Engine Families and Development Costs

So where is money spent in a product’s development? That would be an interesting thing to think about. Let’s see. About 40{450b18fb4e8f5b95db3807a9753b1e0519d3e4d461dd68e5594bed7fc3eeb7ae} of a bike’s development comes in the engine and gearbox part. Another 40{450b18fb4e8f5b95db3807a9753b1e0519d3e4d461dd68e5594bed7fc3eeb7ae} in chassis and the other components account for the remaining 20{450b18fb4e8f5b95db3807a9753b1e0519d3e4d461dd68e5594bed7fc3eeb7ae}. Obviously I am makiing up all the numbers but hey this post is nothing but me thinking aloud. So, back to the issue, it is obvious that there would be a number of complex equations behind these numbers. For example, the engine development is seldom started from grounds up.

9:57 AM 9/29/2007et’s see: The hero Honda Super Splendour uses a 125cc engine developed from the 110cc mill on the Splendour+, derived in turn from the 100cc engine on the Splendour which in turn came from the similar capacity engine on the CD 100, which again was developed from the Honda Super Cub engine, which if you read recent news has now crossed the 50-million mark. That is a phenomenal return on R&D expenditure for Honda. Kinetic Motors on its part, reverse engineered the Splendour engine to get the Challenger mill while a further development of the same gave birth to the Boss 115 engine. And yet they managed to sell only a few truckloads of the machines. That’s a very disappointing return on reverse engineering expenditure.

Back to Hero Honda, the company recently used the Honda Unicorn engine as a base for its Achiever and will also use the same engine as the base for the CBZ upgrade. The other not so successful HHML bikes, i.e. the Ambition, the iconic CBZ and the phenomenal Karisma, all use the same family of engines. Surely, Hero Honda is a very investor friendly company.

An engine family makes good sense for costing purposes too. Going by the numbers, Hero Honda suppliers should be virtually delivering components for free (okay, nearly free) with even their employees uniforms having been amortised long back.