Hero MotoCorp and Magneti Marelli sign JV to make powertrain systems for 2-wheelers

New Delhi, December 2013: Two-wheeler major Hero Moto Corp and Magneti Marelli SpA have signed a joint venture for the production of powertrain systems for the two-wheeler market.

Initially Hero is expected to roll out commuter bikes using Magneti Marelli’s powertrain systems. Involving use of electronic fuel injection systems, these will help control the quantity of fuel injected in an improved manner, thereby increasing fuel efficiency and controlling emissions. Hero MotoCorp will hold a 60 percent share in the JV company – called Hero MotoCorp MM Auto Ltd – with the balance 40 percent held by Magneti Marelli.

The construction of the JV plant is planned by 2015 and is likely to come up in the NCR. The JV will, however, become operational immediately with the initial phase focusing on the technological aspect with the JV partners cooperating in the design and development of the first solutions and applications for motorcycles.

The JV will have an equity capital infusion of US$ 8.5 million and an investment of US$ 27 million spread over the next 4-5 years. Hero MotoCorp MM Auto is targeting sales of around US$ 70-80 million by 2017-18 and double by 2020, said Eugenio Razelli Magneti Marelli CEO.

The plant will have an initial production capacity of 100,000 units that will gradually be ramped up to millions of units by 2020. The products will initially be brought as CBUs, then CKD kits, followed by full localisation in around two years. While the focus will be to cater to the domestic market, the powertrain systems will also service Hero MotoCorp’s overseas demand.

“The scope of this agreement is quite significant for Magneti Marelli as our partner in this JV is the world’s largest manufacturer of two-wheelers. The aim is to partner with Hero MotoCorp in order to equip with advanced powertrain solutions all Hero two-wheelers and most of the two-wheelers circulating in a country where current sales are already in order of 15 million per year. We are also proud to be able to contribute to initiating a technological revolution in favour of sustainable mobility for two-wheeled vehicles as well on one of the most important markets in the world.” About 16 million vehicles were sold in 2012 alone.

The JV aims to put together a portfolio of advanced solutions for the powertrain control of two- and three- wheel vehicles, leveraging the value add provided by electronics.

These technologies will make it possible to achieve better engine performance with reduced consumption and emissions. The scope of the agreement makes available to the JV, Magneti Marelli’s advanced solutions in terms of electronic engine management including ride by wire technology. Since this technology allows electronic handling of the power requested of the engine it optimizes its operation in addition to forming the technological base needed to enable future possible solutions for hybrid engines associated with the transmission to be fitted on two-wheelers.

While the technology will initially come from Europe, the JV will set up its own R&D centre. On the workforce front, the JV will begin operations with 40 staffers, expanding to 300 people in 4-5 years.

SHOBHA MATHUR

Photograph: Pawan Munjal, MD and CEO, Hero MotoCorp (right) with Eugenio Razelli, CEO, Magneti Marelli, at the announcement of a new joint venture in New Delhi today.