Hero Honda

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Hero Honda Motors Ltd.
Types of companiesPublic Bombay Stock Exchange:HEROHONDA M
FoundedJanuary 19, 1984 in Gurgaon, Haryana, India
HeadquartersNew Delhi, India
Key peopleBrijmohan Lal Munjal (chair and founder)

Toshiaki Nakagawa (joint managing director)

Pawan Munjal (CEO)
IndustryAutomotive
Product (business)Motorcycles, Scooters
Revenue12pxU$ 2.8 billion
Websitewww.Herohonda.com

Hero Honda Motors Limited, based in Delhi, India, is the world's third largest manufacturer of motorcycles after Honda and Yamaha. Hero Honda is a joint venture that began in 1984 between the Hero Cycles Ltd of India and Honda of Japan. It has been the world's biggest manufacturer of Two wheeler since 2001, when it produced 1.3 million motorbikes in a single year.

Hero Honda's Splendor is the world's largest selling motorcycle. Its 2 plants are in Dharuhera and Gurgaon, both in India. Third plant at Haridwar, Uttaranchal has also started production by April, 2008. It will have production facilities such as Lean Manufacturing concept, more flexible lines & stream line material flow, within & proximity (planning to set vendors in nearby locations constituting HHML Park) to achieve Just In Time (business). It specializes in dual use motorcycles that are low powered but very fuel efficient.

Contents

Company profile


“Hero” is the brand name used by the Munjal brothers in the year 1956 with the flagship company Hero Cycles Ltd. The joint venture between India's Hero Group and Honda Motor Company, they are related to Jagdish Lal Munjal

During the 80s, Hero Honda became the first company in India to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. A legendary 'Fill it - Shut it - Forget it' campaign captured the imagination of commuters across India, and Hero Honda sold millions of bikes purely on the commitment of increased mileage

Hero Honda has consistently grown at double digits since inception; and today, every second motorcycle sold in the country is a Hero Honda. Every 30 seconds, someone in India buys Hero Honda's top -selling motorcycle - Splendor.

Hero Honda bikes currently roll out from two globally benchmarked manufacturing facilities based at Dharuhera and Gurgaon in Haryana. These plants together are capable of churning out 3.9 million bikes per year. A third state of the art manufacturing facility at Hardwar in Uttranchal will soon be commissioned to cope with sustained customer demand.

Hero Honda's extensive sales and service network now spans over 3000 customer touch points. These comprise a mix of dealerships, service and spare points, spare parts stockists and authorized representatives of dealers located across different geographies.

Hero Honda values its relationship with customers. Its unique CRM initiative - Hero Honda Passport Program, one of the largest programs of this kind in the world, has over 3 million members on its roster. The program has not only helped Hero Honda understand its customers and deliver value at different price points, but has also created a loyal community of brand ambassadors.

History


Hero Honda is worlds third largest two wheeler maker. India has the largest number of two wheelers in the world with 41.6 million vehicles. India has a mix of 30 percent automobiles and 70 percent two wheelers in the country. India was the second largest two wheeler manufacturer in the world starting in the 1950’s with the birth of Automobile Products of India (API) that manufactured scooters. API manufactured the Lambretta but, another company, Bajaj Auto Ltd. surpassed API and remained through the turn of the century from its association with Piaggio of Italy (manufacturer of Vespa scooters).

The License raj that existed between the 1940s to 1980s in India did not allow foreign companies to enter the market and imports were tightly controlled. This regulatory maze, before the economic liberalization, made business easier for local players to have a seller’s market. Customers in India were forced to wait 12 years to buy a scooter from Bajaj. The CEO of Bajaj commented that he did not need a marketing department, only a dispatch department. By the year 1990, Bajaj had a waiting list that was twenty-six times its annual output for scooters.

The motorcycle segment had the same long wait times with three manufacturers: Royal Enfield, Ideal Jawa, and Escorts. Royal Enfield made a 350cc Bullet with the only four-stroke engine at that time and took the higher end of the market but there was little competition for their customers. Ideal Jawa and Escorts took the middle and lower end of the market respectively.

In the mid-1980s, the Indian government regulations changed and permitted foreign companies to enter the Indian market through minority joint ventures. The two-wheeler market changed with four Indo-Japanese joint ventures: Hero Honda, TVS Suzuki, Bajaj Kawasaki and Kinetic Motor Company (Kinetic Honda). The entry of these foreign companies changed the Indian market dynamics from the supply side to the demand side. With a larger selection of two-wheelers on the Indian market, consumers started to gain influence over the products they bought and raised higher customer expectations. The industry produced more models, styling options, prices, and different fuel efficiencies. The foreign companies new technologies helped make the products more reliable and with better quality. Indian companies had to change to keep up with their global counterparts.

The 2006 Forbes 200 Most Respected companies list has Hero Honda Motors ranked at 108. [1]

Growth

Hero Honda experienced great growth throughout its early days. The Munjal family started a modest business of bicycle components. By 2002 Hero Group had sold 86 million bicycles producing 16000 bicycles a day. Today Hero Honda has an assembly line of nine different models of motorcycles available. It holds the record for most popular bike in the world by sales for Its Splendor model. Hero Honda Motors Limited was established in joint venture with Honda Motors of Japan in 1984, to manufacture motorcycles. It is currently the largest producer of Two Wheelers in the world. It sold 3 million bikes in the year 2005-2006. Recently it has also entered in scooter manufacturing, with its model PLEASURE mainly aimed at girls. HUNK is the latest offering from the HHML stable.

A Hero Honda "Splendor" bike

Just-in-Time Manufacturing

The Hero Group through the Hero Cycles Division uses Just-in-time manufacturing. The Group boasts of superb operational efficiencies. Every assembly line worker operates two machines simultaneously to save time and improve productivity. The fact that most of the machines are either developed or fabricated in-house, has resulted in low inventory levels.

In Hero Cycles Limited, the just-in-time inventory principle has been working since the beginning of production in the unit. This is the Japanese style of production. In India, Hero is probably the only company to have mastered the art of the just-in-time inventory principle.

Ancillarisation

An integral part of the Group strategy of doing business differently was providing support to Affiliate. There are over 300 ancillary units today, whose production is dedicated to Hero's requirements and also a large number of other vendors, which include some of the better known companies in the automotive segment.

Labor relations

In Hero Group there is no organized Labor union and family members of employees find ready employment within Hero. The philosophy with regard to labor management is "Hero is growing, grow with Hero." Hero workers receive a uniform allowance, as well as House Rent Allowance (HRA) and Leave Travel Allowance (LTA). Extra benefits include medical Check-up not just for workers, but also for the immediate family members. For the majority of the production workers, who are hired through contractors, these benefits are out of reach. This and other problems lead to a strike and factory occupation by 4,000 temp workers in the Gurgaon plant in spring 2006.

Diversification

Throughout the years of enormous growth , the Group Chairman, Mr. Lall has actively looked at diversification. A considerable level of Vertical integration in its manufacturing activities has been ample in the Group's growth and led to the establishment of the Hero Cycles Cold Rolling Division, Munjal and Sunbeam Castings, Munjal Auto Components and Munjal Showa Limited amongst other component-manufacturing units.

Then there were the expansion into the automotive segment with the setting up of Majestic Auto Limited, where the first indigenously designed moped, Hero Majestic, went into commercial production in 1978. Then came Hero Motors which introduced Hero Puch, in collaboration with global technology leader Steyr Daimler Puch of Austria. Hero Honda Motors was established in 1984 to manufacture 100 cc motorcycles.

The Hero Group also took a venture into other segments like exports, financial services, information technology, which includes customer response services and software development. Further expansion is expected in the areas of Insurance and Telecommunication.

The Hero Group's phenomenal growth is the result of constant innovations, a close watch on costs and the dynamic leadership of the Group Chairman, characterized by a culture of entrepreneurship, of right attitudes and building stronger relationships with investors, partners, vendors and dealers and customers.

Criticism

There is a frequent complaint that the biking enthusiasts in India make in many Auto-related forums which is related to Hero Honda not making serious efforts to upgrade its models as frequently as its competitors like Yamaha,Bajaj and TVS. Many bike enthusiasts in India feel that Hero Honda only upgrades the "stickers" along with the names of its bikes.'Sticker' upgrading can be easily noticed by observing the technical specifications of the models Splendor, Splendor Plus, Passion, Passion Plus, Karizma, Karizma R. Another frequent complaint made by Bike enthusiasts is that Hero Honda has too many bike models with exactly same or similar engines despite of the company claiming that it caters to 'all segments'. While Bajaj rolls out new models with many improvements, there have been very less new or feature-upgraded models from Hero Honda.The latest bike from Hero Honda is Hunk which again has an engine more or less similar to CBZ-Xtreme and now Yamaha has launched two new bikes YFZ-R15 and FZ16 to compete with Hero Honda and Bajaj.

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