Low-cost bike next innovation from Hero as it goes global

Hero MotorCorp is finally coming out on its own. The company has lived for almost a quarter of a century in the shadows of technology partner Honda Motor Company, under a joint venture which barred it from tapping export potential and developing its own technological expertise. But now, free from Honda’s shackles and having cast his net wide for technology partners, Pawan Munjal is happy to show the world what Hero can do on its own. The managing director of the world’s biggest two-wheeler maker spoke to Firstbiz_’s Sindhu Bhattacharya after unveiling products as varied as a hydrogen cell fuel concept bike, a 620 cc sports bike and a full electric bike at the Auto Expo. The next big thing could be a low-cost bike, developed from scratch by Hero. In the past, Munjal has said it will not be short on performance. Excerpts:_

Question: The Leap hybrid scooter and the diesel bike are completely new products in the two-wheeler category, so are the others unveiled at the Expo. When is the low-cost bike coming? Please give us some details of work already done on this and by when can we see this bike. You have said earlier this will not be low performance but truly low cost. How will you build performance without compromising on the low-cost motto?

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Munjal: It is still early to talk about the low-cost bike. We are seriously working on a concept, we have some very innovative ideas. On your question about maintaining low cost without compromising on quality, let me say we are not focussed on bringing down costs at all. We are not using an existing product to reduce costs. Instead, we are starting from zero base and trying to build something new. So essentially it is a bottom up approach.

Since innovation is the buzzword at Hero MotoCorp now. How much have you increased the R&D spend by?

Yes, spends on R&D have gone up. Earlier, we had to pay design and development fees to Honda but now, all expenses are our own.

Are you moving away from the mass market since new products like the Leap hybrid scooter, electric bikes etc come from expensive technologies and Hero is known as an affordable brand?

We have had a certain past in the company, when there was a huge focus on fuel economy and affordability. Now we want to take the Hero brand global. The brand will not be restricted to markets like Africa (similar to India in seeking affordable products). Globe means the globe. Yes, Leap is an expensive technology and may be expensive for Indians (to buy). But my consumer is a global consumer. When I sell globally, I am sure Hero will be more economical than global products in the same league.

How has the performance of you bread and butter bikes, Splendor and Passion, been last year?

In a slow market and slow economy, there will be ups and downs. But Splendor and Passion have done well.

Your assessment of how Hero has performed after separation from Honda?

Last year, the market was impacted but Hero has grown thankfully. And now, we have enough ammunition to take on competition from Honda in the domestic market. At the time of separation we were clear that we were going in for a challenge. We have, in fact, come out of the challenge much better than we had anticipated. Our domestic market share was 51 percent last year.

Some thoughts on rural market potential for two wheelers and outlook for 2014…

We have had a big rural focus for a long time and now, rural sales account for more than 47 percent of total sales. And they continue to inch up. As for 2014 outlook, I see the market picking up in the second half of the calendar year.