Hero MotoCorp (HMC) on Tuesday announced the formation of a new joint venture company with Fiat Group?s auto component firm, Magneti Marelli (MM), for two-wheeler powertrain development and manufacture. The new company, HMC-MM Auto, will be the first such JV for the two-wheeler market leader since breaking up with Japanese partner Honda in 2011.
Munjals-owned HMC will have a 60% stake while Italy?s MM will have the rest. The partners have together committed investments of $27 million over a 10-year period. Though seen largely as an extension of HMC?s new R&D arm, the new company will be open to business from other domestic automakers as well.
Hero MotoCorp MD & CEO Pawan Munjal said, ?Over the past year, we have been forging multiple alliances with globally-renowned design and technology firms, and the newly-formed partnership with Magneti Marelli is yet another strategic move in that direction. It will look to develop next generation electronic fuel-injection systems.?
He added, ?This development will help Hero to improve durability of its engines and meet the environment–related regulations. The JV may also supply to other two wheeler manufacturers.?
Another HMC executive added that the JV will commence production by end-2014 and will hope to generate $100 million worth of revenues in the first five years. ?The aim is to partner with HMC in order to equip with advanced powertrain solutions all Hero motorcycles and scooters, and indeed most two-wheelers circulating in a country where current sales are already close to 15 million units per year, ? Magneti Marelli CEO Eugenio Razelli said.
With plans to expand exports and tap developed markets like Europe and US in a few years, HMC has made multiple moves to gain access to new two-wheeler technology and also develop its own capabilities.
In September this year it started building its own R&D centre near Jaipur at a cost of R450 crore while in July it decided to buy a 49.2% stake in US-based sportsbike developer, Erik Buell Racing.
Separately, it also entered into two tie-ups with European automotive technology firms ? Italy?s Engines Engineering and Austria?s AVL.
