Opinion: Give Hero a chance
I wasn't at the press conference but I can see from our Facebook page (https://www.facebook.com/odmag) that many people were surprised to see that the Ignitor, for instance, was a re-stickered and re-named Stunner. And that the Impulse is a copy of a Brazilian bike. And laments on the lack of originality and so forth.
But here is the thing. While all of the observations are true, I think the laments are unwarranted. Allow me to explain.
The company formerly known as Hero Honda was among the most effective marketing, sales and distribution organisations in India, and I personally think, in the world. Their sales record corroborates this beyond all doubt. And since Honda was their partner publicly from 1984 to last year, the motorcycles they sold, obviously, were Honda developed and jointly badged. You know this already. You also know that Hero Honda had a 100-odd man R&D team, largely restricted to development work related to aggregate parts for the motorcycles - though some would quip stickering - but clearly not aligned towards full-lifecycle product development. And this wasn't some blind stumble. There were two clear reasons - first, Honda's role in the game was of the technology partner and Hero didn't need to duplicate efforts and second, later, when Honda Motorcycle and Scooters India was born, the contract required that Hero use the newly formed Honda R&D's services and not take on product development. That is the history.
Now, the terms of the Hero and Honda separation say clearly that Hero MotoCorp will have access to Honda products till June 2014. The badging on these products is Hero's call. Which means they are free to use Hero MotoCorp badging or Hero Honda badging as they see fit. Hero announced with their new logo at London that all Hero showrooms and products would wear the new look and logo. Just Hero. And that makes sense too. If you got divorced, what possible reason would you have to continue to use the joint surname or indeed, any part of your spouse's name? And since Hero was bound to make a brand change in 2014, why postpone it?
Now back up a minute and look at the global motorcycle industry for a minute. The average product development life cycle today is approximately 24 to 26 months. That's how long it takes for a product to go from an idea in a R&D or marketing guys head, to the design table, through the engineering process, to productionisation, to production and then finally, on sale.
We know Hero could not possibly have an R&D operation capable of developing its own products till the break-up was announced. That means, in the simplest terms that Hero's first indigenously developed product will probably come by at the very earliest, June 2013 using the accepted thumb rule of the 24-26 month all-new product development lead time. But hold on, that presumes that Hero will have had a fully functioning R&D setup, ready and able to develop a product from scratch on the day they announced that Honda and Hero were going their separate ways. And that, unfortunately, is simply impossible.
That is the reason why Hero will make the most of their access to Honda-developed products till 2014. It's the only logical way to tide-over the gap between becoming their own person, as it were, and nurturing to adulthood a fully-functioning R&D setup. The sole alternate is to pay an outside engineering firm to make products for you. There is no official word on this, but if I were Hero it's not an opportunity I would pass up either. But as it stands, it looks like all the products Hero has launched so far, and probably those that it will launch till 2014 have been based on - or are - Honda products. And to Hero's credit in my eyes, they have never been shy of accepting that fact. Even at the Passion X, Ignitor, Maestro press conference, Anil Dua, Hero's marketing and sales chief called a spade a spade and said they had contractual access to Honda's technology and that they were using it. That the Ignitor was in fact, the Honda motorcycle that everyone seemed too stunned to note it was. Where's the deception?
But there's more. The Splendor is still a super hit and don't for a minute assume that the Hero juggernaut will suddenly retire those products. The Splendor and its multifarious siblings are the foundation on which the cash-rich, market dominating company we know has been built. It would be pure foolishness to retire products with such great reputations and histories especially when you have free and legal ownership of the brands in question. The motorcycles themselves may not glow with a rosy halo in the eyes of the enthusiast, but the Splendor's band of brothers are the reason why all the motorcycle manufacturers look at India with such great interest and desire.
I've myself been guilty of forgetting that fact often enough, but it needs to be said. Were it not for the lakhs and lakhs of Splendors (et al) sold every month, the Indian motorcycle industry wouldn't be the second biggest motorcycle market in the world. And by direct extrapolation, the international interest in India would be lower by that much of a margin. Which means and forget the import duties for a moment, few manufacturers would be tempted to offer us the range of CBU motorcycles we get today at all.
I think Hero will continue to work on the Splendor and its brothers in the coming years. As their ability to develop products grows, they will make the necessary changes to keep the enduring popularity of these motorcycles as constant and enduring as humanly possible. If nothing else, Hero is going to have to make that 100cc engine meet emissions norms which grow tighter as time passes. And without a functioning R&D team that knows what it is up to, Hero may not be able to. They aren't going to make that basic a mistake, trust me.
That brings me to the final point I wanted to make. Can Hero suddenly up and produce a functioning R&D department? Well, I've said this before. I know they intend to. And I know that the company has both the financial resources needed for it as well as the intense pressure from its competition and its internal need to keep building on the success. Pride is a wonderful thing, and Hero is out to prove that they're as strong, as robust, as dynamic and as dominant an organisation today, post-split. I think they underestimate neither how critical a good R&D department is to success nor how difficult it is to setup one.
As I see it, Hero has the resources to make a resounding success of this. And I think they know what needs to be done to make it happen. And they're in the hunt. But no one can predict the future. I'm praying for them because at some level, whether enthusiasts get along with their products or not, they are Indian and in that I identify with them.
But forget the emotional angle. Just think. What kind of products will Hero need to succeed? Good ones. Ones that take on the competition, right? What kind of competition? All kinds of it. Hero can no longer afford to ignore the upper segments in the market because growth, the promise of bigger per unit returns, as well as export and expansion opportunities in the more mature overseas markets require them.
In India, I think they will need upper segment models to establish themselves as an effortless maker of (all kinds, and not just commuting) motorcycles. So Hero will not only have to stave off the challenge of the coming-shortly Honda mass-market motorcycle, but eventually, have to find a response to motorcycles as diverse as the Honda CBR250R and the Kawasaki Ninja 650R as well.
Think about it this way. Let's say you had to take on the CBR250R. Could you get away by making a meekly styled, ultra-frugal 250? No! There will be some takers for that as well - this is India, after all - but to go head to head, you would need a motorcycle that was in the same performance and appeal ballpark with some combination of features, characteristics and pricing that made it distinctive as a buying proposition. It could be as simple as 3PS more, or something as radical as a 250cc supermotard. Point is, it would have to be good to beat the competition.
And if one more good motorcycle entered a segment of the market, especially the upper end of the market, would you complain?