Hero MotoCorp forays into Africa with CKD facility at Kenya

Hero MotoCorp's strategy to stave off Honda's bid to become the world's largest two wheeler maker by volumes, has been one of looking outward. In line with that philosophy, the Indian two wheeler giant is setting shop in emerging markets of the two wheeled world. After making an imprint in South American markets with its motorcycle range a few weeks ago, Hero MotoCorp has now set shop in Africa.

Kenya is a country with a sizable population of Indian origin people. So, the Hero MotoCorp brand is expected to resonate well in that part of the world. The two wheeler maker has partnered Ryce East Africa in Kenya for assembling motorcycles in Africa.  CKD assembly operations will happen in a new factory at Kenya, Hero's third such facility abroad, after the ones at Bangladesh and Colombia. In the coming weeks, the company will begin selling its motorcycles in Burkina Faso and the Ivory Coast, other African nations.

Through the Kenyan CKD facility, Hero MotoCorp could service other East African motorcycle markets too. The motorcycle major is also said to be mulling full fledged production facilities at Bangladesh and Colombia once demand reaches an inflection point. Sameer Group, a part of Ryce East Africa will be Hero's distributor in Kenya. In Africa, Hero is selling motorcycles from its Dawn, Splendor, Glamour, Hunk and Karizma lines.

In the coming years, this range could be expanded to include more Hero MotoCorp products. The company wants revenues worth 1 billion USD to come from exports in the next half decade. Also, the two wheeler maker plans to sell a million units in export markets over the same time frame. By 2016-17, Hero MotoCorp wants to hit the 10 million annual sales mark in the two wheeler segment. 

To pursue its aggressive exports strategy, Hero MotoCorp is building a greenfield manufacturing facility at Gujarat, which when functional will produce 2 million two wheelers each year. This facility's location at Gujarat, a western Indian state with well developed port infrastructure, will be instrumental in Hero MotoCorp's push towards a bigger focus on exports. The company's Gujarat factory will be the gateway to the Middle East and Africa. 

While it was in a joint venture with Honda, non-compete clauses in the agreement meant that Hero MotoCorp could not enter export markets in which Honda also operated. Now though, Hero and Honda have split. This split has given Hero access to previously inaccessible markets. Also, Hero has tied up with a range of technology suppliers such as Engines Engineering of Italy, AVL Austria, Erik Buell Racing and Ricardo, for new product development.