This is a small study about the reasons about the break of Indian major motorbike industry Hero Honda.

1. Reasons For Separation of
Hero-Honda

2.  "Hero" is the brand name used by the Munjal
brothers for their flagship company, Hero
Cycles Ltd. A joint venture between the Hero
Group and Honda Motor Company was
established in 1984 as the Hero Honda
Motors Limited at Dharuhera, India. Munjal
family and Honda group both owned 26%
stake in the Company.
 During the 1980s, the company introduced
motorcycles that were popular in India for
their fuel economy and low cost. A popular
advertising campaign based on the slogan

3.  In 2001, the company became the largest
two-wheeler manufacturing company in India
and globally. It maintains global industry
leadership till date. The technology in the
bikes of Hero Motocorp (earlier Hero Honda)
for almost 26 years (1984–2010) has come
from the Japanese counterpart Honda.
 It is interesting to know that HERO started its
journey just from manufacturing of Cycles
which is know as “Hero Cycles” & lately

5.  Honda is the world’s largest manufacturer of
two Wheelers , Recognized the world over as
the symbol of Honda two wheelers , the
‘Wings’ arrived in India as Honda Motorcycle
and Scooter India Pvt. Ltd. (HMSI), a 100%
subsidiary of Honda Motor Company Ltd.,
Japan ,in 1999. Since its establishment in 1999
at Manesar, District Gurgaon, Haryana, Honda
has lived up to its reputation of offering the
highest quality at the most reasonable price.
Despite being one of the youngest players in
the Indian two-wheelers market, Honda has

7.  1956 - Formation of Hero Cycles in
Ludhiana (Majestic Auto Limited)
 1983 - Joint Collaboration Agreement
with Honda Motor Co. Ltd. Japan signed.
Shareholders Agreement signed
 1984 - Hero Honda Motors Ltd.
Incorporated.
 2001 - The company became the largest
two-wheeler manufacturing company in
India and globally.
 2010 - The board of directors of the Hero
Honda Group had decided to terminate the
joint venture between Hero Group of India

8. In 1998 Honda decided to set up its own
scooter manufacturing subsidiary. At that
time Press Note 1 was in force, which
made it mandatory for it take a No
Objection Certificate (NOC) from its
existing JV partner, that is, Hero Honda.
The NOC was given with the
understanding that Honda will not

9. The conflict arose when Honda
Motorcycles and Scooters India Private
Limited decided in 2010 to launch a
110cc motorcycle, the segment that
formed over 70 per cent of Hero
Honda’s sales. Honda dismissed Hero
Honda’s apprehensions that HSMI’s
motorcycle will become a direct
competitor to its largest selling bikes –
Passion and Splendor.

10. According to the shareholder’s
agreement signed in 1984, the joint
venture was only for domestic
production and consumption. BUT In
2001 Hero Honda had become the
world’s largest & biggest player in the
motorcycle segment. So in 2008 Hero
Demanded to export.

11. When the issue of exporting the
Indian JV’s products to other
countries came up, Honda said that
Hero Honda will have to compete on
its own since it could not influence its
subsidiaries abroad to import the JV’s
products. Honda’s subsidiaries are
run very independently and decide
which countries they want to source

12. The third contentious issue was that of
board representation. Of the four
Honda representatives on the board,
one executive director was the head of
Honda in India, to whom HSMI reported,
and the other located in Bangkok,
represented Honda’s two-wheeler
business in Asia. The other two were
nominated by Honda.

13. As directors on the board of Hero
Honda, all of them had access to
its plans and strategies while
Hero Honda had access to none
of Honda’s plans. This, Hero
Honda felt amounted to a conflict
of interests.

14. The fourth issue was related to Hero
Honda wanting to do its own
independent R&D and manufacturing
its own products. When it asked Honda
to be allowed to do so, subject to
approval from the head office in Japan,
Honda’s response was ‘R&D is like its
heart and it can’t give its heart to
anyone’.

15. On other hand,Honda was making its
expansion stronger in India by
introducing efficient models. Thus
gaining more market share in India.
Models such as Activa, Dio & Eterno
were introduced by Honda

16. As Honda was engaged in developing
itself separately with Japanese
technologies which were not being
availed to Hero, the R&D for Hero
Honda was not given importance . Thus
Honda was not showing enough interest
in its own venture
Example : Self-Start Technology.

17. In simple words, Hero wanted to
export his motor bikes to other EU
nations, and Honda on the other
hand didn't agree. Honda was
already selling it's Motors to most
of the country and certainly no
one would want to compete our
own brand. So they mutually