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Hero Cycles, Ultra Motor form JV for electric two-wheelers in India

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Hero Cycles, Ultra Motor form JV for electric two-wheelers in India

UK-based Ultra Motor Company (UMC) and Hero Cycles Ltd (HCL) had signed a technical collaboration and joint marketing agreement in September 2006 to produce and jointly market a new range of electric two-wheelers in India. ‘Hero Electric-Ultra Powered’ was jointly launched in January 2007. Now, Hero Exports Pvt. Ltd, an affiliate of Hero Cycles Ltd, has formed a joint venture with UK-based Ultra Motor Company – Hero Ultra Pvt. Ltd. Both the companies will enjoy equal partnership in the JV in terms of equity participation.

In the last six months both the companies have understood the strength of the market, witnessed a good response and aggressively rolled out 57 joint dealerships across North and West India. Currently, the company’s range of electric two-wheelers is present across Delhi and the NCR, Haryana, Punjab, Rajasthan, Western Uttar Pradesh, Madhya Pradesh and Gujarat. The company is looking forward to expanding its network of exclusive dealerships in the other states of West and South India by the end of this fiscal, and will take its overall distribution to over 150 outlets by March 2008.

Vijay Munjal, Managing Director, HCL, said, “Hero Cycles and Ultra Motor have shared a strong partnership under the technical collaboration and joint marketing agreement, and this JV is a natural extension of that relationship. Both the companies have worked seamlessly in creating a market for electric two-wheelers in India. Going forward, we will put in the necessary resources to make Hero Ultra a bigger success.”

According to Ian Woodcock, Chairman, UMC UK, “So far, the ‘Hero Electric’ brand has offered the consumer uncompromising credibility and reliability, while the ‘Ultra Powered’ technology was the differentiator from others. Efficiencies of both the companies in marketing and manufacturing, respectively, proved to be a strong catalyst for sales. With the formation of ‘Hero Ultra’, we will continue to innovate and grow with our current and future customers.”

Although electric two-wheelers is a new category in India, the segment is likely to witness an exponential growth. According to a report by ACNeilsen, the category potential of electric vehicles for 2007-08 is two lakh units, and is projected to grow to 4.9 lakh units in 2008-09. The JV is betting largely on the Indian two-wheelers market, with 1.3 million two-wheelers sold every month. Additionally, current statistics show that 9 million bicycles, 1.2 million scooters and mopeds, and 6 million motorcycles are added on Indian roads every year. Many local and regional players are operating across North, West and South India. However, in the future the category will witness a consolidation of four to five major brands, which are expected to contribute significantly towards marketing, sales and service infrastructure.

The existing range of seven electric two-wheelers is priced between Rs 14,400 and Rs 27,900, and these are already selling at all existing dealerships. Under the aegis of the new venture, two new models of electric scooter – ‘Velociti’ and ‘Optima’ – have been launched. While the former offers extra speed, the latter offers extra range. These two new models come under the automotive products range and hence, their usage will be subject to RTO authorisation, unlike the other already existing seven models. The range of these new models is priced between Rs 29,000 and Rs 34,000.

Velociti will be available across select showrooms within a week, while Optima will be available just before Diwali this year. The current largest selling model, Maxi, which has also been rated as the best electric two-wheeler by ‘Bike India’, is contributing to about 80 per cent of the sales for the company. Hence, keeping in mind the same performance parameters and to give a new variant to the consumer, Optima has been launched. On the other hand, Velociti is targetted at the 28-plus evolved customer.

The company is investing a significant 40 per cent of its marketing spends for its dealership set-ups. After having made use of only the print medium to ‘educate’ its target audience about this new segment, the company will be rolling out its first TVC very soon and will continue with its regular roadshows, school contact programmes, exhibitions and mall displays.


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