Hero Motors first half 2020 global sales reported at a record 47% fall, the worst performance among the top 25 motorcycles manufacturers in the World. As recent years growth was based on Indian region dominance, the 2019-2020 volume lost – projected at 2.5 million units – is related to the region decline and low presence in the rest of the World
McD tracks new vehicles registrations across the World (over 80 countries), reporting data on calendar year. When you wish to compare data reported by us to those declared by the manufacturers, consider they usually report their “sales” (vehicles invoiced), which are usually different from “registrations”, accordingly with their fiscal year split.
Who is the World’s n°1 two-wheeler company?
Hero Motor is not the N°1 two wheeler manufacturer in the World, as they proudly like to introduce themselves in official documents and in the trade shows. Considering they are a quoted company, e assume they can affirm this statement under legal aspects.
However, any people involved in our industry is aware that Honda Motor, is the global leader under several aspects – including sales – with a still huge gap over all others.
Hero Motor is the second best worldwide. However, while the manufacturer is a giant in the domestic Indian market, at global level is a marginal competitors, behind not only to Honda, but to several others.
The opportunities are all affordable fro Hero, considering it is one of the most profitable companies in the industry, with FY 2020 EBIT at 15.4%, although revenue declined 13.8%, due to the Indian market 2019 lost.
Global sales in the first half at record 47% fall
Hero global sales growth tremendous trend in the last years was 99.9% based on domestic growth. Nothing wrong considering the huge increase of the Indian market in the last 5 years.
However, while other Indian competitors – Bajaj Auto overall – have developed and implemented an international strategy, Hero is far away in this road, with just few distributors and marginal sales overseas. While they affirm to distribute in over 40 countries (mainly in Africa and Latam) the most of their sales abroad are scored in Bangladesh, Sri Lanka and Nepal, countries in which the Indian manufacturers have a sharp culturale advantage over other competitors and with customer profiles very close to hose in India.
The shock created by Covid 19 spread in the World, with Indian domestic market hit for million sales is actually showing as the Hero long term strategy needs to be revised in short, considering that Indian market is unique in the world in terms of product demand, pricing, distribution, emission tolerance, customer demand and other.
The first half 2020 sales reported have been 1.9 million, with the worst performance among the top 25 manufacturers in the World, losing a deep 47.9% compared with the correspondent period last year.
Indian region sales (India, Pakistan, Bangladesh, Sri Lanka) sales fell 48%, while sales in the rest of the World lost only 15%, but count 0.1% of the total.
Considering the lost reported in the previous year, the 2020 calendar years projected figures, at 5.5 million units will represent the lost of 2.5 million from the 8 million all-time record established in the 2018 and is totally related to the Indian region decline and to the low presence in the rest of the World.
Global sales declined in double-digit in the 2019
Hero Motor is the second largest motorcycles company in the World with a record of 8 million vehicles sold in the 2018.
Hero Motor global sales trend in the 2019 was almost negative, reporting the first drop since the 2011 divorce with Honda. Sales have been 6.9 million units, down a robust 14% from the previous year.
This negative score was heavily correlated with the lost in India. where Hero struggles with sales declined 15% and was not offset by other countries where the performance was positive, like Colombia (+15.8%) and Bangladesh (+10%).
Hero Motor Company heritage
Hero is headquartered in New Delhi, India.
The company was established as a joint venture company between Honda Motor Company of Japan and Hero Group. In the year 1983 they signed a joint collaboration agreement and formed the company. The joint venture between India’s Hero Group and Honda Motor Company Japan has not only created the world’s single largest two-wheeler company but also one of the most successful joint ventures worldwide
In the 2011, the Munjal family holding, Indian Promoter Group, and Honda Motor Co Ltd Japan (Honda) entered into a Share Transfer Agreement to transfer the entire Honda’ shareholdings of 26% in the Company to the Indian Promoter Group bringing an end to the joint venture between the two promoter groups of the company.
The acquisition was completed on March 22 2011 and the shares held by Honda were transferred to the Indian joint venture partner. In addition to the Agreement the Indian Promoter Group and Honda also entered into a License Agreement which has given to the company the right and license to manufacture assemble sell and distribute certain products and their service parts under their Intellectual Property Rights.
In July 2011 the company changed their name from Hero Honda Motors Ltd to Hero MotoCorp Ltd.
In 2015 the company commences operation in their first ever plant outside India established in Villa Rica Colombia.
On 10 March 2016 Hero formally inaugurated its world-class `Global Centre of Innovation and Technology’ (CIT) in Jaipur Rajasthan. Built with an investment of Rs 850 crore the CIT will design and develop world-class products for global markets
On 12 January 2017 Hero launched new Glamour motorcycle in Argentina its first-ever global launch of a new product outside India.
In May 2017 Hero commenced commercial production at the second global manufacturing facility in Bangladesh. On 7 November 2017 Hero unveiled the Xpulse Concept motorcycle as a world premier at the EICMA annual trade show in Milan Italy.
In the 2017 Hero hit the milestone of 75 million motor sold since the 1984.