Financial Daily from THE HINDU group of publications
Thursday, Jun 03, 2004
Financial Daily from THE HINDU group of publications Thursday, Jun 03, 2004 |
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Two/Three Wheelers Corporate - Alliances & Joint Ventures Honda Motor renews partnership with Hero — Model Committee to help minimise cannibalisation Our Bureau
Mr Pawan Kumar Munjal, MD, Hero Honda Motors, exchanging documents with Mr S. Toshida, MD & COO for Regional Operations (Asia & Oceania), Honda Motor Co. Ltd., after signing an agreement in the presence of Mr. Brijmohan Lall Munjal, Chairman, Hero Honda Motors Ltd, in the Capital on Wednesday. — Kamal Narang
New Delhi, June 2 HERO Honda and Honda Motor Corporation today announced the extension of their technical collaboration agreement for another ten years. The extension will allow Hero Honda to introduce new models of motorcycles and boost sales. The two companies have also agreed on all the new products that Hero Honda will sell in India by 2008. According to Mr S.Toshida, Managing Director and Chief Operating Officer for Regional Operations (Asia and Oceania), Honda Motor Corporation, "Honda would continue to provide Hero Honda with the latest and most advanced engine technology, with full technical support and assistance for new product introductions and for any other area of our joint operations." He added that Honda, which owns 26 per cent of Hero Honda, is not considering an alteration of its stake in the joint venture. However, market watchers point out that while the renewal of the agreement is a positive development for Hero Honda, the company's sales may get cannibalised with the Honda subsidiary in India, Honda Motorcycles and Scooters India (HMSI), set to foray into motorcycles this year. HMSI is planning to launch a motorcycle in the 100 cc to 150 cc range this year. "HMSI is scheduled to launch bikes by October. With the current level of competitiveness, both the companies together may be able to garner a market share of 50 per cent in the Indian two wheelers market. But market share is not the purpose," Mr Toshida said. Meanwhile, when asked whether HMSI's entry in segments in which Hero Honda is present would have an impact on sales, Mr Pawan Kant Munjal, Managing Director of Hero Honda said that there "will be some cannibalisation, but both companies will try to expand the market". He further added that a joint Model Committee, comprising members from both the companies, had been put in place to decide on the models that will be launched by each company to minimise cannibalisation. Hero Honda today also announced its intention to foray into the scooters segment "very soon" with technical support from Honda. "We will launch a scooter very soon and Honda will be providing us with the technology support," Mr Munjal said. Interestingly, another Hero Group company, Hero Motors, has aggressive plans for the scooter market, for which it has tied up with the Italy-based Aprilia. Hero Honda and Honda Motor Corporation are also exploring opportunities to sign an export-oriented agreement, which would enable Hero Honda to export bikes for the European markets.
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