hero after honda divorce (1)

Monday 1 May 2023MM Group 2 Automobile Industtry

1

Hero After Honda Divorce


2

Objectives

Industry OverviewCurrent Trends Introduction of Hero HondaReasons for the splitImpact of separationSTPSalesMarket ShareDegree of CompetitionSWOT Analysis4 Ps


3

Industry Overview

The Indian auto industry is one of the largest & most competitive in the world

Accounts for 7.1% of the country's GDP

Two Wheelers segment- leader of the Indian Automobile with 81% market share

In April 2016 two-wheeler industry performed well

Scooters sales increased by 35.86% & demand for motorcycles shot up by 16.24%


4

Contd...

Indian Government encourages foreign investment Allows 100% FDI under the automatic route

Indian automotive sector has the potential to generate up to US$ 300 billion in annual revenue by 2026

Will create 65 million additional jobs

Contributes over 12% to India’s Gross Domestic Product


5

Current Trends in Industry

India houses the world’s largest two wheeler maker

4 stroke Motorcycle accounts for almost 75% of the two wheeler market in India

Every 4th two wheeler bought in India is a scooter

Fuel efficiency is still a major factor considered by a customer while purchasing two wheeler

Erratic and deficient monsoon played spoilsport for the industry, around 40% of industries volume comes from the rural belts


6

Contd…


7

Contd…

Creating new segments

Adventure motorcycles

Old times are returning-scooters now come in funky colours


8Introduction-Hero Honda

Hero Motocorp Ltd., formerly Hero Honda, an Indian motorcycle and scooter manufacturer

Largest two wheeler manufacturer in India, having market share of about 46%

Operation started in 1984 as a joint venture between Hero Cycles of India and Honda of Japan

Hero group and Honda group both owned 26% stake in the Company


9Contd....

In 1980s, company introduced motorcycles that were fuel efficient and of low cost

In 2001, it became the largest two-wheeler manufacturing company in India and globally

In 2010, Honda decided to move out of the joint venture

Hero Group bought the shares held by Honda

In August 2011, the company was renamed Hero MotoCorp with a new corporate identity


10

Reasons For The Split

Issue of export

Lack of coordination among the Board of Directors

Honda's reluctance in the free flow of technology

Partners turning into competitors

Refusal of Hero Honda to merge the company’s spare parts business with HMSI


11

Impact Of Separation

Positive Effects• Not much change till 2014, as it continued to have its

technical support from Honda• Zero royalty payments after 2014• Higher exports • Hero’s old ‘splendour’ and ‘passion’ models constitute

70% of its sales• Honda’s new bikes in the last few years add up to only

8% of its sales—so this should not be a huge problem


12

Contd….

Negative EffectsHero had to pay new model fees, which was hefty

• Branding challenges

Advertising and selling expenses are likely to shoot up

• Dependence on Honda for technology

In the two-wheeler segment, Hero had a 19.98% market share while Honda controlled 42.55%


13

STP- Hero Motocorp

Segmentation- Caters a wide consumer base Market segmentation based on income and age Caters to youth of all income groups Portrays itself as the most efficient bike range

Target market- Selective specialization Target market lower middle class to upper middle class Affordable, available and acceptable by all

Positioning strategy- Celebrity endorsement ‘Hum me hai hero’ campaign ‘Fill it shut it forget it’ campaign Event sponsorships of various matches


14

STP- HMSI

SegmentationCater wide consumer basePremium class segmentationBike priced at Rs.65ooo and above

TargetingFocus on sports bikeMiddle and Upper-middle classYoungsters

Positioning Celebrity endorsementShowrooms displaysPamphlets & TV commercials


15

Sales

Hero M

otoco

rpHM

SI

Bajaj A

uto

TVS Moto

rs

India

Yamah

a Moto

rs

Royal

Enfield

0

100000

200000

300000

400000

500000

600000

700000

20152016


16

Market Share

37.99%

26.98%

12.36%

13.15%

4.16%5.37%

Hero MotocorpHMSIBajaj AutoTVS MotorsIndia yamahaOthers


17

Degree of Competition

• Hero leads by volumes in India while Honda leads globally

• In April 2011, Hero MotoCorp controlled 50.81% market share while Honda had just 13.29% share

• From past five years Honda Activa is the India’s best-selling two-wheeler

• Hero Motocorp is a bigger leader of motorcycle in Northern part of India

• HMSI is riding ahead in Southern part of India


18

SWOT Analysis


19Hero Motocorp

Strengths1. Huge brand equity2. Excellent R&D3. Excellent distribution4. Good advertising and excellent rebranding

Strengths1. Diversified Operations2. Engineering capabilities3. Strong distribution network

Weaknesses1. Absence-Premium bike segment2. High imports for its spare parts3. Similar features and low on design and innovation

Weaknesses1. Expenses related to post retirement benefits for employees2. Employee productivity

HMSI


20

Opportunities1. Two-wheeler segment2. international markets

Threats1.Strong competition2. Dependence on government policies3. Better public transport

Opportunities1. Increasing demand for hybrid electric vehicles2. Opportunities in Asia market3. Aviation business

Threats1. Economic slowdown2. Competition in the global automotive market

Hero Motocorp HMSI


21

4 P’s of Honda

ProductsCB ShineHonda CD110 Dream Dream yuga AviatorActiva Dio Unicorn160

PricePrice is more than competitors Honda has used ‘market based pricing’Honda has used ‘premium pricing strategy’


22

Contd...

Place Operates globally Manesar (Haryana) Tapukara (Rajasthan) Narsapura (Karnataka) Vithalapur (Mandal Taluka, Gujarat)

Promotion Advertising - Banners, Newspapers, Showrooms displays, Pamphlets & TV commercialsSales Promotion- Prizes, Free gifts, Free service campsPublic Relations - Paid reviews in various motor bike magazines and TV shows


234P’sHero Moto Corp

Products Karizma ZMR. Xtreme Sports Maestro Glamour Super Splendor Pleasure Passion PRO Splendor PRO Classic etc

Price They are in the process of keeping their product popular and affordable The company keeps telling its customers to think about Quality rather than

price The company is surely in a business of delivering quality rather than price


24

Place

Globally (Africa, Latin America, South-East Asia) Gurgaon and Dharuhera (Haryana) Haridwar (Uttarakhand) Neemrana (Rajasthan)

Promotion

Hero Moto Corp Rides Safe Sports & Entertainment Sales Promotions:- road shows, Sponsors college festivals, promotes eco friendly

initiatives, festive Season offer etc

Contd.....


25

Group Members-1. Shivambi Mishra2. Shubham Jain3. Sonia Mukherjee4. Shweta Dutta Gupta5. Saurabh Dhawan6. Shubhi Kaim

hero after honda divorce (1)

Marketing