The Hindu Business Line : Hero to drive in Italian Aprilia

Mr Ivano Beggio, President of Aprilia, with Mr O. P. Munjal, Chairman, Hero Motors, at a press conference in the Capital on Wednesday. - - Kamal Narang

New Delhi , Nov. 19

ITALIAN two-wheeler maker Aprilia is entering the Indian market through a tie-up with Hero Motors, part of the Hero Group, to sell a range of scooters from the last quarter of 2004.

Aprilia will also outsource scooters from Hero Motors to sell in other markets, taking advantages of the low production costs in India, top company officials announced here today.

The first scooter, an ungeared, 75 cc four-stroke model targeting young females, will roll out during October-December 2004. Subsequently, 92 cc and 125 cc models will also be launched, targeting the young male and utility segments, according to Mr Pankaj Munjal, Managing Director, Hero Motors.

"The segment that we are getting into is not a price-led one, it is a technology-led one where the brand matters," Mr Munjal said. Using the knowhow from Aprilia, the vehicles will be designed and developed in India.

Hero Motors, which currently sells the Hero Puch moped and Hero Winner scooterette, targets to garner a 10 per cent market share in the scooter market with the Aprilia models.

Hero Motors expects to achieve a turnover of $70 million a year through this partnership, which is for eight years and renewable thereafter. The companies will undertake a joint branding for the vehicles in India, while Hero Motors will pay a royalty per vehicle to Aprilia for using the brand and technical know-how.

Mr Munjal said Hero Motors would invest Rs 135 crore in setting up assembly lines for the Aprilia scooters in its Ghaziabad facility.

According to Mr Ivano Beggio, President of Aprilia, Europe's second largest maker of motorcycles and scooters, the company will save 20-30 per cent cost by outsourcing vehicles from India.

Aprilia will source scooters from Hero Motors for the European markets, as well as for South-East Asia, Latin America and Africa. Companies such as Yamaha and Kawasaki have also announced similar plans to source two-wheelers from India for other markets in view of India's low-cost production advantages.

"The European market is too competitive in terms of price and we have to source vehicles from countries where cost is lower and quality is good," Mr Beggio said.

Though Hero Motors doesn't intend to bring Aprilia's motorcycles in to India in the near future, the company will carry out a feasibility study in this regard, officials said.

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