Can Hero Be The Bajaj In Exports?

The joint venture between Hero and Honda prohibited Hero from selling to countries where Honda sells its bikes and scooters. Due to Honda’s presence in global markets, Hero was restricted to markets like Sri Lanka, Bangladesh and Nepal, leaving the company’s exports lying low at a mere above 2 per cent of the revenues. At the same time, companies like Bajaj and TVS worked hard on getting a stronghold on the export front. In FY12, Bajaj earned 33.95 per cent of their revenues from exports while TVS’ export component stood at 15.85 per cent.

Sales Volume For Hero Motocorp And Bajaj Auto

The past being past, Hero now plans to set foot into the foreign markets aiming for exports to grow at 25 per cent in FY13 and for the export component in their volumes to reach 10 per cent in five years. Hero plans to lay more emphasis on the existing export markets of Sri Lanka, Nepal and Bangladesh by increasing the sales network. The company also plans to enter Central & Latin America and Africa and start with marketing and brand-building exercises in these markets shortly.

Hero Motors recently launched its new brand identity in Sri Lanka by launching 14 models which included Deluxe, Dawn, Splendor, Glamour, Passion Pro, Karizma ZMR, Hunk, Xtreme, Achiever and Pleasure. Cricketer Kumar Sangakkara launched the 125 cc Glamour while Miss Sri Lanka Stephanie Siriwardhana launched the 100 cc scooter Pleasure. Hero has partnered with the ABANS Group as the sole distributor and sales would be channelised through 50 outlets.

Hero Motors also announced their plans of strengthening their position in Nepal yesterday. They would do so by selling their products through 70 outlets, partnering with Nepal General Marketing (NGM). They plan to increase the number of outlets to 100 by next year. The company’s market share in Nepal has been at a steady 31 per cent and Hero plans to work on increasing this through new product launches and by working on the sales network.

For Bajaj, who is a well-established exporter, most of the export revenue comes from Africa which contributes to 41 per cent of the total exports. Among other geographies, Asia and Middle East contribute up to 40 per cent, Latin America added 18 per cent and Europe 1 per cent. Africa and Latin America are considerably important for TVS Motors too and the company has expanded into Laos, Columbia, Argentina, Peru, Guatemala, Nigeria, Brazil and Vietnam.

Financials Of Hero Motocorp And Bajaj Auto

Looking at Bajaj’s export standing brings out the importance of exports. While Bajaj’s sales volumes are 70 per cent of that of Hero’s, their revenues are 82.74 per cent as that of Hero. Bajaj’s margins too are better than that of Hero’s by a huge margin. Other reasons like volume gain and higher average price per vehicle have worked in favour of Bajaj but exports too have contributed significantly to better margins. The gain that Bajaj has seen from these factors in financials, market presence and overall performance signifies the need to continue strengthening exports, and fast.