Honda to exit Hero Honda by March 2011

Honda to sell their entire 26% stake in Hero Honda and exit the company with 1.3 billion dollars

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The writing was on the wall. We told you about this earlier, and now it’s official. Honda have decided to pull out of their JV with the Munjals in India, and will offload their entire 26% stake in the world’s largest producer of motorcycles. Honda will get close to $1.3 billion from the deal.
This was to happen. With Honda increasingly introducing products in the India market which conflicted with Hero Honda products in the same segment, there didn’t seem to be any way in which the two companies could have worked together. This was essentially serving as a double bonanza for Honda, as they were getting royalty on every HH sold, and increasing the footprint of their own company too concurrently. There was no way the Munjals could have relished these developments.
So what’s next? Well, once this divorce happens, sometime in March 2011, Honda will stop providing any further tech knowhow to Hero Honda (like they ever did except for that epic sloper engine that conquered the world). However, technical support pact which is valid till 2014 will stay in place.
And how will the Munjals go it alone, after having committed the unpardonable sin of not having developed their own in-house R&D resources? Well, we are sure that with their kind of market standing and share, any company would love to jump into the bed with them. We are sure they are going to have to partner with an international company if they wish to develop and expand. Their tech knowhow isn’t something they could boast of, and a new partner who is willing to share more knowledge than Honda will surely be welcome by the Munjals. Also, they are in a situation where they can dictate terms, so it will really be less compromising for the Indian company than it was when they shook hands with Honda.
So can we expect a Hero Suzuki or Hero Yamaha in the coming days? Well, we cannot be sure, but we definitely see the possibility of such a thing happening. What do you think? Are we going to see ‘Hero Honda is now Suzuki Honda’ ads running in the print and electronic media in the next six months? Please share your thoughts with us…

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