Hero Honda goes door-to-door in hinterland

Hero Honda Motors is accelerating efforts to tap rural markets as it gears up to sell a whopping five million units in 2010-11. Already, four out of 10 Hero Honda bikes sell in rural markets and in the next three years, one out of every two (50%) will be selling in the hinterland.

No wonder then that the country’s largest two-wheeler maker has decided to begin a door-to-door service facility for rural customers.

Called ‘Service Har Jagah’, this network will be based on specially customised bikes which are fitted with necessary equipment to provide service on wheels in the interiors. Hero Honda managing director Pawan Munjal said 600 fresh rural support executives are being recruited for this purpose and this programme will support the company’s successful ‘Har Gaon Har Aangan’ drive where village elders, sarpanchs, headmasters and aanganwadi workers were contacted to enhance bike sales.

More than 7,500 villages will be covered every month under the rural service initiative on a regular basis and will attend to over 70,000 customers. So far, 1,100 customised bikes for servicing remote areas have been introduced.
Munjal said that though the two-wheeler market has shown good volume growth even during the recent months of global slowdown, penetration levels leave a lot of scope for further growth.

“Even today rural penetration for motorcycles is just 7% and in the urban areas between 21% and 25%. This gives us immense opportunity for growth.”
The number of touch points (dealerships plus sales and service outlets) are already up by 50% to 3,000 and another 500 would be added by March.

A majority among the new touch points would be coming up in the hinterland, tier-II and tier-III towns and suburbs of larger towns, indicating a subtle yet extensive shift in the company’s strategy towards addressing newer two-wheeler consumer.   

Munjal said that some years back, Hero Honda had customised some CD 100 bikes to suit rural road conditions but now that the road infrastructure is improving there is no longer any need to deliver any specialised products for the rural markets.

To a question on capacity expansion, Munjal said that Hero Honda’s three manufacturing facilities (two in Haryana and one in Uttaranchal) are being used almost fully now so there was the need for setting up another manufacturing plant.

“Our teams have begun assessment forsetting up the fourth greenfield facility…at present, we look at optimum capacity addition of 2,000 units per day…we did show interest in setting up a facility in Rajasthan even before the Uttaranchal plant was set up, but possession of land posed a challenge. We still don’t have the land,” Munjal said.

Plans ‘Nano’ bike

 Hero Honda Motors has already begun tapping suppliers for developing a low-cost motorcycle. Managing director Pawan Munjal says that the joint venture partners have begun research on this project which, if implemented, would generate large volumes and come at a “breakthrough” price.

“It must be a win-win for all stakeholders, the company, suppliers and buyers. We will take a call on this project in the next 10-12 months.”

A large supplier of locks and mirrors says Hero Honda is looking at 40-50% cost reduction in some parts for this bike and could be looking at a price point of Rs 15-20,000.