MM Group 2 Automobile Industtry
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Hero After Honda Divorce
Saturday, 22 October 2016

Objectives
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 Industry Overview
 Current Trends
 Introduction of Hero Honda
 Reasons for the split
 Impact of separation
 STP
 Sales
 Market Share
 Degree of Competition
 SWOT Analysis
 4 Ps

Industry Overview
MM Group 2 Automobile Industtry
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 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%
Saturday, 22 October 2016

Contd...
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 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
Saturday, 22 October 2016

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
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MM Group 2 Automobile Industtry Saturday, 22 October 2016

Contd…
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Contd…
 Creating new segments
 Adventure motorcycles
 Old times are returning-scooters now come in funky colours
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MM Group 2 Automobile Industtry Saturday, 22 October 2016

Introduction-Hero Honda
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 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
Saturday, 22 October 2016

Contd....
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 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
Saturday, 22 October 2016

Reasons For The Split
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 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
Saturday, 22 October 2016

Impact Of Separation
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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
Saturday, 22 October 2016

Contd….
Negative Effects
 Hero 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%
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MM Group 2 Automobile Industtry Saturday, 22 October 2016

STP- Hero Motocorp
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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

STP- HMSI
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Segmentation
 Cater wide consumer base
 Premium class segmentation
 Bike priced at Rs.65ooo and above
Targeting
 Focus on sports bike
 Middle and Upper-middle class
 Youngsters
Positioning
 Celebrity endorsement
 Showrooms displays
 Pamphlets & TV commercials

Sales
0
100000
200000
300000
400000
500000
600000
700000
Hero
Motocorp
HMSI Bajaj Auto TVS Motors India
Yamaha
Motors
Royal
Enfield
2015
2016
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MM Group 2 Automobile Industtry Saturday, 22 October 2016

Market Share
37.99%
26.98%
12.36%
13.15%
4.16%
5.37%
Hero Motocorp
HMSI
Bajaj Auto
TVS Motors
India yamaha
Others
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MM Group 2 Automobile Industtry Saturday, 22 October 2016

Degree of Competition
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• 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
Saturday, 22 October 2016

SWOT Analysis
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MM Group 2 Automobile Industtry Saturday, 22 October 2016

Hero Motocorp
Strengths
1. Huge brand equity
2. Excellent R&D
3. Excellent distribution
4. Good advertising and
excellent rebranding
Strengths
1. Diversified Operations
2. Engineering capabilities
3. Strong distribution network
Weaknesses
1. Absence-Premium bike
segment
2. High imports for its spare
parts
3. Similar features and low on
design and innovation
Weaknesses
1. Expenses related to post
retirement benefits for
employees
2. Employee productivity
Saturday, 22 October 2016
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MM Group 2 Automobile Industtry
HMSI

Opportunities
1. Two-wheeler segment
2. international markets
Threats
1.Strong competition
2. Dependence on
government policies
3. Better public transport
Opportunities
1. Increasing demand for
hybrid electric vehicles
2. Opportunities in Asia
market
3. Aviation business
Threats
1. Economic slowdown
2. Competition in the global
automotive market
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MM Group 2 Automobile Industtry
Hero Motocorp HMSI

4 P’s of Honda
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Products
 CB Shine
 Honda CD110 Dream
 Dream yuga
 Aviator
 Activa
 Dio
 Unicorn160
Price
 Price is more than competitors
 Honda has used ‘market based pricing’
 Honda has used ‘premium pricing strategy’

Contd...
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Place
 Operates globally
 Manesar (Haryana)
 Tapukara (Rajasthan)
 Narsapura (Karnataka)
 Vithalapur (Mandal Taluka, Gujarat)
Promotion
Advertising - Banners, Newspapers, Showrooms displays, Pamphlets
& TV commercials
Sales Promotion- Prizes, Free gifts, Free service camps
Public Relations - Paid reviews in various motor bike magazines and
TV shows

4P’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
Saturday, 22 October 2016
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MM Group 2 Automobile Industtry

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.....
Saturday, 22 October 2016
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MM Group 2 Automobile Industtry

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Group Members-
1. Shivambi Mishra
2. Shubham Jain
3. Sonia Mukherjee
4. Shweta Dutta Gupta
5. Saurabh Dhawan
6. Shubhi Kaim