NEW DELHI: Hero Honda managing director Pawan Kumar Munjal has told vendors that exports will get sharp focus after the formal split with Japanese partner Honda Motor Company. “Work hard. We are planning to build a new brand and market it internationally," Munjal told vendors on Tuesday.
Exports account for a meagre 2.6% of Hero Honda's production of 34.48 lakh units as the 26-yearold joint venture put restriction on entry into key overseas markets. The Hero group will compete with partner Honda in global markets once the definitive pact to dissolve the partnership is signed in four weeks. A Hero Honda spokesperson declined comment.
Executives from key suppliers such as Rico Auto, Motherson Sumi, Sandhar Technologies, Minda Industries , Sunbeam Auto, Lumax Industries , Omax, Excide Batteries, Sriram Pistons, MRF Tyres, and Falcon Tyres attended the first vendors' conference after the announcement of split. The Munjals will buy 26% stake from Honda, taking their total stake in Hero Honda to 52%.
The Hero Group will export bikes and scooters under its new global 'Hero' brand in places such as Latin America, Africa, East Europe and Asia. It now sells in countries such as Nepal, Bhutan, Bangladesh, and Myanmar.
"The company is yet to harvest its full potential of 5.4 million capacity. Hero Honda aims to be a major players in exports," said a Delhi-based supplier.
"Exports to emerging markets like Africa and Latin America are more lucrative in terms of margins, but would be a challenge to find space in the crowded South East Asia which is one of the largest block in terms of sales. Brand visibility and product positioning would be a challenge for the Hero Group," Mahantesh Sabarad, a Mumbai-based analyst at Fortune Equity said.
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