Three Wheelers May Drive Out From Hero Motors

By By: Vicky.in

Published: Thursday, January 13, 2011, 16:13 [IST]

As the process of acquiring 26% share from Honda putting an end to the 26 year old partnership, Hero group is planning to enter into the three wheeler segment to counter the local competitor Bajaj Auto. The company sources hinted that the group has got more agenda in the sleeves - passenger carrier and commercial goods mover. Hero group seems to have apprised these proposals to its vendors In Delhi meeting. In the process, the engine employed in its two wheeler may be refined to be fit for the three wheelers. The meeting was attended by nearly 50 suppliers and vendors to whom Hero group has set the proposal for devising the three wheeler components. Currently Hero Honda premium vehicles such as Hunk are fitted with 150cc engines while Karizma is fitted with 225cc engine. Since 2007, TVS motors has been pressing the piggyback for its three wheelers in a bid to share the costs.

Though the three wheelers are generally termed as auto rickshaws in India, Hero Honda Motors has neither confirmed this proposal nor denied. However, sources from the company said that Hero group may seek the node from its ally Honda for proceeding with this proposal. Hero group"s spokesperson said that the split has envisaged new outlook for Hero group to go alone in its new journey but no concrete picture could evolve as of now. Hero finds the growth strategy of Bajaj and TVS from the diversified activities and thus it is not quite new in the industry that Hero group too takes the same road to much profitability. Bajaj secured profit margins of 20% from the three wheeler segment indicating an increased one from its two wheeler segment which fetched 15-17%. The increased margin in three wheeler segment is attributed to the export volume which has been consistently growing by which Bajaj and TVS gain a lot, said an analyst from Angel Broking, Mumbai.

The potential markets for three wheelers are Bangladesh, Nepal, Srilanka and SE Asia, in addition to gradual rise in African market. As of now Bajaj is the top most producer of three wheelers in India which has got huge volume of business in both domestic and export market. It has got a dominating share of 40% in Indian three wheeler market followed by DiMaggio of Italy which possesses 38%. The three wheeler domestic market has been on the rise with 18.4% at the sale volume of 3.39 lakh units till November 2010. Hero group, bound by the JV with Honda Motor, could not enter into the three wheeler segment and export too will be restrained to select neighboring countries.

Article Published On: Thursday, January 13, 2011, 16:03 [IST]

Read more on: #bajaj auto #hero honda #two wheeler

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