Having clocked double-digit volume growth last year, two-wheeler major Hero MotoCorp is expanding focus in its international operations. With the spike in crude oil prices and recovery in value of local currencies, many overseas two-wheeler markets are seeing an increase in demand. The global business had registered a volume decline of 14 per cent during FY17.
In FY18, the company sold a total of 204,484 two-wheelers in overseas markets, growing 12 per cent over the previous year. Hero’s growth in global sales in FY18 is also a reflection of the gradually improving economies in several markets around the world.
“The big positive is that we have started seeing growth across all geographies. Our sales in Bangladesh grew at 194 per cent during the last fiscal year. Similarly, Argentina, which is a key market in South America, grew by 252 per cent. Sales in Central American countries like Guatemala and Nicaragua also saw a three-digit growth. Other markets in the Middle East and select African markets like Ethiopia also looked up last year,” said a Hero MotoCorp official.
A crash in global crude oil prices to about $30 per barrel from a high of about $130 in a span of few years impacted all oil-dependent countries, including Colombia – the third largest two-wheeler market in Latin America behind Brazil and Argentina. The Colombian currency Peso depreciated sharply almost overnight and that impacted the industry quite adversely. Crude oil has started looking up now.
The economic slowdown hit Colombia just when Hero had made investments to set up its new manufacturing facility in the country in 2015. Colombia was Hero’s first overseas facility with a capacity of 80,000 units. It now has a second unit in Bangladesh, inaugurated in June 2017, with a capacity of 150,000 vehicles. In FY18, the company also commenced exports of motorcycles and scooters from its manufacturing plant at Vila Rica in Colombia to Guatemala, El Salvador and Bolivia. Besides Colombia and Bangladesh, Hero has a few assembly units in Africa, South Asia and Latin America including in Kenya, Sri Lanka and Nigeria.
The company plans to launch six products for global markets during the current financial year to support the growth in demand. As far as growth is concerned, a lot will depend on several variables, including global crude prices, local currency fluctuations and the state of the economies in some of the large global markets in Latin America and Africa, the official said.
The company recently received approvals to sell Hero genuine parts from the Colombia unit. Company chairman and managing director Pawan Munjal told the employees at Colombia plant on a recent visit that sale of parts will enable the company to improve customer satisfaction and also help us generate additional revenue and profit for the plant. Though exports form a fragment (less than three per cent) of the company's annual volume of about 7.5 million units, Hero remains bullish on prospects. It aims to sell products in 50 countries by 2020 from 37 now.