Ride sharing and electric vehicles will be the next wave, says Munjal

Ride sharing and electric vehicles will be the next wave, says Munjal

Hero MotoCorp Chairman and Chief Executive Officer Pawan Munjal is working hard to take the brand Hero on the global automotive landscape.  He believes that Hero MotoCorp’s global expansion will help the company achieve a sustainable growth in the long run.

Being the largest producer of two-wheeler globally with over 6.5 million vehicles a year, Munjal says the company’s strategy is product-centric for each geography. Munjal tells DH’s N V Vijayakumar that the company will reach 50 global markets within 2020.

Can you elaborate your global expansion plan?
We are going global to tap the huge untapped opportunities for growth. We entered the global market after beginning our solo journey six years ago. The launch in Argentina marks our foray into the 35th country globally. We are right now present across Asia, Africa and South and Central America.

Our rapid expansion in these regions helped us build our brand identity. We are present in these regions with a range of popular motorcycles and scooters across segments, which are known for their fuel efficiency, performance and durability. We expect that the mix of our product portfolio and after sales service efficiency will bring us ahead of the curve in these markets.

How do you view the global economic environment?
We also realise the fact that political or economic uncertainties are looming large globally. We have to understand that such uncertainties are present in every sphere of activity and that should not deter us from pursuing our long-term goals and vision. We believe our global expansion is an opportunity for sustainable growth in the long run.

We believe that we can achieve 10% of total sales from global operations by 2020. We do hope that we will scale up further after that. We are planning to enter the Mexican and Brazilian markets soon.   

Do you believe that your volume play will help in the global expansion plan?
We have to achieve some basic volume mass to make certain impact in the market. The size and scale of Hero MotoCorp in the Indian market is a big advantage when we foray into any global market.

This helps us choose the distributor partner. In terms of continent, we are focussing on various continents and by 2020, we will get a solid idea of the market. Then we will be focussing on 12 to 15 markets, as they will help us grow. Some markets will grow on their own steam.

We believe that we should focus on low hanging fruits in the markets like Latin America and Africa where we can achieve the volume. Unlike the western market, especially the US and the South-East Asian markets, geographies like Latin America and Africa we do not have to face any complications and no competition from existing established players from Japan. Having said that we haven’t lost focus on global product planning.   

How do you view the domestic market?
Hero MotoCorp finds huge potential from the domestic market as our growth comes from there only. We are very much focused on changes in the customer preference and this is clearly revealed during the last Auto Expo.

We find a lot of traction in the premium and high performance products. We feel in these segments our market share is very less or we are entirely missing. Also, since our domestic two-wheeler penetration is still only around 30%, we think there is still growth in the mass market segment ranging from 100 cc to 150 cc. 

We are also registering steady growth in the scooter segment. We aspire Hero MotoCorp achieve greater market share in this segment than our current position.

How do you view the investment made in R&D?
We invested heavily in our new Centre of Innovation and Technology (CIT) located at Jaipur. A lot of design and development works on premium products are currently happening there. We have already made it with the new Achiever 150. The next one will be Xtreme 200S, a premium product which is already showcased at the Auto Expo last year.

We want to come up with products that suit each geography as part of our global expansion, and the centre will play a key role in that. Till now we don’t have any global product and the CIT will come up with products that are truly global in nature and take Hero MotoCorp ahead of competition.

Can you share your take on the growing importance of electric vehicles, hybrid vehicles and ride sharing?
I believe that ride sharing and electric vehicles will be the next wave. The world is really moving in that direction and we are also committed to that. Our research activities with electric vehicles are progressing at the CIT. The government will have to focus on this and I believe that we are not isolated in that as they have started their initiatives. We have invested in two startups — electric scooter startup Ather Energy based out of Bengaluru, and ride-sharing bike taxi startup Rapido. Cost and affordability will decide the growth of the hybrid products. We have already displayed hybrid products at the Auto Expo.  

Startups are the rage of the day. What is your take on this?
I personally believe that lots of innovation happen in the startup culture. Sometimes, large companies are not able to do those things. We also believe that big companies like Hero and other players should provide the ecosystem so that startups can also prosper.
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