The name Hero Honda brings back memories for many, especially for millennials. From the 1980s till the early 2000s, you couldn’t go out on the road without seeing a Hero Honda bike.
The company Hero Honda was a joint venture between Hero Cycles and Honda Motor. During its 26 years long relationship, it became one of the most successful joint ventures in India. They were successful enough to single-handedly make two-wheelers one of the most popular modes of transportation in India. But like all great relationships, the dream team came to an end in 2010. In this blog, we’ll take a look at the reasons why Hero and Honda separated.
When Hero and Honda signed their joint venture deal in 1984, it was agreed that they would only produce and sell only in India. But because of the runaway success of their cheap but sturdy motorbikes, the deal was eventually modified to include nearby countries like Sri Lanka, Nepal, Bangladesh, and Colombia. This led to the disagreement between the two companies when Hero Honda wanted to start exporting to other countries where Honda had subsidiaries. Honda could and would not influence its subsidiaries to help Hero Honda since these subsidiaries were run independently.
Conflict of interests
Having secrets in a relationship is a huge red flag and can eventually lead to breakups. Similarly, Hero and Hero Honda had secrets of their own. There were four board members of Hero Honda. Two of them were executive directors of Honda, and the two other members were nominated by Honda. This meant that Honda had access to all of Hero Honda’s plans and strategies. Still, Hero Honda had no access to Honda’s plans which was a conflict of interests between Hero Honda and Honda, eventually becoming one of the reasons why they separated.
Issue with R&D
Hero Honda’s success made it think about its future. The company wanted to invest in research and development (R&D) and manufacture its products. But to do that, it needed approval from the Honda head office in Japan. Unfortunately, Honda would not agree to it, citing that it would be akin to giving away its “heart” since research and development was one of the most important factors behind Honda’s success.
Competition from subsidiaries
Another reason why Hero and Honda separated was direct competition from Honda’s subsidiaries. When Honda’s Indian subsidiary, Honda Motorcycles and Scooters India Pvt Ltd (HMSIPL), was launched in 1999, Hero Honda had to sign a ‘No Objection’ certificate. The subsidiary did not sell anything that was in direct competition. But in 2010, HMSIPL launched its range of motorcycles that were in direct competition against Hero Honda. This acted as the final straw, and by December 2010, Hero Honda was no more.
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So, that concludes our blog on why Hero and Honda separated. Hero Honda officially ended on the 6th of December 2010 after more than 20 years together. The two companies have moved ahead on their path and have remained household names, especially in India.