[Gansan]

They are a "one engine wonder" company, the extremely reliable and fuss free 97 cc horizontal Honda engine of the Splendor, the previous CD 100 and various iterations. They did have the CBZ and Karizma engines but they were not bread and butter models. The Splendor still has the same engine and sells in huge numbers. To my knowledge all other engines they themselves developed/sourced for their new models have not been successful so far. If they could not develop in house they should at least have collaborated with someone else.

This is in stark contrast to the other two Indian companies Bajaj and TVS.

I still have my 2000 model Splendor which works very reliably even now. Will I buy a new Splendor? Probably not. Will I buy any of their other models with vertical cylinder engines? Absolutely not.

I wonder what the constraint is. They have the funds for R&D, that is not a problem. Long ago one of their advertisement tag lines was "it is the Honda in it that makes it a Hero". Very prophetic.

[Sherlocked]

Earlier this year, there were news reports that various premises of Hero Moto Corp were raided by the IT department.
Anyone knows the outcome of that?
https://www.news18.com/news/business...e-4933367.html

[pranavshet]

Originally Posted by karanbir.sandha

I have worked for the company in a Field sales position and have seen them leading most of the markets, no matter which area I handled during my time there the market shares were crazy high, even as high as 65-70%. The real power of the company lies in its robust network that reached the remotest locations.
However, they were getting beaten badly in the urban and premium segments. no real-premium products to sell coupled with quality and manpower issues.

There is a big culture issue that I experienced there, Ass-licking is what gets you ahead in the corporate ladder, while this is true in most companies, at Hero this is the only way forward. Due to this lot of talented individuals just quit and move to better opportunities. The management is too old and there is no space for young people and ideas, this issue is going to be even bigger when the market moves to EV and they will be stuck in their decades-old work methods.

I wish the competitors catch up quickly and Hero Motocorp gets shown its place in the market.

PS: All this is so much in contrast to when I moved to North America and started working with Tesla, it's the polar opposite of what I had experienced in the automotive industry.

I had a similar notion about the company and you just confirmed my doubt. You described it in a very transparent way. The current CEO & MD Mr. Pawan Munjal appears to appreciate only his yes-man. When a CEO of the company is surrounded only by the yes man he is blinded by the risks of being in that situation. The decline of an organization starts when the decisions of the top management go unquestioned

I always had a problem with him drawing extravagant salaries. He is more obsessed with collaborations and tie-ups rather than creating self-sufficient in-house R&D teams. An external tech supplier/ consultant can only work when you have in-house talent. I felt a lot of times that it is time for Mr. Munjal to move away from the CEO position. Maybe he did a great job when he had honda technology at his disposal.

When you are developing the R&D infrastructure of the organization from the scratch, it is the job of CEO to put forth the vision and make necessary arrangements to attract a suitable talent pool and give them the freedom to execute the things

Infrastructure wise they have India's best R&D Centre but they should have proper teams in place which is a mix of young talent and experienced guys to mentor the young lot. They should be given full licenses to develop premium sporty products without inputs from marketing guys. I always feel the R&D guys always know what is the right product for the market.

Off late hero's product interventions are dictated by marketing guys than the R&D guys. Take for instance the example of Xtreme 160r. That bike has got only cosmetic updates as opposed to apache 1604v or pulsar ns 160 which has got many mechanical performance upgrades over the years.
All hero has done is give stealth editions. The current version 2.0 is just pure bullshit. Those red-colored forks and footpegs are a big no.

Giving a product refresh by giving it Bluetooth and turn-by-turn definitions don't make it new underneath. The engine has to be thoroughly updated or changed so customers can experience differences be it in terms of performance, refinement, reliability, or build quality.

It would be better if they start grooming internal talent or talent available in other Indian companies rather than depending on foreign ex-pats. That would pay them dividend in terms of stability in the organization as well as helps in filling gaps in future leadership positions.

Mr. Munjal is at crossroads. He has to tread his path carefully.

Would love to hear more on this from your end as well as others.

Till then take care and ride safe.

[joednazareth]

Originally Posted by pranavshet

I felt a lot of times that it is time for Mr. Munjal to move away from the CEO position. Maybe he did a great job when he had honda technology at his disposal.

Mr. Munjal is at crossroads. He has to tread his path carefully.

Would love to hear more on this from your end as well as others.

Till then take care and ride safe.

HONDA is a reliable and respected brand worldwide.
When Hero and Honda Motorcycles, joint venture was in place, they had the best opportunity to maintain products and parts quality.
Example here:
Hero Honda CD 100 Deluxe classic 1980s production line.
Same time Production in Pakistan
Honda CD200 RoadMaster. Inline 4 stroke twin, exactly the same chassis and classic finish product.
Even to this date, Honda in India has a very old Honda Activa 125cc model,
Indonesia, Vietnam have since 2017, the Honda Lead 125cc which is decades ahead.
A good average middleclass family commuter Bike, is not in the market.
All you see is Adventure, street racers, street fighters which is not a practical bike for youth to commute to office and weekend rides.
A good Low seat height, flat seat, family bike, with retro classic finish is not available till date.
Hero Honda, products and spare parts quality was also great.
Look at the 3 musketeers, Jeans and sports shirts CEOs from JAWA, YEZDI and the MOJO 300 engine.
These individuals have seen the best of both worlds.
Did they bring a good product on revival of the JAWA, brand?
It's like the Hindustan Aeronautics Limited (HAL), when they see a good Aircraft configuration, immediately it's up in the air that we will make our own in India.
Time line for drawings, xyz and finished product 12 years.
Bhai, how can we be functioning like this for ever.

[theMAG]

Originally Posted by pranavshet

..
Hero Moto corp has literally become one product company. Currently, splendor contributes nearly 70% of its total volumes..

Based on the trend you've highlighted, Hero seems to be headed down another Hindustan Motors abyss: an ageing and obsolete 1-product company - for the most part, with little in-house technical product capability.

One option to stay relevant could be for Hero to consider become a contract manufacturer (again).

[abhi9044]

Since everyone in my family owns a Hero product, I feel like I can add some relevant experiences.

1. My father bought a 2003 Hero Splendor. The bike has done 48k kms to date. No issues till now. Talk about the quality of parts? The chrome spoke wheels that came with the bike are still original and haven't rusted a bit. The clutch is still stock. The swing arm, has only few spots of surface rust. The fuel tank is still as good as new. The chain set is still original. Rattling? Yes, it's present. Front and rear shockers are still stock, apart from replacing the fork oil and seals once. The paint quality is definitely better than what comes in new BS6 bikes. The build quality? I once T Boned a Kinetic Scooter, the scooter's floorboard cowl was bent and had some damage, but the bike was still in perfect condition. Even the cone set is stock, and I never faced any issues with the steering. The accelerator, clutch, and brake cables are still stock and going strong.

2. I own a 2014 Hero Maestro. This generation of Maestro shared it's parts with Honda's Activa, and i just can not be any happier about it. I'll let you know why a little later. The scooter has done close to 43.5k kms and has only once given up on me. But the ownership hasn't been as fuss-free as it was with my dad's bike. I know, being a scooter, it isn't going to be as easy as a bike to maintain, but there have been some issues that have raised concerns.

First would be the pathetic service support, and trust me if I could use a more cuss word, i would.
My scooter's bulb was fused at 18k. Went to Hero service center and they broke my visor.

At 22k, when I asked them to replace the drive belt, they replaced it with an aftermarket one. And they still had the audacity to charge me the amount of the Genuine Part. This is something that I came to find out about later, so that's why I couldn't do anything. For those of you who don't know, the aftermarket belts cost 200-250 while Genuine ones cost 630. The belt snapped while I was approaching a traffic light and was 40kmph. The engine did suffer some damage cause the oil had a lot of metal flakes in it.

Filled used Engine oil in place of gear oil in the gearbox.

Replaced the tail light bulb with a lower-capacity one.

Soon after all this, i stopped going to HASS.

Second, would be the quality and availability of spares.

Went out to purchase a spark plug from Hero's authorized parts seller in my city. He hands me over a CPR6EA-9 plug vs the CPR7EA-9 that the manual calls for. I tell him it's the wrong part. He doesn't care and tells me he knows which parts are required and which not. Went to a Honda dealership, told them needed a spark plug for Activa 2g(This is the scooter on which Maestro is based upon) and they gave me CPR7EA-9.

Installed Hero's original Air filter. At 2k kms opened up the Air filter box to clean the filter only to find the metal plate is not stuck with the air filter. Went out to Honda, bought one for the Activa, got 7k of reliable filtration. Got the air filter for a cheaper price too at Honda.

Went to buy a float chamber gasket, they didn't have in stock, went to Honda, they too didn't have it in stock, but they directed me to the shop that had them.

For all the small parts, I have to purchase them from Honda, as Hero's Authorised Parts seller doesn't stock it.

The famous Oil leakage from Valve cover of Activa wasn't fixed by Hero when they were designing the scooter. Replacing the gasket every 5k kms help but not a lot.

3. Cousin brother owns a Splendor iSmart 1st gen. He too stopped going to HASS after the free services were over. Says they just don't listen and rectify the problems.

4. Most people I know in my village, don't go to HASS. Reason- Same as given by my cousin brother.

5. My friend bought a Hero Maestro Edge in 2016. This Maestro was supposed to come with an all-new engine. The truth? This new engine, which I think is a heavily reworked Honda's 110cc Activa motor, isn't refined or as peppy. The engine feels as if it hasn't been balanced well. Take the scooter to 60km/h and there will be so much of vibrations to greet you. Mid-range is punchy, but not as much as Activa's original motor.

6. Another friend bought 2022 Hero Pleasure BS6. While the scooter does feel peppier in the midrange than Activa 6g, the refinement of the Activa 6g is miles ahead. Not to forget about the tech that Honda has poured into their new engines. A few days after he bought the scooter, the battery started acting up. HASS hasn't replaced the battery yet.

7. I've seen a video, where the stock wiring harness of Hero that came with the bike had questionable quality, and it was surprising how it passed the Quality checks.

8. Found a lot of reviews online of the new Passion suffering from gear problems. The move from the company to rectify it? None. To date a lot of owners are facing issues related to gearbox. Seems like the problems still exists in XTEC models of Passion too.

While Hero is solely relying on Splendor, let's take a look at other Indian manufacturers. Bajaj, recently launched the F250 and the N250. The successors to the legendary P220. The bikes had few niggles with fueling initially that were resolved with an ECU Update. Where's the Karizma update, Hero?
TVS launched Ronnin, Raider, Apache, NTorq and most of these are successful products.
The reason with Bajaj and TVS are, they have managed to keep the spot light at themselves by continuously launching new products and updating their old ones. And not to forget how their international market is also better.
Also, TVS has marketed its Racing DNA quite well and so has Bajaj with its Pulsar range.
Look at Royal Enfield, they were suffering from reliability issues, but got to work, and fixed most of them. They are one of the Indian brands that can be called influential globally. Their products are receiving good responses not only from India but from more mature markets as well.

In the end, I would like to summarise by saying, Hero has the potential, and they have the money, but they don't have the guts as of now. Not launching big bikes when all the youngsters desire big, powerful bikes, is only going to make these youngsters realize that Hero is a commuter brand, and nothing more. No aspirational products mean that people don't respect you. We as 90's kids respect and love Bajaj and Hero for Karizma and Pulsars. But the next generations, what are they getting to respect from Hero? Splendors and XTec variants?

I remember this masterpiece from Ford vs Ferrari -

https://www.youtube.com/watch?v=4iMu...toesComingSoon

[saitvsk23]

Originally Posted by pranavshet

I had a similar notion about the company and you just confirmed my doubt. You described it in a very transparent way. The current CEO & MD Mr. Pawan Munjal appears to appreciate only his yes-man. When a CEO of the company is surrounded only by the yes man he is blinded by the risks of being in that situation. The decline of an organization starts when the decisions of the top management go unquestioned.

Mr. Munjal is at crossroads. He has to tread his path carefully.

Would love to hear more on this from your end as well as others.

Till then take care and ride safe.

You see, Hero has bet all of its money on the Vida thing only. That shouldn't be it. Now lets take Bajaj and TVS. Bajaj also has an electric product, so does TVS with their iQube. But they have executed it in such a way that this is another product in their line-up. Hero is pushing it in such a way that it is going to be their ONLY product. We all know that's not the case.

Hero's management is basically that group of uncles who gather together in the colony park and discuss absolutely dog-poop content with the most radical thought processes. They absolutely believe that anything new in the market is the ONLY way forward (just like their beloved whatsapp forwards), and rest all are fossils all around. This kind of thoughts stagnates a company, eerily similar to HM and PAL. But there's a critical difference.

In those days, foreign collaborations was something only a Prime Minister could do. In this day and age, a comedian can connect with another comedian sitting somewhere in the USA and produce content with him. An automobile company has an even greater scope in doing this, especially given their expertise in anything engine.

It is very apparent that Hero is giving all the points to the marketing department and this department is ordering what to be made in order to get a slice of the pie (visually and informatically correct). That is a sin when it comes to the automotive industry. Engineers have been the driving force of many many automotive miracles, one of them being the Honda Titan, which is the blueprint of many vertical cylinder commuter motorcycles we have here in India.

I can only imagine the engineer's wrath upon being bossed around by a few marketing guys. Let the engineers take over and witness the wonders that take place.

[Karthik.guru]

I was woefully unaware of the shuffles and turmoils in upper management at Hero. Thank you for bringing it into the light. Its definitely interesting to find out about such things.

As many have rightly pointed out, their commuter segment lineup has been getting stale. But perhaps its for the best? Dare I say, even intentional! EVs are sure to take over the commuter segment, so why would any conglomerate pour resources into ICE when their obsolescence is inevitable? They're definitely late to the EV party and their actions so far don't inspire much confidence, but lets not forget they've got a large, if not the largest dealership and service network in the country. It's within their powers to claw back a substantial chunk of sales they've lost to their competitors.

I'd also like to believe that with their efforts on the rallying front, their R&D must've evolved substantially, particularly for their premium products. I also recall something about Hero setting up an R&D facility somewhere in Europe. I suppose the only way to find out for certain whether anything has improved or not is to wait for products they've developed from scratch. Perhaps their larger capacity bikes (400cc?) that have been spied a few times this year would answer some of these questions. I mean if the Xpulse is anything to go by, which is a solid contender not just within its own segment, but even the one above, I have high expectations of their premium offerings over the next few years.

Or maybe I've just become a little soft, having recently acquired an Xpulse myself

Cheers.

[ellip5i5]

My view is that if hero products are of bad quality, what are those customers switching to ? Don’t see a like to like product from competitors that they’re buying.

I think it’s a matter of the customer preference having shifted.

[PrasannaDhana]

I used to be a HeroHonda fan when I was a kid. I learnt riding on a CD100SS. My first bike was a passion. Then to the lovely karizma R and then to the ZMR FI. I have done over a lakh km on Herohonda bikes alone. Beyond 2010, when the entire bike scene evolved to better, faster (read - KTM entering market) motorcycles, Hero seemed to be stuck with the 223cc engine they borrowed from Honda.

After their separation from Honda, they had no real launches and even a fan like me had to move away to brands like Bajaj, then Honda and then to KTM.

I was excited the first time I heard about the 30 PS HX250R and the 60 PS Hatsur. The excitement went down the second time. And now after the nth time, I am very sure they are only going to be concept bikes.

Enthusiasts have moved away from Hero a decade ago. Now it's the commuters who are moving away. Hero is going to have a bad time, unless they do some magic with EV segment in the future.

I have also owned Royal Enfield of the 90s. To see their motorcycles now (specially New gen 350 and 650s), it's breathtaking how they have improved. Hero has just been a sitting duck hatching the 100cc engine for 4 decades now.

[PearlJam]

I neither drive 2 wheelers, nor am I interested in them. But I do care deeply about their stock prices.

And the stock prices and the earnings do corroborate what people have been discussing here.

This is the stock price comparison of Hero MotoCorp with it's closest competition - Bajaj Auto and TVS Motors. TVS Motors' shareholders have received phenomenal returns (as seen in the %age increase), compared to the bland returns of Hero MotoCorp:



However, at the fundamental level of Earnings per share, Hero MotoCorp seems to have done better than Bajaj Auto, though TVS Motors is way ahead again:



Hero MotoCorp was also known once upon a time for it's phenomenal dividend yields, but alas, that advantage seems to be lost too, now.

[pranavshet]

Originally Posted by abhi9044

In the end, I would like to summarise by saying, Hero has the potential, and they have the money, but they don't have the guts as of now. Not launching big bikes when all the youngsters desire big, powerful bikes, is only going to make these youngsters realize that Hero is a commuter brand, and nothing more. No aspirational products mean that people don't respect you. We as 90's kids respect and love Bajaj and Hero for Karizma and Pulsars. But the next generations, what are they getting to respect from Hero? Splendors and XTec variants?

I remember this masterpiece from Ford vs Ferrari

Your analysis is spot on mate. We have a soft corner for hero because bikes like CBZ & Karizma happened in our childhood. It was an aspirational brand for us back then. It evoked emotions.

But sadly they have not maintained that aspirational brand status. The brand is commoditized. No one associates splendor with a brand of aspiration. They had a golden chance to recreate this when they separated from honda by launching a 250/300 cc motorcycle as their first in-house R&D Effort. They could have logically evolved karizma but they didn't.

All they did was launch maestro edge & duet as 1st indigenous products. These were products with so many problems. They could have started with motorcycles where they had some kind of experience.

The problem was that the company didn't have a proper R&D setup until early 2016. The CIT came up only in 2016. What were Mr. Munjal & Co doing from 2011-2015? Why get a product developed by 3rd party?

The maestro edge & duet were developed with heavy inputs from Engines Engineering. It appears Hero's R&D team till then was a makeshift one. That kind of attitude doesn't bode well for the country's biggest two-wheeler maker.

They thought they could just get a vehicle developed from the outside with their branding, but it is very difficult to get the right amount of performance, refinement, and quality when products are developed under such a structure. One has to be in control of the entire process end-to-end value chain.

The shareholders have to really open their eyes and start questioning Munjals for this current mess they are in.

[sanchari]

I owned Hero Puch back in the day. At the time I purchased it, they were making the engines in India., though earlier it used to be from Honda directly. Within 2-3 years the engine started to give trouble. Spent close to 3-4k in the late 90s trying to fix it. After spending close to 7-8k, disposed off it within 4 years, and took a hit to the pocket. Swore never to buy a Hero product where they are building their own engines. Bought a Splendor later on. That was an example of one smooth bike. Had it for 10+ years with just occassional use and never gave any problems, even when started after 3-4 months!

Sad to see that Hero hasn't learnt anything from Honda, and let its R&D dept go waste.

[pranavshet]

Originally Posted by Gansan

They are a "one engine wonder" company, the extremely reliable and fuss free 97 cc horizontal Honda engine of the Splendor, the previous CD 100 and various iterations. They did have the CBZ and Karizma engines but they were not bread and butter models. The Splendor still has the same engine and sells in huge numbers. To my knowledge all other engines they themselves developed/sourced for their new models have not been successful so far. If they could not develop in house they should at least have collaborated with someone else.

This is in stark contrast to the other two Indian companies Bajaj and TVS.

I still have my 2000 model Splendor which works very reliably even now. Will I buy a new Splendor? Probably not. Will I buy any of their other models with vertical cylinder engines? Absolutely not.

I wonder what the constraint is. They have the funds for R&D, that is not a problem. Long ago one of their advertisement tag lines was "it is the Honda in it that makes it a Hero". Very prophetic.

Namaskara Gansan Sir,

I have been a huge fan of your herohonda splendor ownership post. Huge respect on how you have handled your 20 years old timeless machine.

I completely agree on your view that hero is nothing more than one engine company. Today is 16th December exactly 12 years after hero & honda parted ways. They made announcement of split on December 16, 2010.

Now is the time for shareholders of the company to question the promoter on many aspects

1. Mr. Munjal had claimed in a press conference on the day of separation that it would lead to the improvement of the R&D capabilities of the company. Has the company delivered even one groundbreaking product without any connection to the honda powertrain directly or indirectly right from scratch?

2. Mr. Munjal claimed that the split would help the company to increase exports. It aimed for 10% of its sales to come from exports by 2020. The irony is they are not even doing 5% of its total volumes as exports. They are currently present in 40-odd countries. When a global customer doesn't accept your product, this means there is a flaw at the product level.
Mr. Munjal must understand one thing, Hero Honda's leadership also coincided with weak competition. Back then in the early 2000s Bajaj & TVS had just commenced their own R&D efforts. Hero Honda had a free run of sorts.
It is also imperative for Mr. Munjal to understand that simply participating in export markets doesn't make any sense unless they generate meaningful sales. Running foreign operations requires lots of marketing efforts. Hero's go-to-market strategy for many export markets was flawed. The product has to be custom designed for that particular market. It seems like the 97.2cc engine just didn't make any cut in African & South American markets.

3. Unnecessary capacity expansion. Currently, the company has an installed capacity of around 9.5 million units annually. I don't understand the rationale behind having so many plants when you don't have world-class products to be able to utilize the capacity. It's simply puzzling. It's the shareholder's money that they are investing. Current utilization may be around 60-65% of the capacity.
Let me give a perspective. In Nov 2010, HeroHonda sold 4.21 lakhs units. It had an installed capacity of 5.4 million units annually. In Nov 2022, the company sold 3.9 lakhs units. Now, who is to blame for this miscalculation?
The company has spent close to Rupees 5000 crores on capacity expansion alone. This is plain ridiculous and stupid.
The company could have invested Rupees 1000 crores on the development of 2-3 stand-out products which could have in turn helped to utilize the installed capacity.

4. The Rupees 250 crore endorsement deal with Tiger Woods. Mr. Munjal needs to be questioned as to how the endorsement deal with Mr. Woods is value accretive for Company. Instead, the whole board has to be questioned. Does the company produce products that appeal to the western audience? Absolutely not. I don't know why corporate governance pundits didn't flag this issue.

5. The company over-reliance on sporting/movie celebrities to promote sales.
The days of people getting influenced by sporting or entertainment celebrities are long gone. Currently, people will buy a product that gives them the best VFM Quotient.

6. It's very disheartening to note that the dealers which were associated with the company for the past 20+ years have started to jump ship. Normally a person won't just stop his/ her dealership after having such a glorious past. The dealers are definitely feeling the pinch. The pain always starts first with the dealership level. They invest their funds, buy inventory and when the inventory just doesn't move , it starts putting them under immense financial pressure.
In Goa we had 2 main dealerships one for each district. They have been main dealers for past 20+ years. One of them shut shop in 2020. It was such a big dealership. This is an embarrassment for Hero.
In my town , there was a small dealership back then, Now they are selling products in a makeshift shed. Contrastingly, Honda dealership in my town is 3 storey building with integrated sales & service and growing strength to strength.

Sir, I have lot of other points to discuss as well, but considering the length of the post I will write remaining points in separate post.

Till then take care guys & Ride safe.

[norhog]

The points mentioned here are a bit contrary to the views in the financial domain.
Here is a link from moneycontrol:
https://www.moneycontrol.com/news/ph...y-9636051.html

They still quote them as worlds largest two wheeler maker.
Even though it shows negative CAGR and all, the stock prices are doing well.

Lets see if this discussion has any effect on its stock prices, which I believe is the true indictor of a company's performance.