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Last updated: December 21, 2010 at 16:46 pm

The real reason behind Hero Honda Breakup..

The breakup of Hero Honda after a marriage spanning 25 years sent shockwaves across the entire Indian auto industry. Hero Honda had brought the concept of a two–wheeler in India’s collective consciousness. It is also regarded as the largest manufacturer of two–wheelers in the world. Then why the breakup of such a uber successful marriage ? The reason cited includes disagreement over various issues and deals.

Hero Honda

But then the ground situation points to something different

By 2015, the Bharat IV emission norms would have to be implemented by all the two – wheelers. These are very different from the Bharat III norms being employed today. Earlier this year the norms were upgraded from Bharat II to Bharat III for two – wheelers while to BS – IV for certain cars and SUVs.

The Honda group has invested a lot into technology and R & D because at the same time in the west especially the European region, the movement has been onto the Euro – V norms. Now this up gradation means greater investment in technology and innovation. The fact of the matter is that at the end of the day Honda and Hero Group are competitors.

And therefore Honda India is vary of sharing this technology with the Hero Group. This would have also resulted in greater royalty payments towards Honda which has already impacted the profitability of Hero Honda for many years.

So it’s all about competition?

Yeah obviously. Divorces happen if either of the partners have issues with each other. And in this case Honda has finally realised that the Hero Group is nothing but competition.

In a country where the disposable income is continuously increasing with the economy growing at more than 8.5% p.a. and new players coming in everyday, which company would want to lose out on this market?


Since the name Hero – Honda can be used upto 2015, I am sure it gives a great chance for both – the Hero Group as well as Honda India to develop their respective strategies. With the infrastructure already there and continuous research and development, both these organizations would be really successful in the long run.

It all depends on how fast they are able to leverage their individual identities and move out of the “Desh Ki Dhadkan” bit!

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  • At this time,i think honda will get the more score behind hero group bcoz honda have so many idea and technology abt this competative wrld . Jitendra sahoo,maharishi clz,bbsr.

  • At this time,i think honda will get the more score behind hero group bcoz honda have so many idea and technology abt this competative wrld . Jitendra sahoo,maharishi clz,bbsr.

  • its good to see that both company wants their individual value i think honda win the race because it might be possible that hero use cycle engine in their bykes but in the future hero is the only one bike who run without petrol.

  • This is great chance Hero. Expanding its business from cycle to motor bike. So time to prove how fast it can sustain in the market without Honda. hero is doing great ads which makes sense and trying to fishing its market share. go hero go

  • It is good news, my point of view, It is better opportunity to both of them to run their business to their own way, It should be effect on their customer satisaction.

  • I think with the divorce, in the long run, Honda will be comfortable. With the name Honda more familiar than Hero, it will have smooth sailing for its seperate unit producing motor cycles. It has got its car unit also. By merging both 2 and 4 wheelers, it can benifit more. The synergies in marketing, showrooms, service centers of 2 and 4 wheelers will save costs for the company. As for Hero, it has a brand image in Bicycle industry where it can improve. Also it is already in auto spare parts business with Munjal Showa Shock absorbers. May be it can hook up with some other forign auto major and try to cultivate another brand name (Hero Piaggio or Hero Lambretta….. How does that sound??) Roads are open for both for new adventures. Just my two paisa :)

  • Well pointed out. When Honda group is already manufacturing its own two wheelers, why not to focus on that. But Hero Honda is the synonym for the two wheelers and without Honda, it seems as if something is missing :)

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