. It has tied up with four partners – EBR, Austria’s AVL, Italy’s Engines Engineering and Fiat group’s Magneti Marelli to develop its own vehicle technologies, while investing Rs 450 crore in a major R&D facility near Jaipur.
Hero, which currently has four plants (two in Haryana, Haridwar and Neemrana) at home and a fifth in Gujarat starting operations next year, recently announced a manufacturing joint venture in Bangladesh. It also has an assembly line in Kenya, which is currently run by a local partner.
(The writer is in São Paulo at the invitation of Hero MotoCorp)