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Old 20th September 2010, 19:21   #1
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Default Hero & Honda to part ways? EDIT - Confirmed

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We all know that the Hero & Honda alliance has created history, not just in India but worldwide. However, with Honda having entered the bread and butter 100 (110) cc segment with its Twister, and planning to enter the even more basic entry level commuter segment, it clearly is on a collision course with Hero Honda, which makes almost all of its money from that segment. Although no official announcement has been made on the subject yet, the chances of the two companies coming out of the meeting room with an amicable solution the next time they meet for extending the JV are rather bleak.
Honda owns a 26 percent stake in Hero Honda, which it will most likely sell. Hero will lose out on the design engineering help that it got from its Japanese partnet, but it will gain in terms of saving the 3 per cent royalty it has to pay its Japanese partner. Unfortunately, Hero Honda has been relying solely on Honda’s R&D for its bikes. It’s high time the company started diverting dome funds towards in-house R&D. The road for Hero Honda, without Honda’s fabulous engineering support would be a rough ride, especially so, with so many new internationally reputed bikemakers eyeing a share of the huge 100-125cc pie.
But the biggest benefiter will be Bajaj Auto – a company which is already closing in with Hero Honda in terms of sales numbers, and has over the time managed to set up a strong in-house R&D team. The company has allied with KTM and Kawasaki – and has enriched its engineering knowledge well, and of late has made a solid footing in the entry-level commuter segment with its new Discover.
The odds seem to be against the biggest bikemaker of India. Let’s hope it comes out of the situation with flying colours, if ever it emerges.
Above News Source :motoroids.com
Below Inputs by Yours Truly

Lately HH has been starved of technology from Honda, right from the time the Unicorn was launched by Honda to mark its foray in the bike market. Though they said all was well and gave rosy press briefings, there was some trouble in paradise.When HMSIL launched the Activa, Honda said the bike domain is for HH to exploit and it would never venture there. But the Unicorn came and the Shine followed and later on other models by Honda in the 125-150 cc segment came along. Now the 110 cc market is also one where Honda is making its foray with the Twister.
If someone has carefully observed, the Karizma was the last technological transfer from Honda to HH.Thereafter no upgradation of the 100 to 150 cc and 230 cc machines came by and HH relied on twisting the plastics, fairings, some chrome, graphics and stickers to launch new models with attractive names in attractive colours, to show the market that it can go on a launching spree sans Honda.
Now there is trouble in paradise and Honda's technology will stop coming forever. HH is now buying the Honda stake through its arm based in Singapore. It remains to be seen what HH does to continue and survive.Their quality control and experience of mass production has made them a household name in the 25 years they have been in the market. We (the general populace) after all go for the more economical models and rarely swear by technology. That USP may perhaps harbour good times for HH.
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Old 20th September 2010, 19:30   #2
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This leaves us to see how HH is planning its future strategy. Without any in-house R&D, they have to make do with whatever tech transfer has happened so far.

Can they use the tech that they have got from honda by paying royalty after they break ties with them?
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Old 20th September 2010, 19:42   #3
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Quote:
Originally Posted by abhinav.s View Post
This leaves us to see how HH is planning its future strategy. Without any in-house R&D, they have to make do with whatever tech transfer has happened so far.

Can they use the tech that they have got from honda by paying royalty after they break ties with them?
Not sure about the Japanese!!
Vespa and Bajaj broke away and so did Fiat and Premier, Lambretta and API, LML and Vespa, apart from the many others.The Indian arm used their technology that they had so far gained. The Renault-Mahindra divorce is again a new case in point where Mahindra retains the Logan technology for India.
Coming to the Japanese, the Suzuki and TVS parting saw TVS launch its own models, the Victor being a first from TVS inhouse R&D.In fact this JV did not have any 4 stroke models launched during their pre-divorce years.
But other Indo_Jap ventures that fell off were the Nissan- Ordnance Factory, Jabalpur (under the Ministry of Defence), the Mitsubshi- Eicher and the Allwyn (now Mahindra owned) -Nissan, where the technology of the production model/s remained with the Indian company.
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Old 20th September 2010, 20:25   #4
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Quote:
Originally Posted by anjan_c2007 View Post
......But other Indo_Jap ventures that fell off were the Nissan- Ordnance Factory, Jabalpur (under the Ministry of Defence), the Mitsubshi- Eicher and the Allwyn (now Mahindra owned) -Nissan, where the technology of the production model/s remained with the Indian company.
Going by this, then there wont be any surprise if HH continue flogging the models that they already have the tech for, another 3-4 years. Rightfully so since they have to start R&D from scratch which will take them quite a few years to come up with something on their own.
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Old 20th September 2010, 20:43   #5
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This was bound to happen one day but I didn't think it would take so long.

Hero has been building up its own R&D over many years now. They even have a tie-up with Briggs and have done many vehicles on their own..latest being a step thru (Stnger??). Of course, matching the quality of Honda is something else.
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Old 20th September 2010, 21:01   #6
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Quote:
Originally Posted by anjan_c2007 View Post
Not sure about the Japanese!!
Coming to the Japanese, the Suzuki and TVS parting saw TVS launch its own models, the Victor being a first from TVS inhouse R&D.In fact this JV did not have any 4 stroke models launched during their pre-divorce years.
In fact would like to correct myself here. The 150cc Suzuki Fiero was a TVS-Suzuki JV model that was a four stroke bike. But this bike did not perhaps continue to be sold under the TVS badge. Suzuki hence did not part with any technology for use by TVS later on.
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Old 20th September 2010, 22:54   #7
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I seriously doubt if Hero Honda would be able to get its R&D in time, as by the time they would be able to bring some bike from there own stable, the ground would have been covered by majors like suzuki, Yamaha, Honda, and Bajaj with its partners.

its true that Hero Honda is having huge amount of Cash on its book, but for R&D just money cant bring success, it also requires time , which in current growth trajectory of our country is at a premium.

Apart from that the biggest hit for Hero Honda will be its associates and general public, as it will cause fear among customers to buy a product without Honda's reliability. (as Honda itself is going to be present on its own)

It took many hard and painful years for Bajaj to be at this place where it is currently, same goes for TVS.

In case of TVS it got some time to come up with its R&D facility/products which is not going to be available with Herohonda as Honda is present itself currently.

(Just my point of View)
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Old 21st September 2010, 09:08   #8
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Considering Hero Honda makes most of its sales in 100 cc segment - Will those buyers be too concerned about honda engine being not available in that bike ..i dont think most will mind unless the engines that Hero makes sucks.

I see them getting hit primarily in executive segment 150 + where honda's refined engine will be missed.
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Old 21st September 2010, 10:02   #9
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The moment HMSI was set up this was on the cards - sooner rather than later. HH have chosen a good point to say bye-bye. BS4 is in so they have five years before BS5 comes it. Enough time to get R&D going, or (more likely) buy a small struggling Bike Maker in Italy!
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Old 21st September 2010, 10:34   #10
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Let's hope that they come with new bikes instead of sticker jobs atleast now.
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Old 21st September 2010, 11:52   #11
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I think the honda Engines are the main attraction in Hero Honda vehicles. IMHO, Honda engines are the most silent among 150 cc series. HH needs to do a lot of Homework to balance the pace.
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Old 21st September 2010, 11:53   #12
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Let hope they come with bikes instead of mopeds.
- and lets see what is the real prowess of "Indian R&D" (of course I am being cynic here)
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Old 22nd September 2010, 12:19   #13
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Some questions. If they do indeed part ways:

- Can Hero continue to sell the bikes as Hero-Honda? Obviously not. Would a Hero CD100 have the same recognition as a Hero-Honda CD100?

- If Hero has cash, brand and distribution on one hand, and no R&D on the other, does it make sense for them to tie-up with any other international bike manufacturer? How many years behind are they of Bajaj's R&D?

Full marks to Bajaj though. Their transformation from a scooter to motorcycle maker is stuff of legend!
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Old 23rd September 2010, 14:53   #14
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there appears to have been an official denial of this
Venture with Honda not ending: Munjals - Money - DNA
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Old 23rd September 2010, 15:19   #15
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@GTO:

1. Agreed that Hero will not be the same as hero Honda.
2. I guess Hero may buy a small Italian Bike Maker (like Mahindra bought KTM) and then use them to fine tune the bikes, and develop engines. These tiny firms are always 'almost' bust.
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