After announcing the presence of a manufacturing facility in Colombia, Hero MotoCorp is ready to take it a step higher by finalising plans to set up another factory in the South American continent in Argentina.
Argentina has the second biggest two wheeler market in the region after Brazil.
Pawan Munjal, MD and vice-chairman, Hero MotoCorp and Deepak Mokashi, VP (head, global business) had met Debora Giorgi, the Argentinian minister for industry, a month ago to confirm plans. Munjal had visited Argentina in September 2013 as well to look for potential importers and distributors.
A spokesperson for Hero MotoCorp confirmed the meeting took place, but declined any further details about investments on the project.
Hero MotoCorp does face a few challenges though. Especially because of the volatile currency rate, adequate volumes are required to maintain sustainability for both the Argentinian market and exports.
Another hurdle is the domestic rival Bajaj Auto, who is already present there and sell models like the Pulsar and Avenger in Argentina. South America accounts to 19% of Bajaj's annual exports. The motorcycle market in Argentina was 7.5 lakh units in 2013.
The move was made after Hero had announced a huge USD 70 million investment to be made in its first fully owned overseas plant in Colombia in July. This plant will be operational by 2015, starting with an initial capacity to manufacture 78,000 units. Later it can be increased to 1.5 lakh units over a period of 3 to 4 years.
Hero MotoCorp is also planning a third plant in Brazil at the moment. The company is setting up assembly plants in other countries like Bangladesh, Tanzania, Uganda and Kenya. These factories will be operated jointly with local partners of that particular region.
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