The Telegraph
Since 1st March, 1999
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Honda plans a long haul with Munjals

Calcutta, April 19: Japan’s Honda Motors is strengthening its ties with the Munjals of Hero Honda to take on competition in the Indian motorbike market.

Hero Honda is a joint venture between the Munjals and Honda Motors in which the latter holds a 26 per cent share.

The Honda group is looking at ways to strengthen ties between the two companies to take on local competitors as well as to reduce costs, a senior Hero Honda executive said.

The Japanese major will shortly finalise ‘Vision India’, its strategies for the subcontinent.

“The product planning is complete and in several other fields the synergies are going to be established shortly,” the executive said.

Honda’s research and development centre has been asked to develop the model line-up for both the companies.

“We are trying to gauge the needs and tastes of Indian people both in the short and long term. Once this is done, which is expected to be through in the current financial year itself, Honda group will be able to prepare its Indian strategy,” he added.

Honda Motors India is the wholly-owned subsidiary of the Honda group.

The Honda group has also extended the licensing agreement for Hero Honda for another 10 years.

“Hero Honda is the world’s largest manufacturer of motorbikes and the Honda group does not want to snap its ties only because of its wholly owned subsidiary. Instead, the most logical move is to develop a solution which will benefit both Hero Honda and Honda Motors India,” he said.

The executive further pointed out that the driving point behind the move is to capture a combined share of 50 per cent in the Indian two-wheeler market against the existing 36 per cent.

Meanwhile, the Honda group has embarked on a debottlenecking exercise in Hero Honda’s manufacturing units at Dharuhera and Gurgaon.

Following the debottlenecking exercise, the production capacities will be raised to 2.2 million units from the existing two million units, said Atul Sobti, senior vice-president (marketing and sales) of Hero Honda.

“For the first six months we don’t need any capacity expansion. But there are plans to go in for a third plant, probably an assembling unit, to cater to demands in future,” he said.

Hero Honda, which has over seven million motorbikes on Indian roads now, is also gearing up to launch its ninth model — a 200-cc bike — in May. Two more modified models will be launched in October-November, Sobti said.

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