Company profile Hero Cycles Limited, based in Ludhiana Punjab, India, is the largest bicycle and related products manufacturing company of India. Hero group was started by the four Munjal brothers, hailing from a small town called Kamalia, now in Pakistan in the year 1944 by establishing bicycle spare parts business in Amritsar. After independence and partition of India, they moved to Ludhiana and started a bicycle unit called Hero Cycles in 1956. By 1975, Hero cycles became the largest bicycle manufacturer in India.
In 1984, Hero group joined Honda Motors of Japan to create Hero Honda Motors Limited which soon became one of the market leader in motor-cycle sales in India. In 1986 Hero Cycles Limited entered the Guinness Books of World Records as the largest bicycle manufacturer in the world. It has a 48% market share in the Indian bicycle industry. Annual sales volumes of over 4. 8 million makes it the largest bicycle manufacturer in the world. Hero Cycles rolls out around 18,500 units every day. Industry profile
India is the second largest bicycle producer of the world. It has seen a tremendous increase in the number of bicycle manufacturers and bicycle exporters in the recent past. Today, Indian bicycle manufacturing and bicycle spares industry is well accepted and is also widely recognized for its quality standards in the international market. There is a significant scope for export of Indian bicycles, bicycle spare parts and bicycle accessories. The approximate export and import figures of bicycle for the year 2006-07 were Rs. 33. 7 crore and Rs. 31. 7 crore, respectively. The total production of all kinds of bicycles in the organized sector has been 105. 98 lakh numbers during the same year. During 2007-08 (upto December 2007), it was reported at 81. 13 lakh numbers. The industry has been delicensed and is allowed 100 per cent FDI under automatic approval Business situation Bicycle Blues The Indian bicycle industry is facing some challenges. The biggest dampener is the demand for motor bikes.
Changing socio-economic patterns, increasing purchasing power along with the available financing options, the middle class, lower middle class, and also to some extent the poor class has shifted their mode of commuting and transport to motor bikes in urban areas. Even school- and college-goers prefer riding their own motor bikes and scooters over a bicycle. The use of motor bikes is increasing in the rural areas too with better finance facilities and availability of these motor bikes.
In big cities, the increasing number of automobiles on congested road has made it riskier and more difficult to ride bicycles. With no option of separate cycling lanes, bicycle users in the urban areas face tremendous risks while commuting. Also, it becomes easier and much more comfortable to ride a motor bike than a bicycle in big cities where destinations are further away than in villages. People from villages and small towns are moving to metros and other cities for work and this factor has translated in the long term to more people switching over from using bicycles to motor bikes. Solution
Hero Cycles, being the leader of the bicycle industry in India and one of the major players in the world faces the challenge of bicycle market being slowly eaten up the 2 wheelers market (the motorcycle and scooter market). However to overcome the hurdles, Hero cycles need to focus on the following markets: Rural Market Within the bicycle industry, the standard model—which is recognized as the one usually driven by the labour class —dominates with a share of around 50%. This segment still has a huge potential for growth as this basic model is hugely popular. This is because this model is still used for commuting and transporting goods.