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Hero Cycles, India’s biggest bicycle maker, has set its eyes on the e-bike market. But it is its foray into Europe which holds the key to future growth

By Krishna Gopalan
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Pankaj Munjal has a predictable route to work each morning. It is a seven-minute walk and gets a little longer if he decides to stop by to pick up some coffee at an outlet en route. He rarely calls for a car unless it is absolutely necessary.

Just before you start wondering if all this is true, let’s get to the point. The man spends most of his time — at least nine months a year — in London. It is for a strategic reason since it is the perfect locale given his desire to get a large chunk of the European e-bike market. While he walks to work, evenings and weekends are reserved for e-bike rides. That’s how much he loves his own business and what he makes. As Chairman and Managing Director of Hero Cycles, Munjal sees a huge opportunity in the continent since the market is fragmented and most governments are pushing the cause of this more environment-friendly mobility option. “We are already among the top five brands in Europe and there is tremendous room for growth,” he says, over a Zoom call from his Ludhiana factory where he is parked for a couple of days.

For FY21, he reveals (the unlisted Hero Cycles has not filed its numbers yet), exports alone brought in Rs 700 crore. Most of that comes from Europe and is up 2X from the previous financial year. “There is no reason why we will not hit €200 million [over Rs 1,700 crore] from exports over the next couple of years,” he says, with absolute calmness. If those numbers sound ambitious, it must be borne in mind that Munjal has quietly gone about cracking the European market over at least six years. That perseverance is paying off.

We are already among the top five brands in Europe and there is tremendous room for growth

Pankaj Munjal
Chairman and Managing Director, Hero Cycles


Hero Cycles as a brand has been in India since 1956. It started off making components before going on to become one of the largest bicycle manufacturers globally. On the face of it, Munjal has little to complain about. “We are sitting on a 45 per cent market share [in India] but that also means a need to look at other growth avenues,” he says bluntly.

The baby steps in Europe were taken in mid-2015 when his company acquired Avocet Sports, a UK-based distributor. Avocet was among the top three players in the business and offered a range cutting across categories such as mountain, roadster and road. Much as Hero already did export cycles to parts of Asia, Africa and Europe, this was a much bigger play in what would turn out to be its largest market. Two more buyouts followed, the first being BSH Ventures, a Sri Lanka-based company (in 2016) that came with a plant making premium products. With a distribution presence in Europe, the manufacturing leg was complementary. Of course, there were also exports going out of the Ludhiana factory.


Last year, Hero Cycles picked up a stake in HNF Nicolai, a German premium e-bike manufacturer. The plan is to invest in HNF by way of design and supply chain, among other areas. Importantly, HNF has an R&D centre in Berlin. “There is obviously a clear strategic rationale in our buyouts. Today, we can capitalise on low manufacturing costs out of our Sri Lanka operations and top up with our ability to innovate in Germany [the biggest e-bike market in Europe],” explains Munjal. Again, the story in Europe is one that has moved in a phased manner — first understand retail and then look at manufacturing with the ability to get the best out of facilities housed in other locations.

Nothing excites Munjal more than a conversation on e-bikes, though he humorously insists you say e-bicycle. “You might just see me in Hyde Park cycling or taking a break between a long ride to have a meeting,” he says in all seriousness. In terms of financial logic, profits in Europe for e-bikes can be easily twice as much as what the average manufacturer makes in India. In that sense, there is a clear reason to be in a market that is driven by the initiatives of several governments to push for the cause of e-bikes, coupled with a booming market offering healthy financial returns.


For Europe, the big moment was in 2011 when a single regulation was put in place for manufacturing standards. Kevin Mayne, CEO, Cycling Industries Europe, an international association for cycling businesses, says it was now clear that an e-bike “was a cycle and not a moped”. That meant no licence would be required nor any kind of training for the riders. The maximum speed was set at 25 km/h.

For the bicycling industry, Europe has been always been at the top both in terms of revenue and profitability. But e-bikes have just turbocharged growth... [Now, people] have not got back to driving cars in a big way

Kevin Mayne
CEO, Cycling Industries Europe

“For the bicycling industry, Europe has been always been at the top both in terms of revenue and profitability. But e-bikes have just turbocharged growth,” says Mayne. Without a doubt, it is the hottest market and the pandemic has contributed significantly. It was a pleasant surprise to see empty streets devoid of cars and people just took to e-bikes. “They have not got back to driving cars in a big way and that may not change anytime soon,” he says. The governments in Europe have also been proactive. They have cumulatively put in over €1 billion to create infrastructure for e-bikes, which includes separate lanes. The numbers clearly narrate the story. Mayne predicts that by 2030, there will be around 30 million bicycles in all, with at least half of that being e-bikes.


Munjal says that Europe’s fragmented market means the largest player has only a 5-7 per cent share. The opportunity also comes from varying penetration levels. Mayne says, depending on the country, it could be as low as 5 per cent in a few cases. “A country like the Netherlands is at 50 per cent but there are countries like Romania with negligible numbers,” he points out. The demand is expected to come from new cities in the continent and obviously, a lot of companies want a generous helping of that pie. “Importantly, the new demand could see consumers from the middle- and lower-income countries in Europe,” says Mayne. In terms of pricing, the entry point for e-bikes is at €999 but it really is settling in the €2,000-3,000 price range with the fancy versions going all the way to €15,000. The governments, too, have been offering tax breaks for e-bikes or one can even lease them “for €20-30 each month with a higher-end version at €100”. In a lighter vein, Munjal rues not having entered Europe a decade ago. “We would certainly have been a more dominant player had that been the case. Of course, there is still a lot that we can do.” This June, the first batch of 200 Made in India e-bikes from Hero, under the HNF brand, were delivered to Europe. Hero has five models in Europe, priced between €2,000 and €10,000. Four more models are to come from India.


The European story has not missed the attention of Hero’s competitors in India. For Avon Cycles, also based in Ludhiana with revenues in excess of Rs 800 crore, the debut in Europe will be early next year. Rishi Pahwa, the company’s Joint Managing Director, says infrastructure in India — especially in the areas of charging points and stations — is still not very good and looking outside is, therefore, logical. A new plant is coming up in Ludhiana by the end of this year with a capacity of 500 e-bikes per day.

The plan [for Europe] is to sell one part under the Avon brand. For the rest, we will be the contract manufacturer where the buyer will put in his brand name... This is just the beginning of the story [for Europe] and it will keep us busy for a long time

Rishi Pahwa
Joint Managing Director, Avon Cycles

The strategy for Europe is slightly different for the company. “The plan is to sell one part under the Avon brand. For the rest, we will be the contract manufacturer where the buyer will put in his brand name,” explains Pahwa. Like Munjal, he is convinced about the potential of Europe. “This is just the beginning of the story and it will keep us busy for a long time.” This March, Avon Cycles launched its electric cycle brand, Cyclelec, with two models.

Selling e-bikes in India has been an uphill task and Prashant Goel has seen that story unfold. The CEO of Hulikkal Electro, a Coimbatore-based company, launched his brand in 2013 in the Rs 15,000-18,000 price range. “Battery prices were $2,000 per kW then and it has now crashed by 90 per cent. The bigger challenge in India is to establish the product as a retail brand. This is a touch-and-feel product and that is where retail is so critical to a brand’s success,” he says. For a new company to get it right with the trade is a time-consuming affair with a lot of money to be spent on marketing.

The other rub in the Indian market, as Goel puts it, is the necessity to give the best product at the most competitive price. “That is anything but easy. As one goes to more developed markets, it is the quality that speaks,” is his view. At just 31, he has been in the business for a decade having seen many a bumpy ride.

The bigger challenge in India is to establish the product as a retail brand. This is a touch and-feel product and that is where retail is so critical to a brand’s success... As one goes to more developed markets, it is the quality that speaks

Prashant Goel
CEO, Hulikkal Electro

Growth in India for e-bikes has been difficult and till 2016, sales were less than 1,000 units a month. Pre-Covid-19, numbers had got past 3,000 units and, like Europe, the pandemic saw the numbers take off to now hit 9,000 units a month. That said, on a total bicycle base of 15 million units sold annually, e-bikes are barely 1 per cent; in value terms, Munjal says it is €0.1 billion, while it is €5 billion in Europe. The affordability factor is most stark when the other number comes by — bicycles (premium and e-bikes included) priced at over Rs 15,000 make up just 6-7 per cent of the market. For those like Goel, the story has not been as exciting as he had imagined. “We have moved on to contract manufacturing for other brands in India. Investing in marketing is not necessary and from selling 100 units each month, we are at 500 units today,” he says. Taking the export route is the inevitable way forward.


As for Munjal, he would like Hero Cycles to become a pan-European brand, while still eyeing markets such as Japan, South America and South Africa. Taking the example of Japan, he says it is a big story of women using it. “In all, it sells 7 million e-bikes each year and at some point, we could buy a local brand. Our advantage is that we have the capability,” he says.

A key part of the strategy is Hero Cycles’ partnership with Yamaha Motor, a company known for its technological prowess, and Mitsui & Co. In September 2019, the first e-bike, Lectro EHX20, was unveiled by Hero for the Indian domestic market. The motor came from Yamaha while the product was manufactured at Hero’s plant in Ghaziabad. “Obviously, we are looking to take this partnership to a global market. They want a foothold in Europe and there is an opportunity with our capability in low-cost manufacturing. Yamaha will have a big role to play in the plan to grow in overseas markets,” says Munjal, declining to elaborate.

Hero Cycles says that it commands a 45 per cent market share in India

For now, Munjal likes what he sees in Europe. The early foray has given him a chance to study the market in detail and then make the strategic moves. The plan is to spread the Hero network across various countries and grow with the market. With a proactive environment of governments in favour of e-bikes, the next few years will be all about getting in more users and Munjal upping the game. Each country in Europe comes with its own set of peculiarities and how he makes the most of the situation is what will be tracked. With Yamaha for a partner, he has the opportunity to become a dominant player. The ambitious Munjal is clearly aware of all this as an interesting future beckons.


Story: Krishna Gopalan

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