Bike RPM

Hero Honda to manufacture low-cost motorcycle

According to reports in the media, two-wheeler market leader Hero Honda is working on an all-new ultra low cost motorcycle, which might be priced at around Rs 25,000. To develop such a motorcycle – which would indeed be a full-fledged motorcycle and not a moped – Hero Honda is likely to use ‘frugal engineering’ techniques, as pioneered by Tata Motors, for the Nano.

While Hero Honda’s low cost bike may be targeted at rural customers, the company will not compromise on quality, performance and durability. Also, unlike some Honda bikes sold in other Asian markets, the low-cost Hero Honda machine will not be a step-thru, since consumers in India tend to look at all step-thrus as mopeds and accordingly expect such bikes to be priced like a moped.

Hero Honda is actually not the first Indian company that’s working on low-cost motorcycles. Bajaj Auto is also working on a similar machine, which may be manufactured in China. Bajaj’s bike may be sold in the Chinese market as well as other Asian markets, before being launched in India. Right now, details on Bajaj’s Chinese-built bike are scarce, but the machine is expected to have a 100-125cc engine and may be priced between Rs 25,000-28,000.

[Via: indiaautomotive]

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Hero Honda on growth path, posts Rs 402 crore profit

India’s largest two-wheeler manufacturer, Hero Honda posted a profit of Rs 402.2 crore during the quarter ended 31st March 2009. This figure represents a 35% increase over the Rs 298.7 crore in profits, which the company earned in the year-ago period.

Hero Honda’s sales for the quarter stood at Rs 3,411.8 crore, a 22.34% increase over sales of Rs 2,788.65 crore which the company netted in Q4, FY 2007-08.

According to Hero Honda, a high percentage of its sales come from rural and semi-urban areas, where customers tend to buy vehicles on full cash down basis rather than opt for bank loans or finance schemes. Hence, sales haven’t been severely affected by the ongoing credit crunch.

Hero Honda has also implemented significant cost-cutting measures, hence boosting profitability, and the company also benefited from tax savings due to the location of its newest factory near Haridwar, in Uttarakhand. Finally, the fact that steel and aluminium prices have come down also helped the company in lowering overall cost of production, increasing the company’s profit margins in the process.

Hero Honda earned Rs 12,319.12 crore during 2008-09, a 19.2% growth over the year-ago figure. The company’s net profit for FY 2008-09 stood at Rs 1,281.8 crore, a 32.4% increase over its profits in the previous financial year.

Between the 1st of April 2008 and the 31st of March this year, Hero Honda sold 3.7 million units (including domestic sales and exports), a 12% growth over sales in the year-ago period. The 12% growth is especially significant in light of the fact that the entire two-wheeler industry in India grew by only 3% in the same period.

[Via: indiaautomotive]

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Is Hero Honda recession proof?

Hero Honda’s strategy to maintain its position in the ongoing economic slowdown seems to be paying off. The world’s largest two-wheeler manufacturer has registered an increase in sales by 12% or 33 lakh units in the first 11 months of this fiscal year. It is the company’s best sales performance in its 25 years manufacturing history. Hero Honda’s profit margins for the December 2008 quarter were the highest ever in the past three years with its net profit rising by 9.24% and total turnover increasing by 5%.

According to Pawan Munjal, MD, Hero Honda, the company always manufactures products that the customer wants and that are driving sales. He also commented that it’s the manufacturer’s single-minded focus to drive volumes which automatically leads to higher profits. Other two-wheeler manufacturers like Bajaj Auto and TVS Motor Co have not been fortunate enough and have registered negative growth.

Hero Honda has been the world’s largest two-wheeler manufacturer for the past eight consecutive years. The company’s focus on maintaining its market lead in the entry-level segment, which is the country’s largest two-wheeler market segment, has ensured it remains unaffected in the ongoing economic slowdown.

[Via: BIKE]

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