Hero, Honda to launch 225cc bike; extend alliance for 10 years

Our Corporate Bureau
12 March 2003

Mumbai: Hero Honda Motors will launch its most powerful bike so far, a 225cc power-bike in May 2003. Besides this, the company will launch a 100cc entry-level bike next month, followed by three upgraded variants of its existing models. All in all, about five new motorcycles will be rolled out by Hero Honda in the next one year.

Honda, meanwhile, plans to extend its technical collaboration with Hero Honda by 10 years, but has no plans to alter the shareholding of the company, a 26:26 joint venture between Honda Motor Co of Japan and the majority stake holders in Hero Motors, the Munjals, according to M Sudo, general manager (Southwest Asia), Honda Motor Co. The collaboration is coming up for renewal in 2004.

This follows heavy speculation in the recent past that the Japanese company intended to stop the supply of two-wheeler technology to Hero Honda and begin its own operations in the Indian two-wheeler market, the second largest in the world after China. Apart from the Hero Honda joint venture with the Munjals, Honda already has a wholly owned Indian subsidiary, Honda Motorcycle and Scooter India Pvt Ltd (HMSI).

Hero Honda is the market leader in motorcycles as well the country’s largest producer. Honda Motorcycle and Scooter India has become the market leader in ungeared scooters. Sudo says from next year, Honda Motorcycle and Scooter India will start producing motorcycles, while Hero Honda will launch scooters using Honda technology.

Hero Honda chairman Brijmohan Lall says the model introduction plan for the next five years is decided and some of the models are being developed. Hero Honda and Honda Motorcycle and Scooter India are looking at a 50-per cent share of the Indian two-wheeler market by 2005 as against 36.3 per cent now. The partners indicated that the two might launch competing products in the market in order to retain a majority share of the market.

Hero Honda and Honda signed a 10-year technical agreement in 1984, which was extended by another 10 years in 1994. In 1999 Honda set up a 100-per cent subsidiary, HMSI, to make scooters for the first five years.