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Herohonda Decides to Split

In: Business and Management

Submitted By sudhabashyal
Words 267
Pages 2
HERO-HONDA decides to split:

Hero Honda has decided to end the 26 years old partnership. It's finally splits Ville for Hero Honda, one of corporate India's oldest and most successful joint ventures , with the two founding partners—India's Munjal family and Japan's Honda Motor Corp—agreeing to part ways and terminate the 26-year-old relationship due to unresolved differences and ambitious independent plans.

• What hero gets?
Liberty to sell its own two wheelers and create a brand for itself.

• What hero looses?
Looses a strong technological partner, as most of the designs and new models have been brought about by Honda.

• What Honda gets?

A chance to build its own brands in India. Honda’s own market share is 7.6%.

• What Honda looses?

Looses expansive sales and distribution network.

Honda has “Honda Motorcycle and Scooter India Ltd, 1999”

Hero Honda has 52%domestic market share, but it has to pay a royalty of 2.6%-3% till 2014 for all designs.
The Japanese auto major will exit the JV through a series of off market transactions by giving the Munjal family—that currently holds 26% stake in the company—an additional 26%. Honda, which also has an independent fully-owned two wheeler subsidiary—Honda Motorcycle and Scooter India (HMSI)—will exit Hero Honda at a discount and get over $1 billion for its stake. The discount will be between 30% and 50% to the current value of Honda's stake as per the price of the stock after the market closed on Wednesday.

Hero has also planned on changing the brand name of its...

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