Hero Honda and Honda Motors of Japan may have officially parted ways in December of last year, but they will not be leaving each other’s warm embrace for a little while now. Hero Group and Honda have announced details of a technology sharing agreement which gives the Indian company access to the Japanese firm’s present and future engineering until at least 2014.
This will give both companies some significant benefit; Hero controls 44% of the Indian market where motorcycle sales are measured in the hundreds of thousands of units. And, Honda will continue to receive a 2.3~3% share of net sales from Hero during the agreement, just as it did under the joint venture arrangement.
The continued cooperation between the two automotive and motorcycle industry giants will also allow Hero Honda to build its research and development division to the level the dominant company will require. Given its reach, this is absolutely necessary for the company to remain competitive. Hero Group will also have full access to Honda’s automotive technology, another important source of revenue for the New Delhi-based conglomerate.
And, not to be left out, Honda Motors will gain more than extra revenue from this arrangement as they are also heavily involved in the Indian market. While assisting Hero with development for their home market, they are certain to learn lessons which will benefit Honda Motorcycle and Scooter India – wholly owned by Honda.
In this same vein, Hero has also been looking into developing a 400cc diesel engine for use in a motorcycle to sell in the domestic Indian market. Recent reports have them consulting with an outside dedicated manufacturer as a provider. No more information about the specific engineering details has been provided, though, so all is open to speculation.
Hero has also not indicated why they are moving in this direction, but it may have to do with Royal Enfield working on a similar project. Both are expected to reach production by 2013 and are actually simultaneously gaining serious attention from many in the global motorcycle industry.
It may be a world away from the North American market in many ways, but the Indian motorcycle industry has already began to have effects on a global scale which has even reached into European, U.K., U.S. and Canadian showrooms. Hero Honda’s continuing close relationship with Honda Motors is good for more than India alone, we may even see a major manufacturer put a diesel on American roads someday soon.
