Indian motorcycle maker Hero to invest $1.4 billion on future models, expansion

19, Feb. 2020

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NEW DELHI, NNA – India’s Hero MotoCorp. Ltd. (HMCL), the country’s largest motorcycle maker, announced Tuesday its plan to invest 100 billion rupees (about $1.4 billion) over the next five to seven years to create next-generation products and fuel growth globally.

In a statement, Chairman Pawan Munjal said the funds will be spent on research and development of alternative mobility solutions, state-of-the-art and sustainable manufacturing facilities, network expansion and promoting its youth-centric brand across the globe.

“As we enter a new decade, we are aiming at ushering in the next wave of mass mobility that is accessible, convenient and environment-friendly,” said Munjal.

The company had earlier spent over $600 million on R&D and more than $1 billion to set up modern manufacturing facilities and roll out new products including three latest models unveiled on Tuesday. The star is the new Hero Xtreme 160R for the premium market.

Hero's announcement and launch of new products came at a time when the two-wheeler market saw a plunge in sales of nearly 16 percent on year during the April-January period. In tandem, Hero sales fell 16 percent to 5.43 million units, according to according to data from the Society of Indian Automobile Manufacturers (SIAM).

Determined to take the company to its next stage of development, Munjal said, “We are an ever-evolving, youth-centric, innovation led brand, that has remained the market-leader for nearly two-decades now, and yet we are not resting on our laurels."

Pawan Munjal, chairman of Hero MotoCorp unveils the all new ‘Hero XTREME 160R’ model at Hero’s R&D hub - the Centre of Innovation and Technology (CIT) in the northern Indian city of Jaipur, on Feb. 18, 2020. (Photo courtesy of Hero MotoCorp)
Pawan Munjal, chairman of Hero MotoCorp unveils the all new ‘Hero XTREME 160R’ model at Hero’s R&D hub - the Centre of Innovation and Technology (CIT) in the northern Indian city of Jaipur, on Feb. 18, 2020. (Photo courtesy of Hero MotoCorp)

According to local rating agency ICRA Ltd., Hero has continued to strengthen its in-house R&D team with the setting up of the Centre of Innovation and Technology in the northern Indian city of Jaipur and the Hero Tech Centre Germany GmbH (HTCG).

In line with the electric mobility-related industry trend, Hero has opted for a two-pronged electric vehicle (EV) strategy by developing electric two-wheelers for the mass segment in house and targeting the premium market through its strategic investment in the local electric two-wheeler startup Ather Energy Pvt. Ltd.

In October last year, during the company’s earnings conference call, Niranjan Gupta, Hero's chief financial officer, said the company had created a dedicated “Emerging Mobility Business Unit” and opened the tech center in Germany (HTCG) to develop EV solutions.

So far, the company has a total of eight manufacturing plants in places including Columbia and Bangladesh. It is currently exporting its products to as many as 40 countries.

The leader in the Indian two-wheeler market reported annual sales of 7.8 million units with a market share of around 35 percent for the fiscal year ended March 2019 (FY18-19).

Its nearest rival and erstwhile partner Honda Motorcycle & Scooter India Pvt. Ltd. (HMSI), subsidiary of Honda Motor Co., registered annual sales of 5.9 million units with a market share of around 26 percent during the same period, according to SIAM.

In December 2010, Delhi-based Hero Group and Honda Motor signed an agreement to dissolve their 26-year joint venture, Hero Honda Motors Ltd., which was later renamed Hero MotoCorp. Ltd.