Hero Honda Split Finalized

Hero Honda-Honda Split

Hero Honda, as we all know, is the first company that put all of us on bikes, and also the very same company that ended the monopoly of Bajaj in the Indian 2-wheeler market. The board meeting of Hero Honda is being held today and will be attended by top ranked officials from Honda. The meeting is set to finalize the divorce of the most successful joint venture ever in the Indian bike industry.

The 26 year old partnership will end with Honda Motor Corp selling off its 26% stake to the Brijmohan Lal Munjal Group. In turn, Honda will be compensated through royalty payouts of net sales. The reasons for the break up are not just one, and there was friction between the two partners for quite some years now. Honda had a technology tie-up with Hero till 2014, but was seen as reluctant to share all of their technology with the Hero group.

Also, many people close to the Munjals were major suppliers to Hero Honda, something the Honda group was not very comfortable with, as they felt they could tie up with suppliers in a more competitive manner. Honda was also unhappy with the company’s refusal to merge its spare parts business with Honda Motors India. And last but not the least, there was HMSI, through which Honda felt that they could compete in the Indian market on their own steam. In the last 6 months, HMSI has had sales growing by over 40%, and now we need to keep a track to see how the Hero group manage things on their own.

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