Hero Motors in technical alliance with Bombardier

Hero Motors on Thursday entered into a technical alliance with the Austria-based Bombardier-Rotax to manufacture 125 cc and 177cc scooter engines in the country.

These engines would power a new range of ungeared scooters, which would be launched under the Hero-Aprilia brandname in mid-2005, said Pankaj Munjal, Managing Director, Hero Motors.

Bombardier-Rotax, a subsidiary of Canada-based Bombardier Recreational Products Inc., would also source engine parts from Hero Motors, added Munjal, at a media briefing here.

Hero Motors, part of the Rs 7,800 crore Hero group, plans to initially launch a 125cc scooter fitted with a 4-stroke water-cooled engine and follow it up with the 177cc model.

"We plan to get a niche in the scooter market. We also plan to take the scooters to Philippines,Thailand and Indonesia," said Munjal.

Hero Motors, which presently produces the 2-stroke moped Hero Puch and the 4-stroke step-through Sting, would also use the technology of its Austrian partner to upgrade its existing 75cc and 92cc scooterettes. These scooterettes are manufactured at a plant in Ghaziabad (Uttar Pradesh).

Production at the plant would be augmented to 1.5 lakh units during the next 15-18 months to meet an expected rise in sales, said Munjal. The Munjal-family promoted Hero Motors plans to invest Rs 200 crore to manufacture the scooters and engines over the next 3 years.

The company would also set up a greenfield scooter plant at Manesar (Haryana), having a capacity of 400,000 units.

The Hero-Aprilia scooters would be launched following an alliance with Italy's Aprilia S.p.A. earlier this year. Hero is also planning to import and market high-powered Aprilia motorcycles at select cities in the country while Aprilia would source the scooters for sale in Europe.

Munjal said the alliances with Aprilia and Bombardier-Rotax was expected to help Hero Motors generate additional revenues of $90 million over 5 years.

According to Yves Leduc, vice president and general manager, Bombardier-Rotax, the alliance with Hero Motors would enable it to make high-technology but low-cost engines in a bid to become a cost-competitive company.