India's largest two wheeler maker Hero Honda Motors Ltd (HHML) today said it has roped in global brand and innovation specialist, Wolff Olins to create a new identity after the exit of Honda from the joint venture.
"The new buzzwords at Hero Honda are Creation, Renewal and Re-energising. I am happy to have Wolff Olins partnering with us in this exciting journey into a promising future," HHML Managing Director & CEO Pawan Munjal said.
When the two partners announced their break-up, Munjal had said that the Honda name would be eventually dropped from Hero Honda and the company would take up a new identity.
Wolff Olins, a part of the Omnicom group , is working on the new brand identity in its totality. This includes the brand architecture, brand name, brand logo and brand positioning, the company statement said.
The two joint venture partners of HHML -- Hero Group and Honda Motor Co -- signed an agreement recently, wherein the former is going to buy all the 26 per cent shares of foreign partner in HHML,
The Hero Group and Honda had agreed to part ways from their JV in December last year. The BM Munjal-led group will pay Rs 3,841.83 crore for the Japanese partner's 26 per cent stake in Hero Honda.
Commenting on the new assignment, Wolff Olins Managing Director Charles Wright said: "We are indeed excited to be working on this mandate. Hero Honda is an Indian icon and it is a privilege to partner Pawan Munjal and his team on this journey of transformation.
"India is a strategic priority for us and for Omnicom as a whole, and therefore this mandate assumes a huge priority for us".
With offices in London, New York and Dubai, Wolff Olins is a global brand and innovation business that has, over the past four decades, worked on transformation initiatives for brands and corporates across the world, partnering them for growth.
100cc bike will drive Suzuki soon
Suzuki Motorcycle India will soon enter the entry-level 100 cc motorcycle market in the country as the Japanese firm looks to become a major player in world's second largest two-wheeler market. The leader in the niche super bike market, where Suzuki Hayabusa outsells every other big bike, expects its two-wheeler sales to pick up significantly once it doubles the annual production capacity to 5.4 lakh units, at the Gurgaon Plant, Suzuki Motorcycle India's vice-president (Marketing & Sales) Atul Gupta told ET in an interview.
Atul Gupta: Suzuki has a huge brand equity, that goes without saying. But, at the same time, I believe it would be fair to draw comparisons only within the two-wheeler industry. Suzuki Motorcycle has shown higher marked growth within the segment it is present and our sales are growing at the faster pace than the domestic market, but any noticeable change will happen once we double our capacity in Gurgaon and draw sizeable volumes in the local market.
What are the products that you plan to roll out from the new plant to drive Suzuki Motorcycle to the next level?
Atul Gupta : The current growth is led by scooters, where, in the mid-size segment, our market share has increased to 25% from 10% in the past one year. We are market leaders in the super bike category, with Hayabusa, Intruder, Bandit and GSX-R1000 giving us a huge lead over other global companies like Harley Davidson, Honda and Yamaha. Now, we are geared up to expand and introduce products for the mass volume segment like 100 cc bikes that will impact the Indian market with huge volumes in our kitty.
Hero Honda and Bajaj Auto together are likely to produce around 9-10 million motor cycles in the next fiscal. Suzuki Motorcycle's target is only half a million. How do you hope to build up volumes?
Atul Gupta : We are certainly looking at building on our volumes. The entry into the mass segment 100 cc bikes, that form around 50% of the 10 million Indian two-wheeler market, will help us leverage the brand and generate sales.
What is your road map to become a major player in India where young people now drive consumer demand?
Atul Gupta : There are two key areas of focus for Suzuki: product quality and customer service. We will continue to focus on launching India-engineered products, keeping customers in mind. We are steadily building a loyal base of customers and would continue to expand by ensuring high customer satisfaction levels. A strong and steadily growing distribution network will be our strength. Our final objective is to provide a varied range of products to Indian customers. Our strategy would be based on the core philosophy of making 'value-packed products' that generate 'excitement'.
Atul Gupta: Suzuki has a huge brand equity, that goes without saying. But, at the same time, I believe it would be fair to draw comparisons only within the two-wheeler industry. Suzuki Motorcycle has shown higher marked growth within the segment it is present and our sales are growing at the faster pace than the domestic market, but any noticeable change will happen once we double our capacity in Gurgaon and draw sizeable volumes in the local market.
What are the products that you plan to roll out from the new plant to drive Suzuki Motorcycle to the next level?
Atul Gupta : The current growth is led by scooters, where, in the mid-size segment, our market share has increased to 25% from 10% in the past one year. We are market leaders in the super bike category, with Hayabusa, Intruder, Bandit and GSX-R1000 giving us a huge lead over other global companies like Harley Davidson, Honda and Yamaha. Now, we are geared up to expand and introduce products for the mass volume segment like 100 cc bikes that will impact the Indian market with huge volumes in our kitty.
Hero Honda and Bajaj Auto together are likely to produce around 9-10 million motor cycles in the next fiscal. Suzuki Motorcycle's target is only half a million. How do you hope to build up volumes?
Atul Gupta : We are certainly looking at building on our volumes. The entry into the mass segment 100 cc bikes, that form around 50% of the 10 million Indian two-wheeler market, will help us leverage the brand and generate sales.
What is your road map to become a major player in India where young people now drive consumer demand?
Atul Gupta : There are two key areas of focus for Suzuki: product quality and customer service. We will continue to focus on launching India-engineered products, keeping customers in mind. We are steadily building a loyal base of customers and would continue to expand by ensuring high customer satisfaction levels. A strong and steadily growing distribution network will be our strength. Our final objective is to provide a varied range of products to Indian customers. Our strategy would be based on the core philosophy of making 'value-packed products' that generate 'excitement'.
TVS ropes in Virat Kohli to endorse Sport bike
TVS Motor Company has signed on one of India's brightest and most promising cricketing talents Virat Kohli as brand ambassador for its all new TVS Sport motorcycle. Virat Kohli will therefore feature on all advertising and retail material related to TVS Sport. The new TVS Sport is a powerful blend of a contemporary design and a highly reliable fuel efficient engine with the added convenience of an electric start.
HMSI mulls third plant to meet rising demand
Honda Motorcycle and Scooter India Limited (HMSI) is considering setting up a third facility in the country to scale up operations after the termination of the joint venture between parent company Honda Motor Corporation (HMC) and Hero Honda Motors Limited.
HMSI President and Chief Executive Officer, Shinji Aoyama, said, “We are the number one two wheeler brand in the world and would want to be the number one player in India as well. Our current sales volumes do not reflect the actual demand for our products in the market. Our dealers are not being able to cash in on many potential sales due to constraints in supply. The additional capacity from our second plant too, is expected to be exhausted immediately. We have to set up a third plant to boost volumes in India.”
The company has not finalised a location, but is keen on setting up the third manufacturing unit in southern or western India. “As much as 30 per cent of the demand in the overall two wheeler market is from Tamil Nadu, Andhra Pradesh, Kerala and Karnataka. Together, south and west India represent half our business. It is a natural decision to move south to ensure the speedy delivery of our products,” Aoyama said.
Company executives say according to estimates with dealers, had HMSI met the demand in the market, it could have sold an additional one million units. HMSI’s best-selling product, Honda Activa, alone has the potential to clock in a million units annually, compared with the current 0.70 million units, if production constraints are overcome. Similarly, sales volumes of the CB Shine (125 cc) and the CB Unicorn (150 cc), can also be raised to double their current levels.
HMSI has already invested Rs 500 crore to set up a second facility at Tapukara in Rajasthan. Once the plant is operational in September-October 2011, the combined capacity at the two manufacturing units – the other being at Manesar (Haryana) -- would increase by around 37 per cent to 2.2 million units per year. This would partially bridge the gap with market leader Hero Honda, which has the capacity to roll out 5.2 million units annually. HMSI’s Manesar facility has the capacity to manufacture 1.6 million units per year.
Currently, HMSI products have waiting periods ranging from six weeks to six months. The company takes around seven months to deliver a Honda Activa in south India. It expects to sell 1.6 million two-wheelers in the current financial year, a rise of 26 per cent over the 1.27 million units it sold in the last financial year.
HMSI President and Chief Executive Officer, Shinji Aoyama, said, “We are the number one two wheeler brand in the world and would want to be the number one player in India as well. Our current sales volumes do not reflect the actual demand for our products in the market. Our dealers are not being able to cash in on many potential sales due to constraints in supply. The additional capacity from our second plant too, is expected to be exhausted immediately. We have to set up a third plant to boost volumes in India.”
The company has not finalised a location, but is keen on setting up the third manufacturing unit in southern or western India. “As much as 30 per cent of the demand in the overall two wheeler market is from Tamil Nadu, Andhra Pradesh, Kerala and Karnataka. Together, south and west India represent half our business. It is a natural decision to move south to ensure the speedy delivery of our products,” Aoyama said.
Company executives say according to estimates with dealers, had HMSI met the demand in the market, it could have sold an additional one million units. HMSI’s best-selling product, Honda Activa, alone has the potential to clock in a million units annually, compared with the current 0.70 million units, if production constraints are overcome. Similarly, sales volumes of the CB Shine (125 cc) and the CB Unicorn (150 cc), can also be raised to double their current levels.
HMSI has already invested Rs 500 crore to set up a second facility at Tapukara in Rajasthan. Once the plant is operational in September-October 2011, the combined capacity at the two manufacturing units – the other being at Manesar (Haryana) -- would increase by around 37 per cent to 2.2 million units per year. This would partially bridge the gap with market leader Hero Honda, which has the capacity to roll out 5.2 million units annually. HMSI’s Manesar facility has the capacity to manufacture 1.6 million units per year.
Currently, HMSI products have waiting periods ranging from six weeks to six months. The company takes around seven months to deliver a Honda Activa in south India. It expects to sell 1.6 million two-wheelers in the current financial year, a rise of 26 per cent over the 1.27 million units it sold in the last financial year.
TVS Motors to decide on price hike by month-end
Leading two wheeler-maker TVS Motor Company today said it is reviewing the movement of raw material prices and will take a decision on increasing the rates of its products by the end of this month.
“The raw material prices are still very volatile and it is impacting us. Currently, we are doing the review and by the month-end, we will reach a decision,” the TVS Motor Company President (Marketing), Mr H.S. Goindi, told reporters here today.
The company had last increased the prices of its vehicles in January this year by 1-2 per cent, he added.
“We do review the prices in every quarter... Of course our margins are gradually improving,” Mr. Goindi said, without giving any details.
The Chennai—based two-wheeler major today launched its premium ‘Apache RTR 180’ bike with anti-lock braking system (ABS) technology, priced at Rs 78,880 (ex showroom Delhi).
“This is the first Indian two-wheeler which has come with an ABS. This will enhance our brand value,” he said.
“The raw material prices are still very volatile and it is impacting us. Currently, we are doing the review and by the month-end, we will reach a decision,” the TVS Motor Company President (Marketing), Mr H.S. Goindi, told reporters here today.
The company had last increased the prices of its vehicles in January this year by 1-2 per cent, he added.
“We do review the prices in every quarter... Of course our margins are gradually improving,” Mr. Goindi said, without giving any details.
The Chennai—based two-wheeler major today launched its premium ‘Apache RTR 180’ bike with anti-lock braking system (ABS) technology, priced at Rs 78,880 (ex showroom Delhi).
“This is the first Indian two-wheeler which has come with an ABS. This will enhance our brand value,” he said.
TVS Motors to re-enter electric scooters market
TVS Motors on Friday said it was planning to re-enter the electric scooters market in the next financial year. The company has already developed an electric variant of Scooty Teenz, along with another new product for the domestic market.
H S Goindi, president (marketing), TVS Motors said, “We are testing 50 electric scooters in towns across the country. Depending on the feedback, the scooters will be launched sometime in the next financial year.”
The scooters would be rolled out from the company’s facility in Mysore and the company would initially use lead acid batteries for the electric scooters. “Business in electric scooters picked up in India a few years back, but dropped due to issues with battery technology and the withdrawal of subsidies. There is potential in the market, with the government announcing a national mission for promoting electric and hybrid vehicles. We see some proportion of sales coming from this segment over the next five years,” Goindi said.
In April 2008, TVS Motors had launched the ‘Scooty Teenz Electric’, for which the company targeted sales of around 40,000 units per year. However, it stopped production in May 2009, as the product received a lukewarm response.
Goindi said TVS Motors is studying the impact of the rise in commodity prices on the company’s margins and a decision on price rise is likely to be taken next month.
Meanwhile, the company on Friday launched its premium bike, ‘Apache RTR 180’, which boasts of anti-lock braking system technology and is priced at Rs 78,880 (ex-showroom, Delhi).
H S Goindi, president (marketing), TVS Motors said, “We are testing 50 electric scooters in towns across the country. Depending on the feedback, the scooters will be launched sometime in the next financial year.”
The scooters would be rolled out from the company’s facility in Mysore and the company would initially use lead acid batteries for the electric scooters. “Business in electric scooters picked up in India a few years back, but dropped due to issues with battery technology and the withdrawal of subsidies. There is potential in the market, with the government announcing a national mission for promoting electric and hybrid vehicles. We see some proportion of sales coming from this segment over the next five years,” Goindi said.
In April 2008, TVS Motors had launched the ‘Scooty Teenz Electric’, for which the company targeted sales of around 40,000 units per year. However, it stopped production in May 2009, as the product received a lukewarm response.
Goindi said TVS Motors is studying the impact of the rise in commodity prices on the company’s margins and a decision on price rise is likely to be taken next month.
Meanwhile, the company on Friday launched its premium bike, ‘Apache RTR 180’, which boasts of anti-lock braking system technology and is priced at Rs 78,880 (ex-showroom, Delhi).
Honda Exit Process Fails to Ignite Passions for Co
The entire process of Honda exiting from the Indian listed joint venture Hero Honda appears to be opaque, with sketchy details emerging on this transaction. In the latest development, the Munjal family controlled Hero Investments will buy out the 26% stake held by the Japanese company in Hero Honda at Rs 740 per share, or nearly half of the stock’s current price.
From the perspective of the minority shareholder in Hero Honda , it once again raises several unanswered questions, as to the rationale for the Japanese player to exit at such a steep discount and its potential impact on the listed entity’s stock price, in the near term.
Earlier, in mid-December 10, when Honda announced its formal decision to exit this joint venture, there remained several unanswered questions too, especially relating to the royalty structure, going forward . Hero Honda’s royalty and technical fees to its Japanese parents amounted to 2.6% of its net sales of .Rs 15,758 crore for the year ended March 10.
Media reports indicate that the royalty payments for the Indian entity should not rise substantially, going forward, but that may not be sufficient to assuage investor concerns for this stock in the near term. And that’s because the operating profit margins of Hero Honda in the first nine months of current financial year declined 530 basis points year-on-year to 12.2%.
In addition, Hero Honda’s operating margins were substantially lower than the nearest rival during this period. Apart from that, the exit of Honda would require the Indian listed entity to substantially boost its R&D costs, in a bid to remain competitive, and that could hurt Hero Honda’s operating margins in the short term. The Hero Honda stock had hit a 52-week low of Rs 1,377 in late February, and has recovered some ground since then. Although, the time period is not strictly comparable nor the operating environment, but a leading two-wheeler manufacturer in the South had also separated from its Japanese partner in late 2001.
Clearly, from the perspective of the minority shareholder of Hero Honda, they would be hoping that their company would also grow aggressively in the medium term. Besides, there is considerable interest on the Street regarding the price at which private equity players would acquire a stake in the unlisted entity, controlled by the Munjal family, in a bid to help finance the exit of Honda.
From the perspective of the minority shareholder in Hero Honda , it once again raises several unanswered questions, as to the rationale for the Japanese player to exit at such a steep discount and its potential impact on the listed entity’s stock price, in the near term.
Earlier, in mid-December 10, when Honda announced its formal decision to exit this joint venture, there remained several unanswered questions too, especially relating to the royalty structure, going forward . Hero Honda’s royalty and technical fees to its Japanese parents amounted to 2.6% of its net sales of .Rs 15,758 crore for the year ended March 10.
Media reports indicate that the royalty payments for the Indian entity should not rise substantially, going forward, but that may not be sufficient to assuage investor concerns for this stock in the near term. And that’s because the operating profit margins of Hero Honda in the first nine months of current financial year declined 530 basis points year-on-year to 12.2%.
In addition, Hero Honda’s operating margins were substantially lower than the nearest rival during this period. Apart from that, the exit of Honda would require the Indian listed entity to substantially boost its R&D costs, in a bid to remain competitive, and that could hurt Hero Honda’s operating margins in the short term. The Hero Honda stock had hit a 52-week low of Rs 1,377 in late February, and has recovered some ground since then. Although, the time period is not strictly comparable nor the operating environment, but a leading two-wheeler manufacturer in the South had also separated from its Japanese partner in late 2001.
Clearly, from the perspective of the minority shareholder of Hero Honda, they would be hoping that their company would also grow aggressively in the medium term. Besides, there is considerable interest on the Street regarding the price at which private equity players would acquire a stake in the unlisted entity, controlled by the Munjal family, in a bid to help finance the exit of Honda.