A CASE STUDY PAPER ON

MARKET SHARE ANALYSIS OF HERO MOTOCORP

POST SPLIT WITH HONDA.

SUBMITTED BY
PRASHANT KUMAR PANDEY
ROLL NO-IB1816252

BALAJI INSTITUTE OF INTERNATIONAL BUSINESS

S.NO. 55/2-7, TATHAWADE, OFF MUMBAI-
BANGALORE BYPASS, PUNE- 411033,
MAHARASHTRA

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 DECLARATION

I hereby declare that this case study paper has been entirely prepared by me and does
not involve any plagiarism.
It is my own work and has not been already published or submitted elsewhere.
I further declare that this study has been submitted as per the requirement of PGDM
curriculum as a part of dissertation.

Signature of Guide / Mentor Prashant Kumar Pandey

Date: IB1816252

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 ACKNOWLEDGEMENT

I take this opportunity to thank all the people who have helped me through the course
of my journey towards completing this study. I sincerely thank my mentor Dr. Neetu
Kumari and Mr. Quresh Moochala for their guidance and encouragement in carrying
out this study. I would also like to thank all the teaching faculties for impacting
knowledge and making me capable of understanding the concepts and completing this
case study. At last I would like to acknowledge the support and encouragement of my
friends and family. This study would not have been possible without the confidence,
endurance and support from them.

Sincerely,
Prashant Kumar Pandey
Place: Pune

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 TABLE OF CONTENTS

S.NO DESCRIPTION PAGE NO

1. EXECUTIVE SUMMARY 5

2. INTRODUCTION 6-8

3. MAIN CONTENT 8-10

4. ANALYSIS 11-14

5. LEARNING OBJECTIVE / STATUS 13-14

6. CASE SOLUTION 14

7. ACKNOWLEDGEMENT 15

8. REFERENCES 16

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 EXECUTIVE SUMMARY

The case study revolves around the how Hero MotoCorp regained its market after
parting its way from Honda. As Honda was the main reason behind the success of hero
motor India limited as they provided them the technology that was needed in order to
manufacture the motorcycles. The conflict of Hero-Honda arise in the year 2010 when
there was conflict of interest between both the parties. The result was corporate breakup
and finally the joint venture between both the companies comes to an end in the year
2014.However, Honda agreed on the terms to sold hero-Honda bikes till July 2014.
Hero’s major success was Splendor which was launched by Indian arms of Japanese
two wheeler maker, Honda back in 1994. As the motorcycle was powered by 97.2 CC
engine displacement which became an overnight success for hero Honda and the
company had managed to sale over one million units per year. Later on hero upgraded
its models and came up with Splendor series consisting models namely Splendor plus,
Super Splendor, Splendor NXG, Splendor Pro Classic. Hero also came up with sports
biking segment Impulse which wasn’t a great success for hero. Hero MotoCorp is very
much popular in the rural market as the people in the rural India really like its
motorbikes as it gives great mileage and value for money. Hero also conducts market
research in the rural areas and many such programmes like trainings riding skills to the
youngsters and it conducts its market researches by meeting people like sarpanches,
teachers, Aanganwadi workers and labours etc. After parting its way from Honda, Hero
has struggled with its technology and R & D, therefore they have formed two alliances
with Eric Buell Racing (EBR) for technological know-how and other with Austria
based AVL to build its internal capabilities for engine development. Hero has also
launched its electric segment scooter Electric optima and they too have entered in the
electric two wheeler segment. As per Government norms now the automobile industry
requires new policies i.e. BSVI and Honda has worked towards this and launched its
new models of BSVI bikes and scooters by upgrading their technology.

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 INTRODUCTION

The top two of the pack, Hero MotoCorp and Honda Motorcycles & Scooters have shed
some muscles in terms of market share to help Bajaj Auto fatten its share of the pie
size. In FY19, Bajaj Auto's market share rose to 12 per cent compared to 9.8 per cent
in previous years.

Bajaj Auto, Pulsar's maker was the only manufacturer to raise its market share from 9.8
per cent in FY18 to 12 per cent in the last fiscal year. The company also reported a
strong double-digit growth of around 28.7% to 2,541,320 last year sold units. Domestic
sales for Bajaj Auto were recorded at 1,974,577 units in the year before it.
India's largest two-wheeler maker, Hero MotoCorp held its pole position with a market
share of 35.9%–a decrease of more than one percentage point from a market share of
36.6% a year earlier. In FY19, Hero MotoCorp delivered 7,612,775 units, up 3.12 per
cent from 7,382,718 units dispatched in the previous year.
Following the trend, Honda Motorcycle & Scooter India's second-largest two-wheeler
maker (HMSI) also saw a 26.1 per cent decline in market share over the previous year.
In FY17-18, HMSI's market share in Indian two-wheeler space stood at 28.6% as its
sales contracted by 4.41% to 5,520,617 units in FY18-19.
In August, the sector faced numerous obstacles such as Kerala floods, and orders from
IRDA to raise the two-wheeler insurance premium to five years at the time of purchase.
With the start of the second quarter, volumes decreased partly due to the high FY18
base, capacity constraints and OEM inventory correction. Inventory remains at the
higher side, according to FADA, and in some regions has gone up to 100 days.

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 DOMESTIC SALES RANK FOR FY 2018-19

Rank Domestic FY19 FY18 % change

Sales
1 Hero 7,612,775 7,382,718 3.12
MotoCorp
2 HMSI 5,520,617 5,775,287 -4.41
3 TVS Motor 3,136,532 2,875,466 9.08
Company
4 Bajaj Auto 2,541,320 1,974,577 28.7
5 Royal Enfield 805,273 801,229 0.5
6 India Yamaha 804,682 792,812 1.5
Motor
7 Suzuki 668,787 501,203 33.44
Motorcycle
8 Piaggio 77,775 68,169 14.09
Vehicles
9 Mahindra Two 4,004 14,752 -72.86
Wheelers
10 India 3,115 1,799 74.51
Kawasaki
Motor
Others 6,510 12,105 -46.2
Total 21,181,390 20,200,117 4.86

Overall motorcycle sales increased 7.7 percent to 13,599,678 units in fiscal period
ended March 31, resulting in a 2 percent increase in its market share to 64.2 percent of
total two-wheeler sales. Meanwhile, scooter sales dropped marginally throughout the
year as the segment witnessed a 25 per cent drop in dispatches for March's month. With
sales declining, scooter market share across the entire two-wheeler space also took a hit
from 33.27 per cent in FY18 to 31.63 per cent in FY19.
For the first time in the last one decade, scooter sales decreased. The cost of ownership
for scooters has risen over 10-12 per cent last year, affecting the entire segment,
according to analysts.

Two of the top five scooter firms experienced growth while sales shrank for the
remaining scooter producers. The sales increased to 1,241,366 units and 615,520 units
respectively by TVS Motor and Suzuki Motorcycles.

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HMSI, the top scooter seller, posted 3.69 percent negative sales at 3,680,403 units. In
FY18 the company had sold 3,821,542 units.
The hostile growth has come in this segment after almost a decade. According to
analysts, the cost of tenure for scooters has increased over 10-12 per cent last year,
impacting the whole segment.

TABLE FOR SCOOTER SALES IN FY 2018-19

SCOOTERS FY19 FY18

TVS 12,41,366 10,99,133
Indian Yamaha Motors 3,64,879 4,15,321
Suzuki Motorcycles 6,15,520 4,21,539
HMSI 36,80,403 38,21,542
Hero MotoCorp 7,19,087 8,83,887
Others 80,214 78,707
Total 67,01,469 67,19,909

MAIN CONTENT

Company and Hero Group. They signed a joint partnership agreement in the year 1983
and founded the firm. The joint venture between India's Hero Group and Honda Motor
Company, Japan, has established not only the single largest two wheeler company in
the world but also one of the world's most successful joint ventures.
The company began its commercial production at the Dharuhera plant in Haryana in
the year 1985 and launched its first motorcycle, CD 100, to the market. The New
Motorcycle was launched in 1989. The company inaugurated its second production
Hero MotoCorp Limited is the largest double wheelers manufacturer in the world. The
company has four manufacturing facilities in Haryana, Haridwar in Uttarakhand and
Neemrana in Rajasthan, namely Dharuhera and Gurgaon; the enterprise is based in New
Delhi, India.

From CD Dawn, CD Deluxe, Splendor Plus, Splendor NXG, Passion and Passion Pro,
the company offers a range of bikes. Glamour, Super Splendor and Glamour F1 are
offered on the 125 cubic centimetre segment. It also has a product in the 135 cubic

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centimetre segment called Achiever. The company offers products such as Hunk, CBZ
X-treme, Karizma and the Karizma ZMR in the 150 cubic centimetre and above. It also
provides a 100 cubic centimetre scooter, Pleasure.
Hero MotoCorp Limited was founded with the name Hero Honda Motors Ltd in the
year 1984. The firm was founded as a joint venture between Japan's Honda Motor
facility at Gurgaon, Haryana, in the year 1997. They also introduced new model for the
motorcycle, Street on the market. They launched Hero Honda CBZ in the year 1999,
the first 150cc motorcycle in the two wheeler industry in India. The organization
launched onto the market new models, Love and Joy in the year 2001. They launched
onto the market new models, Dawn and Ambition in the next year.
The company hurled novel motorcycle models on the market in the year 2003, namely
CD Dawn, Splendor+ and Passion Plus. Also, they launched Hero Honda Karizma, the
industry's first 223cc motorcycle. The company tossed on the market in the year 2005
Super Splendor, CD Deluxe, Glamour and Achiever. The company forayed into scooter
segment in the year 2006 and launched 100cc gearless scooter, Pleasure on the market.
The company launched onto the market in 2007 Splendor NXG, CD Deluxe, Passion
Plus, and Hunk.
The company custom-built its third plant at Haridwar in Uttarakhand with a primary
fitted capacity of 500,000 units during the year 2007-08. This plant had lean
manufacturing and efficiency assurance practices. The company has hurled new models
(including variants) throughout the year including Splendor NXG, Hunk, New Super
Splendor, New Passion Plus, and Commemorative Splendor. The company launched
Super Splendor, CD Deluxe, Glamour, and Achiever onto the market in 2005. In the
year 2006 the company forayed into the scooter segment and launched 100cc gearless
scooter, Pleasure on the market. The company launched Splendor NXG, CD Deluxe,
Passion Plus, and Hunk onto the marketplace in 2007.
The company commissioned its third Haridwar plant in Uttarakhand with an initial
installed capacity of 500,000 units in the 2007-08 fiscal year. This plant had methods
of lean manufacturing and quality maintenance. Throughout the year the brand has
launched new versions (including variants) including Splendor NXG, Hunk, New Super
Splendor, New Passion Plus and Commemorative Splendor.
The company successfully launched six new models during the 2010-11 year including
versions of existing models. They revamped the glamor and glamor FI. The New Hunk,
Super Splendor and Splendor Pro were introduced. The company launched the new,
improved CBZ Xtreme and Karizma models. We have surpassed the historic annual
sales of 5 million figures in a single year.
Over the course of the year, the company's Indian Promoter Group, consisting of Hero
Investments Pvt Ltd (HIPL), Bahadur Chand Investment Pvt Ltd (BCIPL) and Hero
Cycles Limited (Hero Cycles) re-aligned the company's shareholding under a family
agreement. Hero Cycles has thus shifted its shareholding in the company HIPL on May
28, 2010.
In addition, the Indian Promoter Group and Honda Motor Co Ltd, Japan (Honda) signed
the agreement on a share swap on 22 January 2011 during the year. In accordance with

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the provisions of the agreement, Honda agreed to move the Company's 26 percent full
shareholding to the Indian Promoter Group, thus terminating the joint venture between
two corporate group promoters. The sale concluded on 22 March 2011 and the shares
owned by Honda were passed to the Indian partner of the joint venture.
As well as the deal, on 1 January 2011 the Indian Promoter Group and Honda signed a
license agreement. Honda has given the company, according to this agreement, Honda
has given the company the right and license under its intellectual property rights to
produce, assemble, sell, and distribute those products and their service parts.
In February 2012, the company entered into a strategic partnership for contemporary
technology and design inputs with Erik Buell Racing (EBR) of the USA to enable the
company to launch high-end bikes for the domestic and international markets.
Hero MotoCorp began construction of its new facility & Global Parts Centre in 2013.
The company starts the design of its Global Technology and Research & Development
Centre ' GAME-CHANGING. ‘Had changed its name from Hero Honda Motors Ltd to
Hero MotoCorp Ltd in July 2011.
Hero MotoCorp Heralds A New Era Of Leadership in Engineering 2014. New
Benchmark for the Global Two Wheeler Industry is set by the firm. The company
launches Splendor Ismart Technology with Game Changing I3s. The business also
drives Into a Greener Tomorrow with' GARDEN Factory ' A new entrance stage
commuter, the HF Dawn, was introduced by Hero MotoCorp in 2015. A 592-acre site
has been allocated to the company over the year to facilitate the development of its Rs
1600-crore Greenfield manufacturing unit in Andhra Pradesh. HMCL Americas INC is
entering into' Settlement Agreement' to acquire the consultancy business of EBR. The
company starts operation at its first outside of India plant in Villa Rica.
In February 2016, at Auto Expo, a trade fair in New Delhi, Hero MotoCorp unveiled
three new bikes Splendor iSmart 110, the Xtreme 200 S, the XF3R and a Duet E electric
scooter. On March 10, 2016, in Jaipur, Rajasthan, Hero MotoCorp officially launched
its world-class Global Centre for Innovation and Technology (CIT). Built with Rs. 850
Crore investment, the CIT is designing and developing world-class products for global
markets.
Hero MotoCorp launched a new Glamour motorcycle in Argentina on 12 January 2017,
its first-ever global launch outside of India. Hero MotoCorp announced on 3 April 2017
that the company clocked its highest-ever sales in a financial year at 66.63.903 units in
FY 2017 compared to 66.32.322 units sold in the previous fiscal period (FY 2016).
In Q2 September 2017, Hero MotoCorp sold 20, 22,805 units of two-wheelers,
recording 11 per cent growth over the corresponding quarter in the previous fiscal
period.
On 7 November 2017, at the EICMA annual trade fair in Milan, Italy, Hero MotoCorp
unveiled the Xpulse Concept motorcycle as a world premiere. Hero MotoCorp launched
three new motorcycles on 21 December 2017-the 125cc Super Splendor, the 110cc
Passion PRO and the 110cc Passion XPRO-to further boost its domestic market
dominance. Hero MotoCorp confirmed it will be incur on 22 December 2017.

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 ANALYSIS

PORTER’S FIVE FORCES MODEL

1. Rivalry among existing Competitors

 TVS, Honda ,Bajaj
 Growing Population.

2. Threats of New Entrants

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  FDI (100% Impacting)

3. Threat of Substitutes
 Availability of Public Transport
 Private Players (OLA)

4. Bargaining power of Buyers

 Alternatives/ Substitutes are available.
 Competitors like (TVS, Honda, Bajaj) are in the same range.

5. Bargaining power of Suppliers

 Depends on number of suppliers.
 Hero mainly takes from China (lights) and Germany (Spare Parts).
 Lacks of parts required, hence in market lot of people are waiting to
supply.

1. STARS-splendor series, passion series karizma.

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 2. QUESTION MARK- Hunk, CBZ xtreme, pleasure.
3 .CASH COW-CD Deluxe, CD100SS.

4 .DOG- Achiever, Glamor, Ambition .

Hero MotoCorp Marketing Mix (4Ps)

Strategy

Product:
In Hero MotoCorp marketing strategy the product strategy and mix can be explained as
follows: Hero MotoCorp is one of India's two leading wheeler companies. Hero
Motocorp's marketing mix consists of 25 two-wheeler models and has a wide and strong
product portfolio. The products of Hero MotoCorp are Hero Karizma ZMR, Xtreme
Sports, Xtreme, Hunk, Achiever, Ignitor, FI programmed glamor, Glamour, Hero
Splendor, Passion, HF Deluxe, HF Dawn, Duet, Maestro Edge and Pleasure. Products
from Hero MotoCorp are primarily clustered or grouped according to style, power,
mileage, and needs. Hero MotoCorp's wide product range is responsive to the different
needs of customers.

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Price:
Hero MotoCorp gives competitively priced bikes and two wheelers, focusing on the
mass market. The products ' ex-showroom prices depend on different parameters and
vary from state to state primarily due to VAT and other tax constraints. Hero MotoCorp
is pricing its products which are very competitive on the market, so in turn they have
been able to skim the market and gain the biggest market share over the years. The
pricing in its marketing mix is somewhat expensive than its competitors like Bajaj,
Honda, TVS. But this is because the price varies with the added value it has for the
buyers.

Place:
Hero MotoCorp primarily markets its items at the showrooms. It has the largest network
of dealerships in the automotive market. As a shock absorber of Hero MotoCorp, the
vast distribution network helps, as it sells its goods a little higher than its rivals. With
extensive and strong distribution network its products can be found throughout India in
any large or small urban and rural areas. Being an Indian brand before independence
and being present in the market, the rural reach is highly integrated. Hero MotoCorp
pays its distributors and showrooms a fair margin which helps them maintain a strong
network and build relationships.

Promotion:
Hero MotoCorp has always been aggressive about its branding activities and marketing.
Hero MotoCorp leaves no stone unturned when it comes to promotion, and is always
going the extra mile to reach out to its customers by convincing them in every way
possible. This also helps Hero MotoCorp connect with customers and helps them build
a good relationship. Extensive TV ads become the backbone of promotional activities.
Other forms of advertising activities include newspapers, magazines, commercials,
hoardings, circulation of Pham plates.

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 STATUS
As Hero MotoCorp parted its way with Honda, it struggled with its technology and it
also had some issues related with Honda regarding exports. Hero needs to put up more
focus on the rural areas as its market area is hugely consisting with rural areas. It also
needs to put its focus into the untapped international market as earlier hero had faced
issues related with exports. Though Hero is facing huge competition with its two
wheeler rivalries it needs to be upfront in the two wheeler motor biking and scooter
segment. As Electric vehicles are coming into existence it has also prepared and
launched its electric scooter segment. Here are few questions related to the Hero
MotoCorp-

 How hero can upgrade its technology?

 What can it do for the youths especially in rural areas?
 How it can cover untapped international market?

CASE SOLUTION

1. Concentrate on the youth especially in rural areas as they can conduct various
programmes like riding training.
2. Technological upgrade is very important for hero as they have signed contract with
foreign companies for technology and know-how.
3 .Need to concentrate on untapped markets around the world by increasing the exports.

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 REFERENCES
 https://www.capitalmarket.com/Company-Information/Information/About-
Company/Hero-MotoCorp-Ltd/237

 https://www.mbaskool.com/marketing-mix/products/17145-hero-
motocorp.html

 https://auto.economictimes.indiatimes.com/etanalytics/reports/category/t
wo-wheelers/25

 https://www.heromotocorp.com/en-in/press-releases/hero-motocorp-
forms-yet-another-globalbralliance-to-augment-technology--
designbrcapabilities-138.html

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