anjan_c2007

Hero Honda to be Hero Moto

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Honda-Hero.jpg

We all know that the Hero & Honda alliance has created history, not just in India but worldwide. However, with Honda having entered the bread and butter 100 (110) cc segment with its Twister, and planning to enter the even more basic entry level commuter segment, it clearly is on a collision course with Hero Honda,

which makes almost all of its money from that segment.  Although no

official announcement has been made on the subject yet, the chances of

the two companies coming out of the meeting room with an amicable

solution the next time they meet for extending the JV are rather bleak.

Honda owns a 26 percent stake in Hero Honda, which it will most likely sell. Hero

will lose out on the design engineering help that it got from its

Japanese partnet, but it will gain in terms of saving the 3 per cent

royalty it has to pay its Japanese partner. Unfortunately, Hero Honda has been relying solely on Honda

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If Hero hasn't set up an R&D base as yet it's squarely their fault. They were and are too dependent on Honda. They should have seen the writing on the wall once HMSIL set up shop in India. I hope they don't go the Kinetic Honda way. I think Honda must not have encouraged setting up an R&D centre in India for HH; or must have added a clause in the agreement to supply engines only if they don't set up an R&D centre. 

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I think Honda must not have encouraged setting up an R&D centre in India for HH; or must have added a clause in the agreement to supply engines only if they don't set up an R&D centre. 

Not sure about the Japanese!! 

Vespa and Bajaj broke away and so did Fiat and Premier, Lambretta and

API, LML and Vespa, apart from the many others.The Indian arm used

their technology that they had so far gained. The Renault-Mahindra

divorce is again a new case in point where Mahindra retains the Logan

technology for India.

Coming to the Japanese, the Suzuki and TVS parting saw TVS launch its

own models, the Victor being a first from TVS inhouse R&D.In fact

this JV just had the 150cc Fiero as the only 4 stroke model launched during their

pre-divorce years.I think TVS could not continue with the Fiero after the break-up.

But other Indo_Jap ventures that fell off were the Nissan( Jonga Patrol jeeps and the Nissan light trucks)- Ordnance

Factory, Jabalpur (under the Ministry of Defence), the Mitsubshi-

Eicher and the Allwyn (now Mahindra owned) -Nissan, Kinetic-Honda, where the

old technology of the production model/s remained with the Indian company.

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@anjan c2007 / first post.

I agree with what you said in the last two sentences.  Moreover, the motorbike technology is now available for a cost anywhere in the world.  Now, more makers and more pure-technology-providers are available in the global market.  Exit of Honda may not be that dangerous for Hero.  And, Hero is a good group who got a lot of goodwill in the market (both local and global), which will help them in getting the latest technology from leading players.  The cost of such technology will also be cheaper as Hero has got the required mass volume numbers.  If not for this reason, the Hero group would not have come forward to take the exiting Honda's share in the JV.

 

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I have a strong feeling that Hero had some R & D. Also, they can do what Mahindra's have done - buy out a small bike maker from (most probably) Italy. This parting of ways was on the cards as soon as HMSI was set up. In many ways this is a good time for Hero since BS5 is almost five years away, and this give them enough time to get the engines up to speed. As for the rest I think they should have the expertise, even if they decide to do an 'ekla chalo re'.

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Off  topic -

The Indian government should have a policy similar to Chinese government regarding any industry - if you want to start any industry then it should partner with an Indian company ( no time limit), share technology otherwise no license to operate in Indian .

Well the above view may be harsh but this is happening far to often in India. It started with Suzuki which denied technology to its Indian subsidiary( and still doing it even though it survived economic crisis due to MSIL ) and threatened to walk out.

Mr. Spock2010-10-03 10:31:01

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Hero Honda's >20 years 26-26% partnership is to end!

The now the Hero & Honda are to split by Honda selling the 26% stake to Hero Group.

As Hero Honda has a very negligible R&D Team, do you think it'll sustain for long despite technical assistance agreement from Honda for a few years of will it be end of the road?

What do you think the company should retain the name as Hero Honda or will it pull off only with the HERO name?

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What do you think the company should retain the name as Hero Honda or will it pull off only with the HERO name?

 

I don't think that Officially & lawfully they(HeroHonda) cann't use Honda-suffix in their name later on, So expect:

-Hero Splendor.

-Hero CBZ-Xtreme.

-Hero Karizma ZMR, etc etc. later on..

 

Regarding R&D, I think they can continue their Sticker & Plastics job for another 4-5 years, but Matching the capabilities of Bajaj will become their distant Dream.

So, might be this Decade belongs to BAJAJ(Distinctively Ahead)

 
dr_nishu2010-10-26 13:42:59

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What do you think the company should retain the name as Hero Honda or will it pull off only with the HERO name?

?

I don't think that Officially & lawfully they(HeroHonda) cann't use Honda-suffix in their name later on' date=' So expect:

-Hero Splendor.

-Hero CBZ-Xtreme.

-Hero Karizma ZMR, etc etc. later on..

?

Regarding R&D, I think they can continue their Sticker & Plastics job for another 4-5 years, but Matching the capabilities of Bajaj will become their distant Dream.

So, might be this Decade belongs to BAJAJ(Distinctively Ahead)

?
[/quote']

Quote from another online mag:

It is just a matter of time when Honda will exit completely from the Hero Honda joint venture. The promoters of the Hero Honda group are now working on a new branding strategy for Hero Honda, which will go live once Honda leaves. Honda

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Just Remember' date=''Rome wasn't bulit in a day'. [/Quote']

Though HH has technology it need time to build up its R&D team and learn the art of refining or upgrading this as other Indian companies (Bajaj & TVS) took year to build them up. And this might bring the set back.

But HH has time to set the pace up as it has products to keep it pulling for a significant time.

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Flash news from ET NOW TV:

Hero (soon formerly Hero Honda) soon plans to commence exports of its models to SE Asian, Middle east, African & Latin American countries competing with its Indian counterparts Bajaj Auto & TVS Motors. This move comes after the tie-up ends between Hero group & Honda.

There was a contract agreement between Hero group & Honda that the former would not export to markets where Honda is existant

Now I really doubt if Honda would give access to higher CC engines and also to the more advanced technologies it possesses.

But Hero has got a major advantage here in marketing. It has the tag of "World's largest Two wheeler manufacturer". And that will come to it's rescue.shanthanreddyp2010-10-28 15:57:53

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Honda all set to sell its stake in Hero Honda

Honda is expected to complete the sale with in 2 weeks. 4 firms are in the race while on has left. One of them is s Singapore firm and keen to establish a JV in Singapore.

As Munjals has 'First Right of Refusal' to any bidder, it is keenly watching the game for a suitable partner.

The deal, as per sources, will be close to 1300-1400 crores.

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And the parting is final now.Honda is set to exit with all of its 26%

equity in the 26 year old partnership with HH.The number 26 repeats

twice here!

 

The Tribune, Chandigarh, gives the news here on this link:

The Tribune, Chandigarh, India - Business

The news gives details about HH setting up newer and newer plants with

Rs 500 crores and so on and about its production capacity of 50 lakh

units and so on.

There is no news about R&D investment or thinking on those lines by

the Hero group, which may emerge as a dodo with its old Honda

technology and with nothing technical coming from Honda in future.

Shows a lack of vision by the Hero Group.

Am reminded of the Titanic sinking in the James Cameron film and the

band of energetic violinists still enthusiastically playing their

instruments! smiley1.gif

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There have been talks about hero group turning to another automobile maker for R&D collaboration. Reports were coming today that they are sending their officials to Europe, to research about 2 wheeler manufacturers there. Also talks have been rumored with a company already in India, but not having a strong base.

If the second is correct, I am guessing Suzuki.

Honda will continue to give technical support for two more years, but not for devellopment of any new products. Also it will get roalty on all the bikes having Honda technology.

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The new brand name is HERO. That was expected.The HH share has got a

bullish run on the bourses last week. The reason is that the management

has allayed fears of investors saying that the company will gain by

paying only a reduced royalty to Honda. There is no royalty outgo

involved after 2014.

And the huge untapped export market was not accessible according to the

HH honchos who blame it on their MOU with Honda that prevented such

commercial overtures. So the Munjals say that the reduced royalty outgo

and the prospect of an export market should be good news for the health

of the new Hero Motorcycles Ltd.

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So now it appears that Hero Honda will have the right to use "Honda" logo on its bike till 2014 until the contract period expires.

Now Hero Honda should try the Maruti Suzuki or Mahindra Renault logo format. Reduce the size of Maruti over Suzuki to giving prominence to Suzuki.

Also Mahindra appears much larger than Renault.

Like this smiley36.gif

HERO

 H O N D A

smiley2.gif

shanthanreddyp2010-12-28 17:48:12

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