2013 Two-Wheeler Special: India market is key for Hyosung’s growth

The Hyosung brand is no stranger to the Indian two-wheeler market. After limited partnerships with Kinetic and Garware, the partnership with the DSK Group, struck in May 2012, seems to be doing well for Hyosung. Till January 15, 2013, DSK-Hyosung had retailed 786 bikes through its network of 21 dealers and hopes to cross the 800 mark by end-January. The wholesale figure stands at a little over 800 till December.

For a portfolio priced between Rs 2.75-Rs 5.79 lakh (ex-showroom, Delhi) under a brand that doesn’t have the equity of a Harley-Davidson or a Ducati, the initial run is good.

It is this response, coupled with the huge potential base here which makes Jimmy Park, managing director of S&T Motors, bullish on India. “Right now, there’s no superbiking market in India. But we want to be the leader in this market, which will grow faster in the coming years. It can become the number one market in the world,” says Park, who expects S&T Motors to see a financial turnaround next year.

"S&T Motors acquired the Hyosung Motors division in 2007. “Our company in the past 20 years lost a lot of money. S&T took over the company and cleaned off everything,” saysHyosung’s partner DSK, a first-timer in the two-wheeler market, is as enthusiastic as its partner about the business prospects. Park adding that the cashflow is “okay”.

Partner in progress

It expects to invest up to Rs 400 crore in the venture, most of which will be invested in an assembly plant at Lonand, near Pune. Assembly operations are planned to start in October or November this year. The plant will start with the assembly of the 650cc bikes, followed by the 250s two or three months thereafter. “It (assembly capacity) will be 8-10 bikes a day initially. We want to ramp it up to at least 20. In the long run, the assembly line should be able to do 120-125 bikes a day in two shifts, after the arrival of the 125cc,” says Shirish Kulkarni, MD, DSK Hysoung and a second-generation entrepreneur at DSK Group, which also runs a few Toyota dealerships.

The plant's production capacity will be crucial for the 125cc and 150cc bikes that are in the planning stage. “We are discussing their introduction and probably sometime next year you will see another product coming into the country with a lower engine capacity. But keeping the premium-ness in mind, not from the pricing factor, but from the look and feel of the bike, it will have to be India-specific and of that high-quality standard. We are talking to them in those terms,” says Kulkarni.

That will also be a key project for the R&D team expected to be set up by March. The team at DSK Hyosung is also busy scouting for competitive suppliers. It plans to have seven or eight vendors on board by the time assembly operations begin.

Hyosung has engines ranging from 50cc to 700cc. Last year, it sold around 50,000 units in 60-odd countries. While discussions are on to enter the 125 and 150cc volume segments, the brand wants to create a respectable space in the 250-650cc band of the market here.

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INTERVIEW WITH SHIRISH KULKARNI, MANAGING DIRECTOR, DSK HYOSUNG



Do you plan to have an equity partnership with S&T Motors?

It is not an impossible situation. If we offer to invest in that capacity or have that kind of growth in India, then I am sure S&T Motors will be interested to come in that kind of a relation. But as of now, there’s no such thing happening.

What learning/s from the Toyota dealership business have you implemented in the Hyosung business?

The key learning is that the two-wheeler market is not easy, unlike the car segment. Secondly, we make sure we say the right things in the market, develop products as soon as possible to deliver in time.

We are in a situation where we can deliver any bike within seven days anywhere in India. We have kept enough stock to cover entire 2013. Initially, I thought it would be very easy to replicate things. But then when I got into the day-to-day operations of Hyosung, I realised it is not easy. Therefore, we changed our approach a bit for internal operations.

We are stressing on DMS and ERP systems to make sure that we got accurate data so that we can serve our clients better.

Are you looking at scooters?

We were discussing the last time. But 50cc may be too small (Hyosung has a 50cc scooter). We are considering a larger engine but it’s too premature to speak about it now.

What is DSK Hyosung’s long-term vision?

Twenty or 30 years down the line, we will be at least twenty times larger than what we are today. That’s the way we are planning with S&T Motors to make sure we enter the market correctly and are recognised as a highly competitive brand.

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INTERVIEW WITH JIMMY PARK, MANAGING DIRECTOR, S&T MOTORS



How big a market do you see for Hyosung in India?

We are not looking at volumes now. We want to build the superbiking culture first. We want to set up our quality systems first. And then we want to increase the volume. Probably in five years, 20,000-30,000 units per year.

You are operating in a market segment which has American, Japanese, European brands. How will you be able to convince people to buy a Hyosung? Harley-Davidson focuses in the 1000cc segment. The Japanese brands focus on all displacements. We have a strong focus on 250-650cc segment and will keep focusing on this segment.

SUMANTRA BAROOAH