Hero Motor. In 2020 lost 1.3 million and the 2nd place in global ranking

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Hero Xtreme 200
Hero Xtreme 200

Hero Motors strongly recovered in the second half, while in 2020 reported 5.7 million global sales, down 19.2% or 1.3 million vehicles, the deepest lost in their history. In addition, Hero has lost the second place in the global brand ranking, overtaken by a booming Chinese company.

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. 

Global 2020 Sales Performance

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 Latin America) the most of their sales abroad are scored in Bangladesh, Sri Lanka and Nepal, countries in which the Indian manufacturers have a sharp cultural 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 only 1.9 million, with the worst performance among the top 25 manufacturers in the World, losing a deep 47.3% compared with the correspondent period last year.

However, in the third and fourth quarter a strong recovery in the domestic market allowed to reduce substantially the lost ending the year with 5.7 million two and three wheeler registered in the World. the lost amount to 19.2% (a great news compared to -47% reported in the first half) with 1.3 million sales lost from the previous year, the highest annual lost ever.

Indian region sales (India, Pakistan, Bangladesh, Sri Lanka) sales fell 19.5%, while sales in the rest of the World lost only 16.5%, but counting only 0.1% of the total.

Hero lost the second place in the global ranking

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, we must 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 was the second until last year, but now has been overtaken by the Chinese Yadea, which sold over 6 million moped/scooter in the 2020.

However, while the Hero 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 for 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%.

hero-xpulse-med

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.