Hero Honda, the name that once ruled the Indian two wheeler markets, has chalked out a new competition strategy. The theory is chalked out precisely by the Hero group after parting their ways officially with Honda in 2014.
As we all know that the Hero group (owned by Munjals) is going to acquire 26% Honda’s stake in the company by the end of the contract in 2014. They have also decided to form 4 to 5 small joint ventures with certain auto part makers. News has it that Hero Group is currently in talks with Austria’s AVL and UK’s Ricardo for transmission JV. Similarly they are also taking their discussions further with Italy’s Cosmo and Engine Engineers regarding body contouring and power train respectively. News also has it that Hero group is seriously looking in to the matter and once everything is finalized these respective part makers will act like hero’s subsidiaries.
Now the important question here to address is; why is there a need for the Hero group to enter in talks with so many part makers? Well, that’s because Hero group wants to build a good technological base for itself such that the company would not suffer after their break up with Honda officially in 2014. The decision with this regard was taken back in January at an official company meet.
Market experts and analysts are of the opinion that Hero group should quickly identify their technology partners before Honda’s exit because then the company has to upgrade its technological emission norms to Bharat Stage 4. Bharat Stage 4 is a mandatory requirement for two wheelers from the year 2015.
As far as technological outsourcing by Hero group is concerned; it is laid out that Hero can use technological support from Honda even after 2014 but after paying royalty to Honda. This is the main reason Hero is trying to build a technological base for itself. Meanwhile, hero group seems to be really working on their re-branding thing and reports say that the company will complete the re-branding phase by the end of current year.
Hero group has really got a whole lot of things to do. As a matter of fact the company is eyeing new markets like Africa and Latin America. Apart from that the company is also looking to export some of its popular motorcycles like Passion and Splendor. All in all, Hero group is really trying its level best to build a strong foundation for themselves.