Honda to continue technical tie with Hero beyond June 2004

Sudo said both Hero Honda and Honda’s fully-owned subsidiary Honda Motorcycle and Scooter India (HMSI) would ‘together’ aim for achieving 50 per cent share of the Indian two-wheeler market by 2005 and launch new models which would complement rather than conflict each other’s interests.

Elaborating on the business structure after June 2004, Hero Honda Managing Director Pawan Kant Munjal said HMSI might make entry-level motorcycles, while Hero Honda might foray into scooter manufacturing after June next year. “There is no conflict of interests. Hero Honda has no restriction on launching scooters. HMSI (which now makes only scooters) may also launch motorcycle in the entry-level segment. The market is huge and we can work jointly,” he said.

The Munjals-promoted Hero group had inked an equity and technical agreement with Honda in 1984 which was renewed in 1994 and now comes up for renewal in June next year. However, there will not be any discussion on change in equity restructuring, Sudo said. The Hero group and Honda own 26 per cent stake each in Hero Honda, which is the world’s single largest motorcycle maker. The remaining shareholding is in the hands of financial institutions and public.

Sudo said models for introduction in the next five years have already been decided and some of the models were being developed. “We intend to strengthen the R&D cover in India. Honda will continue to provide the latest technology to both Hero Honda and HMSI for new products,” Sudo added.