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Hero Cycles bets big on electric, eyes footprint in Europe

Murali Gopalan | Updated on February 28, 2019 Published on February 28, 2019

Pankaj Munjal

Alliance with Yamaha in India presents exciting possibilities

When Pankaj Munjal spells out the hard truths on the penetration levels for bicycles in India, you are virtually gobsmacked.

It is only six (bicycles) per thousand households, compared to Germany, which is 100 times more and only bettered by Denmark, which is a staggering 1,000. Simply put, every home in Denmark has one or more bicycles while India is still languishing far behind even though its need for bicycles is clearly greater.

Naturally, the Chairman and Managing Director of Hero Cycles is not too happy with the present state of affairs, which he terms “so unfair”. As he elaborates, even if the penetration levels for bicycles doubles to 12 per thousand homes, industry sales will grow 15 to 30 million units annually. It is bizarre in this context to digest the reality that bicycles are outsold by motorcycles, scooters and mopeds.

Barriers

In rural India, the biggest barrier to buying them is affordability and this is where Munjal believes there must be some kind of micro-finance schemes in place for the interested customer.

This, he argues, will help people in these areas become more mobile given that a lot of them end up walking long distances to school or their work spots. Without any support on finance, there is no way these people can even think of buying a humble bicycle.

As for bigger cities, the big challenge is safety since a cycle rider can be knocked off by a speeding truck or car. “I ride an electric bicycle from my home to the gym with the car behind to keep me safe,” says Munjal to drive home the point.

And as much as there are more and more people taking to riding bicycles in cities, they are clearly disadvantaged by the absence of specific zones and the huge number of motorised vehicles. “If we address these two issues — safety for urban and micro-finance for the rural customer — then things will improve,” insists Munjal.

Additionally, as more people take to riding bicycles and leave their cars behind, it will help the cause of clean air and safety on roads. “Keep in mind we are also not a healthy nation and all this will change with more cycling,” he adds.

Munjal also reminds you that a bicycle also helps the rider connect better with the world, which is completely inconceivable in a car where the occupant is virtually shut off from the external environment. “Safety and cycle lanes are the way forward and it will motivate people to jump out of their cars and take their e-bicycles to work,” he says.

Electric wave

Munjal is clearly excited by the electric wave and this is where the recent tie-up with Yamaha is significant since it marks the entry into this space.

As of now, the idea is to come out with e-bicycles though the story is just beginning.

People have been coming in from Japan and there is a lot of work associated with product development happening at R&D. By June, the first batch of Yamaha e-bicycles will be out on the road and it will be interesting to see what unfolds after that.

For now, the alliance will see Yamaha supply its Indian ally with e-kits, the power source designed for e-bicycles. Tests will kick off in a few cities, beginning with Delhi. Yamaha has been in the business of electric-assisted bicycles for 25 years now and has reiterated that the alliance with Hero will only be for a limited number of bicycles with the future course of action to be decided later.

From Munjal’s point of view, the partnership is a win-win. Hero Cycles is a dominant force in the market while Yamaha has been struggling with its motorcycle and scooter business for decades. The alliance with Hero will help in better brand visibility and, hopefully, draw more customers to the Yamaha family.

More bonding

It is quite likely that if the script goes according to plan, there could be greater bonding between the two companies. Will this see Hero Cycles getting into other options in the mobility space? Alternatively, will Yamaha also use this base to get its own set of mobility solutions in the future? There are no immediate answers yet but the sky is the limit for sure.

Munjal’s dream is to put out a million e-bicycles eventually, which could make his company the biggest player in this space globally. “India will see a lot of activity in the electric space and it is my belief that the internal combustion engine has lived its life,” he says.

Of course, this does not mean that it will not disappear overnight but the mood across the world is clearly in favour of cleaner fuel options.

As Munjal adds, who would have thought that diesel would be sidelined so quickly in parts of Europe. Of course, legislation is playing a big role especially after the Volkswagen diesel scam of 2015 and there is no telling what the scenario will look like in the coming years.

Hero Cycles is also keen on making a global footprint for its e-bicycle foray and has two to three companies on its radar. After all, this is a market worth six billion euros in Europe and there is a lot to be gained from getting a foothold here.

“We will soon have a footprint in Germany. My e-bicycle story cannot be created on Indian shoulders alone,” says Munjal.

Published on February 28, 2019

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