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Hero MotoCorp & Magneti Marelli From Italy Form Joint Venture
Hero MotoCorp has formed a joint venture with Magneti Marelli from Italy. Magneti is an advanced engineering firm that caters to the automotive industry around the globe and had a turnover of 5.8 billion euros in 2012.
The new JV, HMC-MM Auto Ltd, is a 60-40 partnership between the two companies, with Hero holding the majority stake. Over the next 10 years the companies plan to invest an amount of $27 million and target sales worth $200 million.
The chief task of HMC-MM Auto Ltd will be to develop next generation powertrain technology for Hero MotoCorp two wheelers, including advanced fuel injection systems. The company will not be tied down to supply only to Hero MotoCorp though, but will also supply components to other manufacturers.
"We believe that this development will help the cause of Hero products, Hero engines immensely. It will surely improve the drivability of our products. It will also help in meeting environmental regulations as we go forward," said Pawan Munjal. This will bring down Hero's dependency on external suppliers and move in development of advanced technology in-house.
HMC-MM Auto Ltd will begin operations by the end of 2014.
Speaking about the newly formed JV Magneti Marelli CEO, Eugenio Razelli said, "The scope of this agreement is quite significant for Magneti Marelli as our partner in this JV is the world's largest manufacturer of two-wheelers. The aim is to partner with Hero MotoCorp to equip with advanced Powertrain solutions to all Hero two-wheelers and most of the two wheelers circulating in a country where current sales are already in the order of 15 million per year."
The development will help Hero on several fronts. Advanced, global standard powertrains will enable the company to sell its products in the U.S with better chance of success. Also, it takes the R&D burden off of Hero and hastens the process of development.
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