Market
For a large majority of the Indian population, personal ‘auto-mobility’ is
a huge status symbol, and the two-wheeler typically remains the first automobile
acquisition. In the quintessential Indian way, the two-wheeler marks the
various joyous stages in the lives of people: the coming of age of a young
man, a statement of independence, an increase in income, the favourite
gift for a wedding, or a family on the move. As India’s two-wheeler market
leader, Hero Honda is undeniably intrinsic to all these emotions and experiences
of upwardly mobile Indians. Moreover, this is one of the few product categories
where the national leader is the world leader as well.
India is the second largest two-wheeler market in the world, today. Two-wheelers
account for 79% of the total automobile sales in India. Within the two-wheeler
category, motorcycles dominate, largely because when compared to scooters
or mopeds, they are seen as objects of desire, in addition to utility.
The proportion of motorcycles in 2002/03, to the total number of two-wheelers
is 76%, up from 42% in 1998/99.
Out of the nearly five million two-wheelers sold annually in India today, 3.8 million are motorcycles (Source: SIAM).
There is intense competition in the motor-cycle market. Recent years have witnessed a spate of new product launches, with nearly all the major manufacturers aggressively promoting their respective products. But Hero Honda is the clear frontrunner. The company which manufactures only motorcycles – the other major players also make other types of two-wheelers – is the market leader with a share of 44% in motorcycles and 33% in the two-wheeler segment (Source: SIAM).
Achievements
Hero Honda’s motorcycle sales are more than the total two-wheeler sales of its nearest competitor. In motorcycles alone, the company is nearly twice as large as its nearest competitor. The nearest competitor was India’s number one two-wheeler company, for 41 years, till 2000/01.
Hero Honda’s, Splendor, is the largest-selling two-wheeler model in the world. The sales of this model alone were higher than the sales of all motorcycle models of its nearest competitor. In fact, in 2002/03, the top two-wheeler models in India belonged to Hero Honda.
The company was the first in India to launch a 100 cc four-stroke bike in 1985, which delivered fuel efficiency of more than 70 kilometres per litre; it was also the first to offer
a 223 cc premium sports model called Karizma in 2003. It was the first two-wheeler company to introduce a two-year warranty on its entire product range. And also the first two-wheeler company to initiate a customer relationship programme, christened the Hero Honda Passport Programme. This programme today has over a million members. Again, it was also the first to introduce Automated Workshops for service.
Market surveys have consistently shown that Hero Honda has the highest customer satisfaction among motorcycle owners. In a recent survey by NFO – an independent market research agency – Hero Honda’s CD 100 SS emerged as the motorcycle with the most satisfied customers in the Standard segment; similarly, Hero Honda’s Splendor is the motorcycle with the most satisfied customers in the Executive segment.
The company has built an awesome reputation for product quality and service, thus creating value and maximising returns for its stake holders. The company has grown five-fold from a turnover of Rs.10 billion in 1997/98 to Rs. 50
billion in 2002/03.
One significant indicator of the company’s success has been the recognition at various forums. The Far Eastern Economic Review, in its 2003 survey on corporate leadership, ranked Hero Honda at number three among Indian companies. The company won the Economic Times–Harvard Business School Award for Corporate Performance in 1991. Overdrive Magazine declared it the ‘Bike Maker of the Year’ for the years 2001, 2002 and 2003. The Economic Times Award for Corporate Excellence went to Hero Honda in 2002. In the same year, the company was selected as ‘The Highest Wealth Creating Company of the Year’ by Money Magazine. In 2003, Business World conferred on it the distinction of ‘The Most Respected Company’ in the automobile sector.
History
As its company name indicates, Hero Honda came into being as a tie-up between the Hero Group of India and Honda Motors of Japan. Four Munjal brothers, led by Brijmohan Lall, founded the Ludhiana-based Hero Group. The group had been manufacturing bicycles since the 1940s. In 1986, the Hero name entered the Guinness Book of World Records as the largest bicycle maker in the world, selling 2.03 million bicycles that year.
In the early 1980s, the potential and size of the automobile market in India attracted the Japanese automobile major, Honda. Looking around for a likely partner amongst Indian manufacturers, Honda noticed that Hero Cycles had one of the highest labour productivity rates in the world, a strong engineering capability and an extensive, loyal distribution network. Hero’s commitment to quality was another great inducement for Honda. In 1984, when Hero Honda Motors Ltd. came into being, it was the marriage of the world’s largest manufacturer of bicycles with the world’s largest manufacturer of motorbikes. The success of this liaison is best exemplified by the fact that Hero Honda is, today, the largest joint venture of Honda worldwide.
Hero Honda has always believed in fostering a strong and emotional relationship with its business partners and rewarding them for their contribution. Which is why, for its distribution, the company handpicked the most promising performers from the Hero Cycles network of over 4,000 dealers. There are presently 507 Hero Honda dealerships across India. Another significant import from Hero Cycles was the tradition of building strong relationships with vendors, dealers and employees.
