Everything about Hero Motocorp feels right. Except the fact that it will no longer enjoy the technological support of Honda starting mid-2014. Still, Pawan Munjal, MD & CEO of Hero Motocorp, seems to have his plans worked out to remain on top in the two-wheeler market. B&E’s Pawan Chabra learns more from the man himself
Some competitors in the automobile business call him dangerous. Others fear him nevertheless. Whatever be the verdict, there is no denying that Pawan Munjal has done his father proud by taking the family two-wheeler business to newer heights. And it’s not that he is still replying on the brand equity of Honda. That tale is long over. In fact, the manner in which the Hero MotoCorp ship has continued to sail smoothly despite the exit of Honda from the 26 year-old JV about a year back, interestingly proves how this CEO is one who has his strategies mapped out before events occur. When Honda decided to move out in December 2010, a handful of industry watchers had echoed that the exit would put an end to Hero’s dominance in the Indian two-wheeler market. In the April to December period of 2011, the company sold 4.24 million motorcycles – a y-o-y growth of 23.33%, and much higher than the industry average of 14.01%! Munjal prove critics wrong. And this is what he does best. In fact, over the past six months, each month, in the absence of Honda, the company has been registering sales volume of around half-a-million. So far therefore, the company has been doing business in just the manner in which an entity with close-to-50% market share would in the Indian market. But challenges there are for Hero MotoCorp, and the biggest of them is to be able to continue its track-burning run post-June 2014, when Honda will completely withdraw its technological support to the company. Can the company set up its R&D base in India and continue serving the varied demands of the Indian market? Whatever be the outcome, Munjal is aware of the odds of his chances in the arena and knows what the spectators expect. In an exclusive interaction with B&E, Munjal shares his expectations & strategies for the months to come.
B&E: Let’s start with the Honda breakaway from the JV. It has been more than a year since Honda sold its stake in the 26-year old JV. On a personal note, how do judge the performance of the company post that event, including its transformation from Hero Honda to Hero MotoCorp?
Pawan Munjal (PM): A lot has changed since then. To start with, we have launched our new brand identity, we have launched products under the Hero brand and we are looking at it as a time which offers huge opportunities for a company like us. There are people who believe that the company has been growing at a very fast pace after we decided to go alone but there are sceptics who doubt Hero’s future and believe that not much has been happening at the company. For the latter set of people, our monthly sales number and quarterly results do more of talking as we have been able to break all records achieved since the company began – I would say, new sales records have been set by us in the two wheeler industry in India! I have been asked many-a-time as to why we didn’t choose to book huge profits by selling our stake in the JV and moving out of this business. My answer has always been that we convinced of our vision and we have no doubts on the capability of either the company or the two wheeler industry in India.
B&E: So far, you have focussed mainly on the commuter [mass] segment within the Indian two-wheeler market. Are you thinking of becoming a full-fledged two-wheeler manufacturer in the domestic circuit in times to come, with added attention to premium biking segment?
PM: This is a natural step for a company like us. So far, we have been a dominant player in the 100-cc category. But going forward, we will not restrict ourselves to just that. Having said thus, we are not switching segments and will continue to work on those areas and upgrade technology in this segment of the market. But since we were completely absent from the premium end of the market, we are now beginning to focus on expanding our portfolio. We are also looking forward to increasing our presence in overseas markets, especially South East Asia, Africa and Latin America. We are therefore increasingly exploring the export market. And since we operate in a globalised market today, we are definitely looking beyond just the domestic market. So, whatever we design now, we will design keeping the global consumer in mind.
Some competitors in the automobile business call him dangerous. Others fear him nevertheless. Whatever be the verdict, there is no denying that Pawan Munjal has done his father proud by taking the family two-wheeler business to newer heights. And it’s not that he is still replying on the brand equity of Honda. That tale is long over. In fact, the manner in which the Hero MotoCorp ship has continued to sail smoothly despite the exit of Honda from the 26 year-old JV about a year back, interestingly proves how this CEO is one who has his strategies mapped out before events occur. When Honda decided to move out in December 2010, a handful of industry watchers had echoed that the exit would put an end to Hero’s dominance in the Indian two-wheeler market. In the April to December period of 2011, the company sold 4.24 million motorcycles – a y-o-y growth of 23.33%, and much higher than the industry average of 14.01%! Munjal prove critics wrong. And this is what he does best. In fact, over the past six months, each month, in the absence of Honda, the company has been registering sales volume of around half-a-million. So far therefore, the company has been doing business in just the manner in which an entity with close-to-50% market share would in the Indian market. But challenges there are for Hero MotoCorp, and the biggest of them is to be able to continue its track-burning run post-June 2014, when Honda will completely withdraw its technological support to the company. Can the company set up its R&D base in India and continue serving the varied demands of the Indian market? Whatever be the outcome, Munjal is aware of the odds of his chances in the arena and knows what the spectators expect. In an exclusive interaction with B&E, Munjal shares his expectations & strategies for the months to come.
B&E: Let’s start with the Honda breakaway from the JV. It has been more than a year since Honda sold its stake in the 26-year old JV. On a personal note, how do judge the performance of the company post that event, including its transformation from Hero Honda to Hero MotoCorp?
Pawan Munjal (PM): A lot has changed since then. To start with, we have launched our new brand identity, we have launched products under the Hero brand and we are looking at it as a time which offers huge opportunities for a company like us. There are people who believe that the company has been growing at a very fast pace after we decided to go alone but there are sceptics who doubt Hero’s future and believe that not much has been happening at the company. For the latter set of people, our monthly sales number and quarterly results do more of talking as we have been able to break all records achieved since the company began – I would say, new sales records have been set by us in the two wheeler industry in India! I have been asked many-a-time as to why we didn’t choose to book huge profits by selling our stake in the JV and moving out of this business. My answer has always been that we convinced of our vision and we have no doubts on the capability of either the company or the two wheeler industry in India.
B&E: So far, you have focussed mainly on the commuter [mass] segment within the Indian two-wheeler market. Are you thinking of becoming a full-fledged two-wheeler manufacturer in the domestic circuit in times to come, with added attention to premium biking segment?
PM: This is a natural step for a company like us. So far, we have been a dominant player in the 100-cc category. But going forward, we will not restrict ourselves to just that. Having said thus, we are not switching segments and will continue to work on those areas and upgrade technology in this segment of the market. But since we were completely absent from the premium end of the market, we are now beginning to focus on expanding our portfolio. We are also looking forward to increasing our presence in overseas markets, especially South East Asia, Africa and Latin America. We are therefore increasingly exploring the export market. And since we operate in a globalised market today, we are definitely looking beyond just the domestic market. So, whatever we design now, we will design keeping the global consumer in mind.
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