The document summarizes the history of Hero Honda Motors Ltd., a joint venture between Hero Group and Honda Motor Company. It discusses how the joint venture was formed in 1984 and became the largest motorcycle manufacturer globally by 2010. However, Honda later decided to exit the joint venture and formed its own subsidiary, Honda Motorcycle and Scooter India, in 2011. This led Hero Group to rebrand as Hero Motocorp and focus on developing its own products and distribution channels internationally on its own.

2. License Raj
Restricted foreign investment
In 1980’s, government permitted joint venture with
minority foreign holding in Indian companies
Supply side economics to demand side economics

3.  Hero cycles manufactured 16000 cycles per
day
 Sold about 86 million bicycles till 2002
 Nurtured an excellent network of dealers to
serve to serve India's expansive market

4. 
Honda motor company initially planned to enter
two wheeler segment and electric generator segment

Honda first chose kinetic engineering ltd. and formed
Kinetic Honda Motors Ltd. joint venture for scooter
manufacturing

It chose Hero Group for motor cycle
manufacturing as joint venture

5. Wide Distribution
Better Understanding
Network Through
Of The Market
Dealers
Dynamics
Wide Experience In
Manufacturing Of
Vehicles
Commitment To
Quality
Limited Options With
Honda
Focus On Financial
And Raw Material
Processes
Salience Of Hero
Cordial Industry
Engineering
Brand
Relation
Capabilities

6. 
Joint Venture came up in June 1984 -Hero Honda Motors Ltd.

Honda would provide technical know how and assist in setting
manufacturing facilities

Honda agreed for $500000 as one time lump sum fees and 4% loyalty

Joint Venture had 26% equity each with 26% to the public and rest with
the financial institutions

7. 
Hero Honda Motors had grown consistently, earning the title of the
world’s largest motorcycle manufacturer with annual sales volume
of over 2 million

Every 30 seconds, someone in India buys Hero Honda's top-selling
motorcycle – Hero Honda Splendor

Company lead in both domestic two wheeler industry with nearly
48 % and motorcycle segment, with the shares of 59%

Over 9 million motorcycles on Indian roads

Deep market penetration with 5000 outlets

8. DEEP PENETRATION NETWORK OF HERO LARGELY
BENEFITED THE SALES
ABSENCE OF MAJOR COMPETITORS IN INITIAL YEARS
SOUND AND PROVEN TECHNICAL CAPABILITIES OF HONDA
AND THE RELIABILITY OF HERO
INCREASED MARKET FOR MOTORCYCLES
BETTER FUEL EFFICIENCY
CHANGE IN PEOPLE’S PERCEPTION
DECREASE IN PRICE DIFFERENCE WITH SCOOTERS.

9. 
Technological Leadership

Market STP

Extending brand equity to
new categories

Innovative Advertising

Consumer Initiatives

Rural Market Penetration

Employee Management


Stronger product portfolio
Capacity expansion

Ancillarization

Expanding Dealer
Network

10. 
Announcement regarding formation of Honda Motorcycle and
Bicycle India (HMSI) in August, 1999

Hero Honda Motor Company stock plunged by 30 % on the day of
announcement

Overlapping of products had already started

Example:-Honda Unicorn and Hero Honda CBZ Extreme in 150cc
segment whereas Similar is the case with Honda Shine and
Splendor plus

Entry of new entrants increasing competition

11. HERO HONDA 1984 - 2010
HERO MOTOCORP LTD
Paid 2,479.33 crore for
assembly, manufacture,
selling, distribution and
exports licenses, which have
been amortized over a
period of 42 months up to 30
june’14
HONDA
- Entered into a share transfer
agreement
- Entire share holding of 26%
transferred to Hero, bringing
an end to the joint venture

12. Higher Royalty Payments
Honda's reluctance to fully and freely share
technology
Refusal of Hero Honda to merge the
company's spare parts business with HMSI
Partners turning into Competitors

13. 
Hero’s Rebranding Exercise – HERO MOTOCORP

New logo along with an advertising campaign

Launched new products and announced its intentions of exploring
international markets

Remained successful in retaining its position as the top two-wheeler
company in the Indian market

According to Pawan Munjal MD of Hero Motocorp, the Challenges included
- First is to bring our own product
- Second is to go out and set up our distribution globally
- Third to replace the brand, which was already one of the most
established brands in the country