Honda kick starts 3-year plan to beat Hero in
Malini Goyal, ET Bureau Mar 31, 2013, 06.30AM IST
Shinji Aoyama is a breath of fresh air. The Japanese honcho welcomes you with a namaskar. He is comfortable speaking English. He reels out numbers in lakhs and crores (typically Indian denominations). And he knows how to deal with swarming reporters looking for their daily fix without getting flustered. "One by one please. I will answer all your questions," he says calmly.
Aoyama is the operating officer of Honda Corporation's motorcycle business based out of Japan. And he has just infused some vroom in the local two-wheeler industry. "Very soon, we will make the dream to become No. 1 [in India] come true," he announced at a recent press conference.
Former head of Honda Motorcycle and Scooter India (HMSI), who spent four years as India CEO between 2007 and 2011, Aoyama should know what he is talking about. "Given the current scenario in India, I believe it will not be 2020 but 2016 or even 2015 by when we will attain No. 1 position here," he says.
That Honda wants to be numero uno in India is hardly surprising. The two-wheeler giant is the leader in virtually every country it operates in, except China. In Brazil, it has a dominant 80% share, and controls half of the pie in Indonesia.
What is eye-popping is the hurry in which Honda wants to rule Indian roads. A little over two years after it exited a joint venture with the Hero group, HMSI has overtaken TVS and more recently edged ahead of former No. 2 Bajaj Auto to become the second-largest two-wheeler company in India.
And, in the next two to three years, HMSI, with a market share of just under 20%, has set its sights on beating the India leader Hero MotoCorp, which is currently sitting pretty with a 46% share. "We had 61% of the Indian market [before the breakup with Hero Honda]. We are under 20% today. We have to be No. 1 here. This is our dream," says Keita Muramatsu, CEO, HMSI.
Such big dreams and audacious ambitions from any other company in any other sector would have been dismissed as delusive. But there are three big reasons why HMSI's journey from here to king of the road will be keenly watched â€" from within and outside the automobile industry.
The uniqueness of this race â€" three-horse as of now â€" is that the rivals are jostling for supremacy not just in India but globally too. If Honda is the world's largest two-wheeler company (in volumes), Hero MotoCorp is not far behind at No. 2 and Bajaj Auto at No. 4 (Yamaha occupies the third slot).
India, for now though, is where the biggest and most critical battle is playing out. Last year, India overtook China to become the world's largest two-wheeler market with around 14 million unit sales. Further China, despite selling 12 million odd two-wheelers annually â€" has so far been a difficult market for overseas companies. It is crowded and fragmented with over 50 players, most having market shares in single digits. Also, the dominance of cheap, low-quality bikes makes it an unattractive market for technology-focused MNCs like Honda.
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Hero incorporates subsidiary in Netherlands
Chanchal Pal Chauhan, ET Bureau | Apr 1, 2013, 07.54AM IST
NEW DELHI: In a bid to fast-track its ambitious plan to enter 30 countries, two wheeler maker Hero MotoCorp has incorporated an off-shore investment subsidiary in the Netherlands — the first in a slew of overseas arms it plans to establish. This new subsidiary is the first-ever overseas financial transaction by Hero MotoCorp aimed to catapult its international operations into a major growth driver in the future, according to three informed sources.
"Hero recently got its first 100% subsidiary incorporated in the Netherlands to expedite its global expansion plans, which includes overseas investments and merger and acquisition opportunities. The company may announce this soon," said a senior executive from Hero MotoCorp. The size of the potential investment in the overseas subsidiaries was, however, not available.
The New Delhi-headquartered Hero "is also actively considering opening up a few more overseas companies and offices in Europe, the US and Latin America to facilitate scaling up its international businesses", one of the three persons told ET on condition of anonymity.
Its domestic peers such as Bajaj Auto and TVS Motors are already operating overseas subsidiaries. The Pune-based Bajaj Auto operates PT Bajaj Auto Indonesia that is engaged in production and sales of two-wheelers in South East Asia while Bajaj Auto International Holdings BV, Netherlands, is a wholly-owned subsidiary for the company's key strategic operations. TVS Motors also operates an Amsterdam-based subsidiary TVS Motor Company (Europe) besides a manufacturing entity, PT TVS Motor Company in Indonesia.
As India grows into the top five global automotive markets by volumes, other Indian companies are also expanding to increase penetration to new overseas markets. The country's largest carmaker Maruti Suzuki, owned by Japanese Suzuki Motor Corporation, is also toying with ideas to start assembly operations in several overseas markets as part of its strategy to consolidate exports in key strategic countries. Hero MotorCorp, which parted ways with its erstwhile technology and joint venture partner Honda Motor of Japan, has set up a target to increase exports to around 10% of its total sales in the next few years from the current 2% of its total sale of 6 million units.
"These subsidiaries will play a critical role in expanding Hero's global footprint in these key markets through solo investments, joint ventures and strategic partnerships. As the company goes into new international markets, it may have to set up assembly units and full-fledged manufacturing plants, form joint ventures with local partners and invest in brand building activities," the person told ET on condition of anonymity.
This international initiative is in line with the company's stated objective of reaching a million units in volume sales from its international business by 2016-17, around the time when the overall volume of the company is expected to be around 10 million units, he added. When contacted, the Hero Moto-Corp spokesperson confirmed the recent developments but refused to divulge any details. "We have plans to take brand Hero to global markets. Our plans are in place and we are going ahead as per our own timelines. We would, however, like to talk about these in details at an appropriate time."
ET, on January 30, was the first to report that Hero has already started dispatching its two-wheelers to new international markets such as El Salvador, Guatemala and Honduras in Latin America — a continent where Hero has presence only in Colombia. Its first consignments to Africa will also commence soon. "The company is looking to speed up new launches, invest in capacity addition, expanding its already vast distribution network and aggressively foray into new international markets. It is expected to make some announcements in the near future," the official said.
Hero MotoCorp CFO Ravi Sud had told ET last week that the company has earmarked Rs 1,100-crore capital expenditure for FY14. "We are no stranger to competition. We have put in place a multi-focal strategy to sustain and build upon our leadership," he had told ET. Hero MotoCorp is working on a new line up of technologically advanced and environment-friendly two-wheelers range targeting both domestic and the global markets.
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Hero MotoCorp goes global with operations in 3 Latin American countries
30 Jan, 2013, 01.10AM IST, Chanchal Pal Chauhan,ET Bureau
NEW DELHI: Kicking off its ambitious plans to garner 10% of its total volumes from international business in five years' time, Hero MotoCorpBSE -2.23 % has commenced its operations in three Latin American countries - El Salvador, Honduras and Guatemala in Latin America - eventually hoping to go to as many as 30 countries spread across the globe.
According to a top industry source in the knowledge of the development, Hero MotoCorp dispatched the first consignment of two-wheelers to these three countries in Latin America just a few weeks back.
This marks the beginning of Hero's ambitious global foray, which the company has been aiming for since separating from erstwhile partner Honda. The Pawan Munjal-led company eventually plans to expand its international business to 30 countries spanning across Africa, Latin America, Central America and South-East Asia over the next few years, a plan that was first unveiled at Hero's global brand launch event in London in August 2011.
"The company has already started dispatching its two-wheelers to some new international markets from January. The company has finalised the distributors and channel partners in its new markets in Latin America and Africa. Hero is also set to commence its operations in African markets anytime soon," the source told ET on condition of anonymity.
"In just a matter of weeks, the company will announce the launch of Brand Hero in these new markets in Latin America and Africa. Hero is also actively exploring the possibility of setting up assembly units in some of these markets once the volumes picks up," he added. When contacted, a Hero MotoCorp spokesperson agreed that local distributors in these markets have already been identified.
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