Today if one talks about Indian two-wheeler industry, reference to Hero Honda Motors Limited is by default. It is not only the market leader in the two wheeler segment in India but also is the number one two wheeler company in the world by volumes. The company’s name is synonymous with fuel-efficient bikes and longevity. The company has a presence in all bike segments viz. economy (CD 100SS, CD Dawn) executive (Super Splendor, Splendor+) and premium (Karizma, CBZ). Splendor is the most successful product of the company and accounts for almost 50% of the company’s turnover.
Back ground
Hero Honda is a two-decade-old story. It came into existence as a joint venture agreement between the Munjal family’s Hero Group and Honda Motor Company (HMC) of Japan, each having 26% stake in the company. A ten year agreement was first entered in the year 1984, whereby HMC brought in technical expertise and Hero Honda brought in local talent to manage all other functions including marketing, finance, and human resources. The agreement was once again renewed in 2004 and has been extended till 2014.
Performance vis-à-vis Industry
The Indian two wheeler industry has seen a paradigm shift from being a regime of regulation and tight control in the 1980s to a more liberalised and a competitive present day era. After missing out on the initial boom in two wheeler segment during the period of 1993-1996, Hero Honda has emerged as a world leader. The gap between motorcycles sold by Hero Honda and its closest rival is approximately 1 m units (23% of industry size). One of the reasons for the tremendous performance of Hero Honda is the significant increase of share of motorcycles in the two-wheeler segment, from 42% in FY99 to 77% in FY04. No doubt, that the shift in preference of Indian ...