Hero cycles limited

Founded -1956 Headquarters Ludhiana Key people -Brijmohan Lal Munjal Hero Cycles manufactured Over 16000 Bicycles a day. They Sold about 86 million bicycles in aggregate as of 2002.

 They had nurtured an excellent network of dealers to serve Indias expansive markets Over the years Hero Group had entered multiple business areas like

Founded-24 September 1948 Found by- Soichiro Honda Headquarters-Minato, Tokyo, Japan world's largest motorcycle manufacturer since 1959 Honda is also involved in robotics and launched the ASIMO robot in 2000

 HMC initial plans called for both two-wheeler market and the electric generator market. HMC first chose Kinetic Engineering Ltd. And formed Kinetic Honda Motors Ltd. this JV was in field of Scooters Manufacturing

HMC came to Hero Group as the Last compromise choice for its motorcycle venture

Speciality of hero and Honda which led to the venture

Hero cycles Relevance and salience of HERO brand Distribution network. Tight focus on financial and raw material processes.

Honda Its engineering capability Commitment to Quality Know-how and experience in handling large volume production and distribution.

Signing the deal...

Honda agreed to provide technology to HHM and setting up manufacturing facilities and R&D Honda agreed for a lump sum fee of $500,000 & 4% royalty on SP. Both Partners held 26% of the equity with other 26% sold to the public and the rest held to financial institutions.

 Founded: January 19, 1984 Headquarters : New Delhi, India Key people: Brijmohan Lal Munjal (chairman & founder) Toshiaki Nakagawa (joint managing director) Pawan Munjal (CEO)

 Hero Honda Motors Ltd. is the world's largest manufacturer of two wheelers, based in India. is a joint venture between India's Hero Group and Honda Motor Company, Japan that began in 1984. introduced fuel-efficient, environment friendly four-stroke motorcycles in the country & became the first company to launch the Fuel Injection (FI) technology in Indian motorcycles every second motorcycle sold in the country is a Hero Honda bike. Every 30 seconds, someone in India buys Hero Honda's top-selling motorcycle Splendor.

COMPETITORS

 Bajaj Auto is a major Indian vehicle manufacturer started by Jamnalal Bajaj from Rajasthan Its product range encompasses scooterettes, scooters and motorcycles.

 is a Japanese motorized vehicle-producing company It entered into the field of motorized vehicles on July 1, 1955 founded by Torakusu Yamaha

 is the third largest two-wheeler manufacturer in India employs 40,000 people with an estimated 15 million customers only two-wheeler company to have won the Deming Prize awarded for commitment to quality control

Advertising
Discarded product categorization on the basis of engine size Product differentiation was the key Avoided customer confusion of products Karizma (premium segment) comes with the punch line, Always game The ad for the premium segment Hunk doesnt talk of speed or power at all the focus is on the looks even while standing The CBZ Extreme comes with the promise, Thinking is such a waste of time

Print advertisements

Public service advertisements DESH KI DHADKAN has truly capture the

Indian hearts, minds and souls....

Broadcast advertisements

Brand endorsers

Brand endorsers- Virender sehwag, saurav ganguly, priyanka chopra, Hrithik roshan, Rajyavardhan rathore.

Sales promotion
Large product portfolio starting from 37k to 95k Consistent launch of variants in the same models Wide range of colours available in each category Vast network of more than 2100 committed Dealers and Service outlets spread across the country Festive offers- Rs 1000 discount with free accidental insurance

MARKET SHARE OF MOTORCYCLES IN INDIAN MARKET

Hero Honda Bajaj TVS Yamaha LML Kinetic Royal Enfield Majetic

The venture ends....

August 1999, HMC announced Honda Motorcycle & Scooter India (HMSI) to initially make scooters and later, motorcycles. HHMs stock fell by 30% on the day of the announcement. hike in royalty to 6% from 4% Hero will purchase the 26% shareholding of Honda for $1 billion

 Honda's reluctance to fully and freely share technology with Hero (despite a 10-year technology tie-up that expires in 2014) refusal of Hero Honda to merge the company's spare parts business with Honda's new fully owned subsidiary Honda Motors India (HMSI). Munjal group, will form an overseas-incorporated special purpose vehicle (SPV) to buy out Honda's entire stake, which will be backed by bridge loans

Effects of the split

positives
Hero Honda continues to get technology from Honda till 2014 No royalty payment after 2014 Royalty payment will fall if the company makes bikes itself. the company can now export to locations where Honda has a presence

Negatives
Honda may reserve good bike models for itself Hero will have to bear all bike model fees by itself Huge research and development expenses for hero Branding the products will be a challenge Heavy advertising and selling expenses Honda to turn more agressive

The future is here...