India’s Hero motor corp is spreading wings above the potential European E-bike market. The market for E-bike in Europe is growing every day as the lifestyle of people is being centered around experiences rather than materialistic things.
HMC is making bold movements to seize the opportunity and aspires to become a new market leader in Europe, fighting against both domestic producers and low-cost imported Chinese electric bicycles.
The Ambitious Goal
“The first HNF branded bike built in India has landed on European shores. This is a big moment for the company and will demonstrate its ability to disrupt the market in Europe,”
-Jeff Weiss, the London-based CEO of Hero International.
By 2025, the firm hopes to generate organic sales of up to EURO 300 million, with inorganic revenue of up to EURO 200 million. Organic growth refers to the growth achieved by the company through sales and other direct income sources whereas, inorganic growth happens when the company acquires other companies and derives profits from those ventures. Hero motor corp is aiming at both types of growth and we will discuss it later.
The goal is ambitious and achieving the goals would require a lot of variables working together for the company.
The Diabolic Plan
Hero plans to achieve its goal through HMC’s European bike and E-bike division, Hero International. The company has already shipped its first batch of ‘Made-in-India’ E-bike to Germany in Europe, totaling about 200 units. With more units planned for the European Union (EU) in the future, the firm aspires to become a market leader.
But penetrating the European market which demands top-notch quality and cutting edge technologies, is difficult but HMC has already worked it out.
- HMC acquired Avocet Sports in Manchester in the UK in 2016.
- Hero has also developed a digital supply chain firm, Hero Supply Chain (HSC).
- The company acquired HNF Nicolai, a premium German e-bike brand, to enter the European e-bikes market.
- The E-bikes are to be sold under the HNF brand of Hero International.
Acquisitions That Make Sense
As I have mentioned earlier penetrating into the European market is not easy. It requires a technological and manufacturing edge to achieve such a goal. HMC has identified such requirements and has already taken necessary actions.
HMC established its European arm to cater to the expanding European market through the acquisition of Avocet Sports in Manchester in 2016. With over 22% market share in the kid’s bike category, Avocet Sports, subsequently rebranded as Insync Bikes, is one of the major bike distributors in the UK.
The European market was shifting toward e-bikes, with a growing demand for high-tech, light, and durable e-bikes for sustainable commuting. HMC chose to use its automotive production capabilities to join the luxury e-bike industry in India, while also purchasing HNF Nicolai, a premium German e-bike brand, to expand into the European E-bike market.
In order to meet the rising demand for bikes and E-bike, Hero has also developed a digital supply chain firm, Hero Supply Chain (HSC), with people specializing in logistics management and digital transformation.
Now that we know the HMC’s strategy and the steps they have already taken let us look into some of the market predictions which led the HMC to invest such a huge amount of money and effort.
It is Simple Maths
India’s bike market is now worth EURO 0.8 billion, with 15 million bikes sold each year, but the European market is 15 times larger. According to HMC Group Chairman and Managing Director Pankaj M. Munjal, the e-bike industry in Europe is worth EURO 5 billion, which is 50 times that of India, which is EURO 0.1 billion.
“Clearly, a major part of the future is e-bikes with e-bike sales expected to reach around 15 million units in Europe by 2030. We are confident that Hero is poised to become a market leader in this segment, making high-quality e-bikes fusing HNF’s engineering and design expertise with Hero’s manufacturing capability, especially with the 100-acre Cycle Valley in Ludhiana,”
-Jeff Weiss, the London-based CEO of Hero International.
Conclusion
Any company can take up extravagant goals and declare them to the public. Yes, the vision seems to be ambitious but look at the actions they are taking. Strategically acquiring the potential partners, taking the supply chain issues into their own hands, and resolving them through setting up a dedicated team. Let us hope that, all these efforts will add up and have results.