Hero Moto’s Gujarat plant faces delay on land issues
Plans to rapidly expand capacity come as Hero looks to guard its leadership position — 43% market share in two-wheelers (December 2012) — from erstwhile partner Honda and long-time rival Bajaj Auto. In fact, Honda has already staked its claim to the number one spot by 2020, with around eight plants (five new) and a domestic annual capacity of 10 million units being planned.
Being the market leader, Hero will look to be faster than Honda in ramping capacity to the 10-million mark, by reaching the target by FY17 itself. Out of the total capacity, about 1 million units have been earmarked for the new international markets in Latin America, Africa and Southeast Asia. In all, Hero is investing Rs 2,575 crore over the next two to three years in the two new plants, an R&D centre in Jaipur and a global parts distribution centre, also in Rajasthan.
"The delay in new plants may be seen as a blessing for Hero, especially with sluggish demand in the market. It is true that they have to guard market share against Honda's rapidly increasing presence, but overcapacity would also present new problems," a sector analyst said.
According to Siam, total two-wheeler sales in April-December period of the current fiscal rose 4% to 10.37 million units, compared with the year-ago period. While bikes sales, which account for 80% of two-wheeler volumes, were flat, the growth was largely on the back of an 18% growth in the scooter segment. Hero's sales in
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