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Hero MotoCorp new contender in Ducati Acquisition

After separating ways from Honda Motor Co, Hero MotoCorp is now the fresh contender in the Ducati acquisition race among many. Previously it was Mahindra & Mahindra which was in the competition but after it quit its plan and withdrew, Hero MotoCorp is the only Indian company who is in talks with the financial institutions for buying the Ducati Motor Holding SpA from Milan based Investindustrial SpA.

Hero wishes to expand overseas as well as get new technology through acquisitions and partnership because after the breakup of a 26 year old relationship with Honda Motor Co. it has only time till 2014 when the licensing relationship will also come to an end. Investindustrial SpA is keen to list or sell Ducati for $ 1.3 billion (1 billion Euro’s), whereas; Hero has about $ 1 billion of cash in reserve at this crucial point of time. In previous month, February 2012, Hero became partners with Erik Buell Racing. Under the agreement of partnership Hero will finance the two teams of EBR in the forthcoming AMA Pro Racing National Guard Superbike Championship in America. And in return it will be given design and technology support by EBR for its future motorbikes. But this won’t solve the problem of design and technology development completely.

Hero MotoCorp new contender in Ducati Acquisition

According to the records of the Society of Indian Automobile Manufacturers there has been a growth of 15 per cent in 2011 to 9.95 million units of two wheelers. Because of this competition is getting intense in the Indian automobile market among the two-wheeler manufacturing giants. Hero’s closest home competitor, Bajaj Auto Ltd. sells somewhere around 35 per cent of its manufactured products abroad and is expecting to go beyond its target of 1.5 million units for export by the end of next month, March 1012. Hero has been looked upon as a fuel-economy; utility bike which is focused on the rural and small-town market with models which are in the reach of everybody, from the lower level to the upper level. Thus they have an immense desire which is more of a need right now, to become one of the largest worldwide player in the two-wheeler segment, but that can be achieved by being in the small motorbike segment only.

Although Indian market is going excellent for Hero, by the end of December 2012, its net income rose at 43 per cent to Rs 6.13 billion and by the end of March 2012 it believes to sell more than 6 million units.  Now Hero has targeted Latin America and Africa to begin its sales this year where it expects an export of 1 million units annually in next five to six years. Hero is also about to spend somewhere close to Rs 10 billion on the construction and setup of its third factory near Bangalore which should be up and running in 2013. This will increase the volume of Hero to manufacture 4 million units a year.

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