f'"

;'~ 4: /lero Honda Motors Ltd: Aiming to Capture the;g"i!tuwl1fKMarket in IndiaWi,

~i~..oductionJfItD Honda M?tors Ltd came into existe,nce on 19 January 1984 as

. ".ult of a Jomt venture be~ween India s Hero Group and Japan's, .~ Motor~omp~ny.Dunng the 1980s, He~oHonda became the

.f}IWt(;Ompany.m India to prove that It was possible to drive a vehicle, "flbout pollutmg the roa~s. The company Introduced new generation. 1JJOIOTcyclesthat set the I~d~st~ benchmark for f~eI thrift and low

_8ion. TI~elegenda~ Fill It-Shut It-Forget It slogan capturedCbeimagination of millions across India. Hero Honda sold millions.of'bikes on its commitment of increased mileage.'

Productsoffered by Hero Honda Motors Ltd']beoompany produces motorcycles and scooters. Some of its brands

.,e Achiever, Karizma, CBZ, Splendor, Super Splendor, Splendor~!1us, Glamour, Passion, Passion Plus, CD Deluxe, CD 100 SS, Sleek,JIIJId CD DaWn. The company also manufactures spare parts for these

tWowheelers. It also provides mobile after-sales service to its exist-ing customers.2 .In urban India, lower taxes and good salary increments across sec-torS have resulted in an increase in the disposable income in thebands of consumers. A sizeable chunk of GDP now comes from theterVice sector, which contributes 54% to the country's total GDP.More significantly, the fastest growing segment in the service sec-tor, information technology and IT-enabled services, is being drivenbyyouth.2 Before thel980s, motorcycles were considered to be theideal transport medium for rural India. However, in the changingenvironment, motorcycles are preferred by urban youth because ofthe attractions of style and speed. The motorcycle market overtookthe scooter market in 1998-1999 and this trend seems to be con-

tinuing. The changing nature of jobs especially in selling, market-ing, etc. low EMIs offered by financial institutions, increasing dis-posable incomes, and rising fuel prices are some of the factors thathave contributed to the increase in the size of the motorcycle mar-ket. India could have more than a dozen metropolitan cities by thenext decade, and this will throw up its own challenges and oppor-tunities. Hero Honda has'already begun seeding the rural market,especially ill north and west India, through loan tie-ups with twoleading banks, the Punjab State Cooperative Bank and the StateBank of India. Similarly, through a tie-up with the state bank ofIndia, Hero Honda field officers are working directly with the bankbranch officers reaching rural credit holders (Kisan credit cards) inspecific regions and approaching fanners personally.2

AnOptimisticFutureAccording to the 2005 National Council of Applied Economic Re-search (NCAER) study on India's consuming classes, currently&round20 million Indian families \'IIfOund 100 million consumers)havean annual income of more Rs 200.000 making them ripe candi-dates for consumer durable purchases. The NCAER data also shows

-

that th"re are currently twice the number of motorcycle owners in theRs 200,000-500,000 income segment, compared to the Rs 90,000-200,000 income segment. Those earning between Rs 200,000 and Rs500,000 per year are projected to nearly treble by 2009-201O. HeroHonda expects this income group to be a key constituency for itsprice and deluxe category motorcycles, which accounts for the bulkof its product portfolio.2

Hero Honda believes that the changing demographic profile of In-dia, increasing urbanization, and the empowennent of rural Indiawill add millions of new families to the economic mainstream. Thiswould provide the growth ballast that would sustain Hero Honda inthe years to come. As Brijmohan Munjal, chainnan of Hero HondaMotors, succinctly points out, "We pioneered India's motorcycle in-dustry, and it is our responsibility now to take the industry to the nextlevel. We will do all it takes to reach there. n I

Table 4.01 gives the total income of the company from the year 1990to 2006.

TABLE 4.01Total income of Hero Honda Motors Limited (1990-2006)

Source: Prowess (Y. 2.6.), Centre for Moniloring Indian Economy Pvt. Ltd,Mumbai, accessed September 2008. reproduced \\ith permission,

Figure 4.01 is the MS Excel output (Descriptive Statistics) and Fig-ure 4.02 is the Minitab output (Graphical Summary) of the total in-come of Hero Honda Motors Ltd. From the output, prepare a detailedstatistical report on the success story of the company.

Chapter 4 I Measures of Dispersion 159

Year Total income (in million rupees)

1990 1523.3

1991 2187.0

1992 2757.3

1993 3134.7

1994 3667.1

1995 5087.6

1996 6187.1

1997 7840.3

1998 11,642.2

1999 15,655.3

2000 22,698.0

2001 32,060.0

2002 45,132.7

2003 51,520.3

2004 67,864.8

2005 86,656.2

2006 101,879.5

~>f?~'t';fj{;i, >-.:

FIGURE 4.01

MS Excel output DescriptiveStatistics) of the Total incomeof Hero Honda Motors Ltdfrom 1990 to 2006

FIGURE 4.02

Mlnitab output lQl _Jptllcalsummary) of the tl'tal Incomeof Hero Honda Ml'tl'l S Ltdfrom 1990 to 2006

A BDescriotive Statistics1

23 Mean4 StandardError5 Median6 Mode7 StandardDeviation

8 SampleVariance9 Kurtosis10 .Skewness11 Range12 Minimum13 Maximum14 Sum15 Count

16 Largest(1)17 Smallest(1)18 Confidence LevelC9b.O%)

27499611767768.966788

116422#N/A

32032.270671026066364

0.5421887031276985473

100356.21523.3

101879.5467493.4

17101879.5

1523.316469.47375

--- ----

.~nd='n-O...lmg Nunrulli.y Tes.

.~,

0 40000 10000~

I !95'.. C<>nfiJrno..., In'<rwl for M<dian

3~UI 44819

9~", C'nnfidonoc In'oryc~ f", S.lk\

60000 8000020000

95.~ Cnnfidrnc< In'<rvcl for M""n-{ 1:: 110.'° 439M

M<on9:". ("",Iiden,," In'eI,'.ls. 4875123857

.,M<dion

IOIOUO soooo2UOUO 3000U 41WKIU

.Squ.rcd 1.37

p. V.lu< < O.OO\1e.an 275UUS.o.,,, 32032\'ari......, 1026066364Sl<Wl1CfS 1.271>99KurtOSIS 0.54219

I' PMinimum 1523

I.. Quanik 3401M<diam 116423n! Quartik 48327Maximum 101880