NEW DELHI, Nov 19 (Reuters) - India's Hero Motors said on Wednesday it will use technology from Italy's Aprilia to start making motoscooters -- hybrids of scooters and motorbikes -- aiming for a 10 percent share of the Indian scooter market.
Scooters made up 17 percent of India's 5.1 million-units-a-year two-wheeler market -- the world's second biggest -- in the past fiscal year to March. Motorcycles accounted for 76 percent and mopeds made up the rest.
Unlisted Hero, owned by the Munjal family that part-owns motorcycle market leader Hero Honda Motors Ltd , said it would launch three models in the 75cc-125cc range.
The motoscooter models were designed together with Aprilia for sale on the Indian market in fiscal 2004/05.
Aprilia, Europe's second-biggest maker of scooters and motorcycles, will also buy back part of the production for sale in Europe and other Asian markets, as it strives to shift production to low-cost locations to improve competitiveness.
"Aprilia has outsourced their research and development to us and the relationship could later expand to engine technology and high-end bikes," Pankaj Munjal, Hero Motors' managing director, told a news conference.
Hero, now being spun off from another group, Majestic Auto Ltd , said the technology agreement with Aprilia will run for eight years and Hero is expected to post annual sales of $70 million, including exports, from these products.
The firm will compete in India with market leader Honda Scooters, the Japanese Honda Motor Co's fully-owned unit, Kinetic Motor Co Ltd , TVS Motor , Bajaj Auto and LML Ltd .
Munjal said his company was in negotations with Aprilia for the Italian firm to acquire a 20 percent equity stake in Hero.
The company will also announce a new partner for engine technology in the next three years, Munjal said.
The mopeds maker will invest 1.35 billion rupees ($29.6 million) over three years in a new 450,000-unit-a-year plant to make the models, the first of which will be launched in October, 2004. Aprilia will buy between 20 to 30 percent of its output.
Company officials said the motoscooters would be priced 10 percent higher than existing models and would address the three main buyers, young men, young women and families.
India's scooter sales have fallen in the past four years but are expected to rise this year helped by booming sales of four-stroke, automatic scooters, like those that Hero will make.
($1 = 45.6 Indian rupees)