Hero Group set to finalise a new brand by March

Barely a month into its divorce from Honda Motor Co, Hero Group is already working on an independent brand strategy for itself.

The country's largest motorcycle maker is busy finalising an independent brand that it plans to initially test in the overseas markets.

The new brand is likely to be finalised in the current quarter ending March with the group launching its first product in the overseas markets by as early as the April-June quarter.

"They (Hero Group) are already working on it and it is most likely to be finalised by March," an industry source said on Wednesday.

He said the company initially wants to test the new brand in the overseas markets to gauge consumer response.

"Gradually, the brand would be introduced into the domestic market," he said.

Japan's Honda Motor Co and India's Hero Group ended their joint venture pact last month choosing to go separate ways after being together for 26 years. Although Hero Group has been allowed to use the Honda name till 2014, it will begin testing waters with the new brand as soon as possible so that the new brand is well in place by the 2014 deadline, the source said.

The company, in a recent communique to its component vendors, has asked them to be ready for a significant jack-up in the company's volumes as it forays into overseas markets.

It has informed its vendors that it may begin exporting vehicles by as early as first quarter of the next financial year.

"Their team is in place and so is their product strategy," the person familiar with the development said.

Despite being a leader in the domestic market by a fair margin, Hero Honda was never allowed to foray beyond Indian shores due to the joint venture pact with Honda Motor.

But while announcing the separation last month, managing director Pawan Munjal was very categorical in stating that the company was now free to try its luck in the overseas markets.

"There is a huge opportunity in the overseas markets and nothing stops Hero Honda to do well there. Even Bajaj Auto exports significant volumes," the person said.

During April-December, Bajaj Auto has sold almost a million vehicles in the overseas markets.

The source said Hero Honda is most likely to begin with the export of its popular Splendor and Passion models.

While Hero Honda sells the Splendor in three variants (125cc and 100cc), the Passion is sold in two variants with both 100cc engines.

"Bajaj's biggest export model is the Boxer and Hero Honda plans to pit the Splendor against it," the person said.

The source also said the company has revived its low-cost motorcycle plans post separation from the Japanese partner.

He said the company is developing a motorcycle model that would be priced at around `30,000 and would be mainly sold in the overseas markets.

"There is a huge opportunity for such a model in the Latin American markets," he said.
It has long been reported that a low-cost motorcycle was on Hero Honda's drawing books. However, the project had till now been put on the back burner.

These low-cost bikes would be equipped with smaller displacement engines—either a 75cc or a 100cc engine.

"The company is considering several options to compete with China made cheaper bikes," the person said adding that the motorcycle could share a number of components with the highly depreciated Splendor.

"The bike could very well be an off-shoot of the existing Splendor model," he said.