The company that put middle class Indians on wheels is now set to be separated. After 24 year long spell of this ambitious joint-venture between Hero Group and the motorcycling giant Honda, they have decided to go their own ways finally. However they have singed a new License agreement till 2014, starting January 2011. Hero Group will buy Honda’s 26% stake in Hero Honda.
Hero has been bailing themselves out for a long time now, after it renewed its venture with Honda in 2006. However, this time around Hero will have the brand name changed over the time and will pay royalty to Honda till the time they are using its brand name attached to their motorcycles. Hero can use Hero Honda branding until June 2014 on the condition that the brand will be dropped if any changes are made into the vehicles. Market sources’ speculation that the royalty will be higher than it was at present has been thrashed by CEO Pawan Munjal in its press meet today. The royalty will be at 4.3% of Sales and the company is free to export products in new markets. (more…)