Japan based Honda Motors and domestic Hero Group parted their ways on Thursday after a long standing partnership of over 26 years in the Indian market. Both Honda and Hero group will now be selling separate brand two-wheelers in the Indian market.
As per a statement give by Mr. Pawan Munjal, CEO and MD of HHML, the Hero Group will buy 26% stake in Honda by raising debt initially.
After this split, Honda is planning to reinvest in the Indian two-wheeler market, which is world’s second largest market for motorcycles after China. At present, Honda Motorcycle & Scooters India is the fourth-largest two-wheeler maker and the largest scooter maker in the Indian market.
On the other hand, the Hero group will be facing a tough challenge of protecting its whooping 60% market share in the motor-cycle segment along with the largest sales network of over 4,500 dealers. The company will be using Honda name till year 2014.
According to industry experts, the global expansion ambitions and changing market dynamics are considered to be the major reasons behind this separation. “The main objective of setting up this company 26 years ago was to explore the Indian market which has changed considerably since then,” said Mr. Fumihiko Ike, MD and COO Regional Operations (Asia and Oceania) at Honda Motor.
