The Telegraph
Since 1st March, 1999
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Hero, Honda Motor gear up for a long ride

Mumbai, Sept. 4: Hero and Honda Motor Company today said they will renew their agreement for joint venture Hero Honda when it comes up for review in 2004.

Quashing speculation of differences with Honda Motor Company, senior Hero Honda officials said the partnership would hold beyond the 2004 time limit in the pact.

“The duration of the agreement was fixed at 10 years merely because of the government’s restrictions,” Hero Honda chairman Brijmohan Lall Munjal said. “In fact, Honda officials wanted it to be 30 years when we first forged our alliance in 1984,” he added.

Denying reports about an end to the relationship, Munjal said the two sides are charting a joint action plan to introduce more bikes from the Hero Honda stable. As part of that, it today launched Ambition, a high-end bike, and said a model it intends to introduce in the first quarter of 2003 would redefine the premium segment.

Munjal scoffed at market gossip about discord with Honda, saying so many launches in the space of months would not have been possible if the ties were fraying. However, Honda Motorcycle and Scooter Pvt Ltd, a 100 per cent subsidiary of the Japanese auto major, will make scooters and motorcycles from April 2004. The current agreement restrains it from making motorcycles; at the same time, Hero Honda cannot roll out scooters.

“Yes, we can make scooters and they motorcycles,” Munjal said.

Analysts feel it is not a tempting prospect for Hero Honda to manufacture scooters, which have gradually slipped in the preferences of two-wheeler aficionados over the years.

“Our basic policy is not to fight each other. We will be fighting together to improve our market-shares. The 100 per cent Honda subsidiary will be making bikes that compliment our range,” said A. Kazusa, joint managing director representing Honda in Hero Honda.

Asked about Hero Honda’s research prowess, Munjal said it was the one of the best in the country, and that it was robust enough to help launch so many new bikes so frequently. “If we don’t have technology, how do you think we would make new products'” he said.

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