Five years after Honda split, Hero unveils R&D centre in Jaipur

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Of the nine functions required to develop a product, Hero Honda Motors Ltd, the erstwhile joint venture between Hero Group and Honda Motor Co. that is now known as Hero MotoCorp Ltd, could only perform three: market study, manufacturing and product launch.

The rest, including concept design, sketch generation, clay modelling, engineering design and prototype testing, was done by Honda Motor at its research and development (R&D) centre in Tochigi, Japan.

That was then. On Thursday, five years after it separated from its Japanese partner, Hero MotoCorp inaugurated the world’s first integrated R&D centre. The facility boasts a 16-km-long track with 45 different surfaces spread over a 250-acre plot, just outside Jaipur. It has a design studio, prototype manufacturing, testing and validation unit.

The sprawling unit employs 500 engineers, and Hero plans to add 100 more by end of 2016-17.

Markus Braunsperger, Hero’s chief technology officer and a BMW veteran, will head the R&D centre. He is being assisted by 15 other expatriates who have been hired from top firms including Honda and Yamaha Motor Co.

“We have brought all aspects of our R&D under one roof. This level of integration is absent in most global R&D facilities across,” said Pawan Munjal, chairman and managing director of Hero MotoCorp. “Combining 30 years of domain knowledge with new learnings, and with the help of the finest technology experts from across the globe, we have created a symphony of individual and collective excellence,” Munjal added.

The owners of Hero Group, who migrated to India from Pakistan before India’s independence, started out by selling bicycles and later went on to form the joint venture with Honda Motor that lasted 27 years before the two sides decided to pursue their own business interests separately on 16 December 2010.

The separation raised serious doubts about Hero’s ability to introduce products that would be able to compete in terms of technology and cost with its global and local rivals, including its erstwhile partner Honda.

Hero has partnerships with technology providers like Magneti Marelli, AVL List GmbH and Engines Engineering. It had also picked up a 49% stake in Wisconsin-based bike maker EBR Racing.

That decision backfired as EBR filed for bankruptcy in 2015, prompting Hero to tweak its strategy.

In Jaipur, Munjal has hired a mix of domain experts from countries such as Japan, Europe and the US. They look after functions such as engine development, vehicle integration, chassis development, styling and design.

Some of the prominent ones are Markus Feichtner, head of engine design; Mitsuo Kitada, the head of vehicle integration, Ulrich Dumm, head of chassis development and Hiroyuki Miyo, head of styling design.

Besides, Munjal has also identified a bunch of Indians within the company and entrusted them with responsibilities in each of the verticals to develop new products and enhance the current product line-up.

Munjal said the company will continue to focus sharply on the entry-level segment and new mobility. There will also be a focus on strengthening the firm’s presence in the 200-250cc segment, where Bajaj Auto Ltd is a dominant player.

The commissioning of the Jaipur facility will also help Hero save money on product development as it plans to localize a lot of technology that it brings from overseas partners at a high cost.

“Over time…we will continue to develop the most fuel-efficient and smart-featured bikes and scooters for India and the world…we will also push the envelope and shape the future of mobility,” Munjal said.

“This facility will be our neural centre… Here we will connect the dots…interpret signals from the environment to stay ahead and also define the curve.”

In 2012, Hero announced that it was targeting $10 billion in revenue in five years with total sales of 10 million units, out of which 10% was to come from exports. It raised its estimate in 2014 to sell 12 million units by 2020.

On Thursday, Munjal told a gathering of investors, suppliers, dealers and journalists, “We as Indians are good doers. We are good followers. We execute brilliantly. We make excellent use of business opportunities. But do we create enough? Do we invent and visualize enough?”

Munjal will now expect Braunsperger to deliver on this.