hero honda joint venture

8/8/2019 Hero Honda Joint Venture

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By

Sunil

Antony Furtado


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Introduction On Hero.

y Hero group was started by the four Munjal brothers in the

year 1944 by establishing bicycle spare parts business in

Amritsar.

y Hero Cycles manufactured over 16000 Bicycles a day.

y They sold about 86 million bicycles in aggregate as of 2008.

y They had nurtured an excellent network of dealers to serve

Indias expansive markets.

y Over the years Hero Group had entered multiple business

areas.


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Introduction On Honda Motors.

y Honda Motor Company Ltd is a Japanese multinational

corporation primarily known as a manufacturer ofautomobiles

and motorcycles.

y Founded : 24 September 1948

y Founders: Soichiro Honda, Takeo Fujisawa

y First production automobile from Honda was the T360 mini

pick-up truck powered by a small 356 cc straight-4 gasoline

engine.

y First production car from Honda was the S500 sports car.


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Contd.

y Honda Motors initial plans called for both two-wheeler market

and the electric generator market.

y

Honda Motors first chose Kinetic Engineering Ltd. and formedKinetic Honda Motors Ltd and this Joint Venture worked in the

field ofScooters Manufacturing.

y Honda Motors came to the Hero Group as the last compromise

choice for its motorcycle venture.


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Honda selected the Hero Group for a variety of

reasons which included.

y Its engineering capability.

y Relevance and salience of HERO brand.

yDistribution network.

y Commitment to Quality.

y Know-how and experience in handling large volume

production and distribution.

yTight focus on financial and raw material processes.

y Cordial Industrial Relations.


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The Deal is Done (June 1984).

y Honda agreed to provide tech. know-how to Hero Honda

Motors and setting up manufacturing facilities. This included

the future R & D efforts.

y Honda agreed for a lump sum fee of $500,000 & 4% royalty.

y Both Partners held 26% of the equity with other 26% sold to

the public and the rest held to financial institutions.


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Success Story.

y Hero Honda Motors had grown consistently, earning the titleof the worlds largest motorcycle manufacturer after havingchurned out 1.3 million vehicles in 2001.

y During the fiscal year 2008-09, the company has sold 3.28million bikes and the net profit of the company stood at`1281.7 crores, up 32% from the previous fiscal year

y Worlds largest two-wheeler manufacturer with annual salesvolume ofover 2 million motorcycles.

y Owns worlds biggest selling motorcycle brand Hero HondaSplendor.

y Deep market penetration with 5000 outlets.


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Reasons for success.

y The deep penetration network ofHero largely benefited the

sales.

y

Absence ofmajor competitors in initial years.y Sound and proven technical capabilities of Honda and the

reliability of Hero.

y Increased market for motorcycles:

y

Better Fuel efficiency.y Change in peoples perception.


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Some concerns.

y In August 1999, Honda Motors announced Honda Motorcycle& Scooter India to initially make scooters and later,motorcycles as well. Hero Honda Motors stock plummeted by

30% on the day ofthe announcement.y Competition hotting up.


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List ofModels.

y Ambition 133, Ambition 135

y CBZ, CBZ Star, CBZ Xtreme

y CD 100, CD 100 SS, CD Dawn, CD Deluxe, CD Deluxe (SelfStart)

y Glamour, Glamour F.I

y Hunk

y Joy

y Karizma, Karizma R, Karizma ZMR FI

y

Passion, Passion+, Passion Proy Pleasure

y Street

y Splendor, Splendor+, Splendor+ (Limited Edition), Super Splendor, Splendor

NXG

y CBF 150 (Honda Unicorn)


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THANK YOU

hero honda joint venture

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