Honda to continue tie-up with Indian venture

Japan's Honda Motor Co, the world's top motorcycle maker, said on Tuesday it will renew for 10 years a pact to supply technology to its Indian joint venture company Hero Honda when the current agreement expires in 2004.

Indian newspapers have speculated that Honda would prefer another subsidiary, Honda Motorcycle and Scooter India Pvt Ltd which it fully owns, to launch new models after its technical agreement with Hero Honda expires in June 2004.

"Honda will continue to provide full technical support to Hero Honda and the two Indian subsidiaries will together aim to capture 50 per cent of the local two-wheeler market," M Sudo, Honda's South West Asia general manager, told reporters in New Delhi.

Sudo said the technical agreement between Honda and Hero Honda would be renewed in June 2004 for 10 years and Honda's research and development unit would continue to support both the Indian subsidiaries.

Honda Motor Co Ltd and India's Munjal family each hold 26 per cent stakes in Hero Honda Motors Ltd that has a commanding 45.2 per cent share of the Indian motorcycle market, the world's second biggest.

The two Honda units together had a 36.3 per cent share of the Indian two-wheeler market, including scooters, mopeds and motorcycles, in 2002.

Honda Motorcycle and Scooter India Pvt Ltd began by making scooters in India but will have the option to make motorcycles as well after June 2004.

Hero Honda Motors Ltd currently makes motorcycles only but will have the option to make scooters from June 2004.

Sudo

said that a joint model introduction plan for the two companies had already been decided.

Pawan Munjal, managing director of Hero Honda Motors Ltd told the news conference that the company would launch at least four new models, perhaps five, in the next financial year beginning in April.

Hero Honda, whose sales have jumped 21.1 per cent to 1.56 million motorbikes in the first 11 months of this financial year to March, has been battling competition from second-ranked Bajaj Auto and number three, TVS Motor Co Ltd.

The company is in the process of expanding the combined capacity of its two plants to 2.2 million units from 2.0 million now and would complete a study to set up a third plant in the next six months, Munjal said.