India’s Hero Honda ‘to buy Honda’s African market
Mumbai, India – Top Indian motorcycle maker Hero Honda is, according to a report from India, looking to acquire Honda subsidiaries in Nigeria, South Africa, Egypt and other African countries.
The Business Standard reported today (October 30) that New Delhi-based Hero Honda would manufacture its existing products in those markets.
India’s Munjal family and Japan’s Honda Motors each hold 26 percent of Hero Honda whose managing director Pawan Munjal was quoted as saying: “Talks are on with Honda for a joint initiative in some foreign markets.
“We have been meeting the Honda people on this issue but so far nothing concrete has come of it.”
Another company executive said Hero Honda had identified the African markets because Honda was not a significant player there but had some manufacturing and marketing base.
Munjal added: “These markets suit the same vehicle profile as that of India, which is scooters and motorcycles.”
Hero Honda plans to export products from India in the initial stages but will later export completely knocked down (CKD) units to be assembled locally under the Hero Honda brand.
The company currently exports more than 55 000 two-wheelers a year to Bangladesh, Sri Lanka, West Asia and Latin America but depends entirely on Honda Japan for its technology requirements. It will use the latter’s local expertise to sell motorcycles and scooters in African markets
Munjal said: “We prefer markets with high volumes with markets similar to India; we are working out a mutual agreement benefiting both companies.”
Hero Honda last week posted a bigger-than-expected 9.2 percent drop in quarterly profit as it battled rising costs and intense competition from rival Bajaj.
Waiting for permission
Honda Japan also operates wholly owned subsidiaries in India - Honda Siel Cars and Honda Motorcycle and Scooter India - and plans to establish a new, wholly owned subsidiary in India to handle the wholesale spare parts divisions of these operations.
In terms of Indian law, however, it may not do so without a “no-objection” certificate from Indian joint venture partner Hero Honda, which had yet to respond.
Hero Honda played down any possible conflict of interests, however; director Suni Kant Munjal said: “There is no fight between the partners and no dispute. It is only a procedural matter.” - Reuters
# Honda SA, a wholly owned subsidiary of Honda Motors which handles motorcycle and car distribution into the South African market, denied any knowledge of Hero Honda’s moves.
