Honda Motorcycles to Go on Its Own in India

Japanese motorcycle manufacturer Honda has recently announced it will put an end to its long-standing partnership with India’s Hero Honda Motors, and will introduce its own subsidiary in the local market, the Nikkei business daily reported.

Honda and its Indian partner will seek approval for this from their respective boards of directors later this month, the paper added.

In addition to that, Honda will sell its entire stake in the motorcycle maker to the Hero Group's founding family and investment funds by as early as March, and will no longer provide technical support to Hero Honda. The agreement was to provide technical support to Hero Honda for development and production until 2014.

Each partner took 26 percent stakes in the venture. The Japanese maker could earn some 100 billion yen ($1.20 billion) from the sale of its shares in Hero Honda Motors, founded in 1984 with India's Hero Group, Nikkei said.

Also, Honda’s interest in its wholly owned subsidiary could come as a response to the other major motorcycle manufacturers establishing not only a network of dealerships but also assembly plants in the country.

This is why Honda plans to build a new factory in the southern state of Andhra Pradesh for its own subsidiary, Honda Motorcycle & Scooter India (HMSI), while speeding up its development of new sales outlets.

Hero Honda was founded in 1984 and the partnership has helped Honda sell a third of its motorcycles worldwide. In fact, Hero Honda sold no less than 4.5 million Honda-brand motorcycles in 2009 in India.

India is the world's second-largest market for motorcycles and scooters, with annual sales of slightly over 8 million units. More than 15 million units are sold annually in China.