Hero steps up on own Nano mobike plan

Splitsville with Honda later, the Hero Group is learnt to be working overtime on development of a sub-Rs40,000 motorcycle to retain its grip on the entry level segment.

Currently, the Splendor and Passion 100cc bikes, which together account for seven out of every 10 bikes sold by Hero Honda Motors Ltd, are priced above this price mark.

Hero Honda managing director Pawan Munjal had told DNA Money around two years ago that a low-cost bike was very much on the company’s radar. “This has been on our horizon for a long time, but we haven’t been able to come up with a solution till now. But this is not the end and we hope to come up with a solution. We continue to work on this.”

Now, with Honda Motor exiting the joint venture, Hero appears to be getting back to the drawing board on this cheaper bike, aimed at the rural market.

Vendors said the new bike may or may not be developed on a new platform and could even be housed under the existing ‘Splendor’ brand umbrella.

“But we are certain that it will be ready for production by the first quarter of 2012 calendar,” a top vendor said.
Until Honda’s exit, new product development was seen as an expensive and time consuming proposition.

“Japanese-oriented companies were dictating vehicle and component design. Now, with only the Hero Group as decision maker, things are not only faster but development of a new product can also be done cheaper. The Hero Group is now asking each vendor if it can do without foreign collaboration, etc and whether product development can be done at lesser cost,” the vendor said.

Hero Honda still controls over 65% of the entry level bike (engine capacity above 75 cc but less than 125 cc) market.
Munjal’s push for a lower cost offering comes much after arch rival Bajaj Auto has developed such a product for overseas markets. The Bajaj bike has been developed in China, using its low-cost supplier base, but the Hero Honda product would most likely use the company’s existing cache of local vendors.

Munjal has emphasised that this ‘Nano’ bike must be very affordable. “Whatever we bring should certainly have a significant price advantage. Also, there is no compromising on either durability or performance,” he had said earlier.