Hero Honda split comes through; JV dissolved

The Hero Honda split is now formal with Honda Motor Co. Ltd of Japan and its Indian Partners Hero group signing Memorandums of Understanding on a new relationship. Following the signing of the MOUs, a joint press conference was held in New Delhi. Brijmohan Lall Munjal, the Chairman of Hero Honda, Pawan Munjal, the Managing Director and CEO of Hero Honda and Sunil Kant Munjal represented the Hero group while Fumihiko Ike, Managing Director and Chief Operating Officer for Regional Operations (Asia & Oceania) represented Honda. Based on the consent established by the MOUs, Honda will sell all of the Hero Honda shares it currently holds, which is 26 per cent of Hero Honda’s outstanding shares, to its erstwhile partners. Honda and Hero Honda will sign a new licensing agreement which enables Hero Honda to continue producing, selling and servicing its current products. Hero Honda will change the company name. The brand name will gradually be shifted from the current ‘Hero Honda’ to the new original name. Honda will also grant new licenses for new products which will be produced and sold under the new brand name, according to an official release from Honda. Hero Honda was established in 1984 with a 26 pc investment by Honda and 26 pc investment by the Hero group with the purpose of developing the motorcycle market in India and started operation in 1985. Since then Hero Honda has achieved remarkable growth by combining Honda’s technologies and products with Hero Honda’s strengths in marketing and development of a sales network and has grown to be the industry leader in India. In 2009 Hero Honda sold approximately 4.32 million units of motorcycles in India, a 23 per cent increase compared to 2008. The Indian motorcycle market led by Hero Honda continues to grow in size and diversity. In the time of such dynamic changes, Honda and the Partners (Hero group) have been continuously discussing the most appropriate business framework for the future, which has led to this consent, the release said. “We would like to extend our sincere gratitude to our partners who made possible Hero Honda’s growth to date,” said Fumihiko Ike, Honda’s Managing Director and Chief Operating Officer for Regional Operations (Asia & Oceania). “Our joint venture agreement will be dissolved, but our positive relationship will continue. And in order to assure service to the customers, Honda will grant the necessary license to enable continued production and sales of current products as well as a license for new products. I would like to take this opportunity to express our sincere gratitude to the Indian government and related authorities, the customers, and all our stakeholders who have supported Hero Honda’s growth to date. Honda wishes for the success of Hero Group. And Honda will continue exerting our efforts for our customers in India and for further development of the Indian market.”