Hero to Replace Ignitor and Impulse Motorcycles to escape Royalty Payout

Hero Motocorp aims to replace its latest models sourced from its erstwhile partner Honda Motor Corporation of Japan.  The company has identified few products like it’s off road motorcycle Impulse (Honda NXR 150 Bros), Ignitor (Honda CBF Stunner) and scooter Meastro.  The company will replace these models with new models. The new models will be developed with the help of its new technology partners.  The move will save company’s royalty outgo to Honda Motor Corporation of Japan for these products.

Hero Motocorp signs agreement with new European technology partner

Hero Motocorp has signed an agreement with new European technology partner. The company did not announce the name of its new technology partner. However the company said that the new partner operates in all kind of two wheelers and it is an expert in Internal Combustion engines, hybrid and electric vehicle. The company will soon announce its name.

Pawan Munjal, MD & CEO of Hero Motocorp said “We are already working with our alliance partners for a new on/off bike. This could be similar to or much better than Impulse. All models before Impulse will stay. Royalty payouts for them will end in 2014. The new partner that we have tied up with will help us in aligning to new emission norms that come in from 2015.”

“With AVL, we will work on engines while EBR will be used for developing certain kinds of bikes and other products like hybrid scooter. We are just getting to know each other and seeing what we can get from these companies. As we move along, we may purchase a stake in them, beginning with a minority stake. Ultimately, the idea is to have them as an extended arm of our R&D set-up at Jaipur. ”

The company is aiming to set up its full fledged integrated R&D facility before the technology agreement with Honda expires in June 2014. The company is setting up 250 acre R&D facility with an investment of Rs. 400 crore near Jaipur. Earlier the company bought minority stake in US based Super bike and engine maker Erik Buell Racing (EBR) and entered into technology agreement with Austria based AVL. The company is also looking for more technology partners.

It is to be noted that Hero Motocorp will not change the previous models like Splendor and Passion as the royalty payout on these model will end in 2014.

-Mahavir Kothari