Cycle News

VOL. 52 ISSUE 12 MARCH 24, 2015 P89 Hero was originally a bicycle company started by my father, who founded Hero Cycles in 1956. By 1975, Hero had be- come the biggest bicycle maker in India, and in 1986 it entered the Guinness Books of Records as the largest bicycle manufac- turer in the world. Just when I entered the business, we went up from bicycles to mopeds for our first motorized products. Back then in the very early '80s, the government allowed the import of technology for mo- torcycles, but for some reason capped it at 100cc… maybe they wanted fuel-efficient products. So, many Indian companies went out looking for technology, and many of us went to Honda. We were fortunate, because Honda decided to establish two joint ventures in India—one of them with us to create Hero Honda Motors Ltd. in 1984, and the other to create a company called Kinetic Honda. At that time the Indian two- wheeled landscape used to be 50 percent scooters, with only 25 percent motorcycles and 25 percent mopeds. But the road infrastructure in the interior of the country was hardly there, so scooters with small wheels and poor suspension couldn't go there, and there were hardly any motorcycles—just a few using very old British technology. The business plan for Kinetic Honda vis-a-vis Hero was much bigger, because it focused on scooters, but we managed to very quickly ramp up, and we changed the marketplace scenario. Motor- cycle sales increased very fast, because we built products that were suitable for use in the countryside and small towns or villages. So the structure of the market changed, and there were some years when motorcycles Indian friends, that your real success came in setting up Hero dealers in every small town, and even many villages in India. So that when people there thought, "At last I can af- ford to buy a motorcycle," they thought of Hero because there was a Hero dealer next door. Yes, that's true. Thanks to the existence of Hero Cycles, the Hero brand was already very popular. Hero Cycles had a vast network of dealers, so when we set up the deal with Honda to make motorized two-wheelers, we picked the better dealers to also set up dealerships for motorcycles. But I understand that outside of India, Hero Honda was only permitted to sell those motor- cycles in Bangladesh, Nepal, Sri Lanka, and Colombia in South America. Is that true? Well, under the joint venture structure there was an agree- ment about stuff that this joint venture could do, and could not do. So there was a list of coun- tries we could export to, and the list was longer than those four names, but those were really the only markets where we could sell some proper numbers. We did approach our joint venture partner Honda when we felt that there was a market in a certain country we'd like to sell in, and sometimes we were able to go into countries that were not part of the agreement. So, I remem- ber sending a couple of contain- ers to Vietnam, the Dominican "BUT I WAS BEING VERY HONEST AND OPEN ABOUT THE RELATIONSHIP, SO WE DID APPROACH HONDA AND ASK THEM TO SIT DOWN AND TAKE A LOOK AT THESE ISSUES. WE HAD LOTS OF DISCUSSIONS OVER THE NEXT FEW YEARS, BUT NOTHING CHANGED." occupied 80% of the two- wheeled market. So Hero Honda was the com- pany that really drove that? Well, yes, we were, alongside another company called TVS Suzuki that wasn't doing very large volumes, but which started up about the same time using Japanese technology. I understand from talking to

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