<p>The Hero Group and Honda hold 26 per cent each in Hero Honda that started operations in 1984 to become the world's largest two-wheeler maker today.<br /><br />As part of a new licensing agreement with Honda, the Hero Group will buy Honda's 26 per cent stake in Hero Honda.<br /><br />"This is the most important announcement I have made in last 25 years... The board has approved an MoU between Hero Honda and Honda," Hero Honda Managing Director and CEO Pawan Munjal told reporters here.<br /><br />Hero Honda will continue to produce and sell the existing models with "continuous flow of new models", he added.<br /><br />However, all future products will be rolled out under the new licensing agreement between Hero Group and Honda.<br /><br />Commenting on the deal, Honda Managing Director and COO Regional Operations (Asia and Oceania) Fumihiko Ike said: "In order to assure service to the customers, Honda will grant the necessary license to enable continued production and sales of current products as well as license for new products."<br /><br />With the promoters parting ways, the Hero Honda brand name will be changed over time, the company said.<br /><br />Munjal said the two companies will sign a definitive agreement within the next few weeks.<br /><br />He, however, declined to share the deal value saying that the amount will be funded through debt.<br /><br />"Royalty to remain in line or even lower... it is incorrect that royalty will go up to 8 per cent," Munjal said.<br /><br />The royalty paid in 2009-10 on an average stood at 2.3 per cent to 3 per cent of sales.<br />The two-wheeler major will also start exporting products across the globe and look for manufacturing opportunities.<br /><br />"Hero Honda can go out and can make its presence felt globally," Munjal said, adding that the company can now establish distribution networks across the globe. <br /><br />Besides, the two-wheeler major is free to set up its own R&D capabilities and acquire technology.<br /><br />"It will be business as usual for the time being at Hero Honda and there will be no change in ground operations in the immediate future.<br /><br />The two companies have also put in place processes and means of support to ensure a gradual and smooth transition," the domestic auto maker said.<br /><br />Hero Honda had sold 4.6 million two-wheelers in the last fiscal, grabbing 48 per cent of the Indian two-wheelers market, which is the second biggest in the world after China.<br />In 2004, the Hero group and Honda had extended their agreement for 10 years.<br /><br />Under it, the Japanese partner would continue to provide technology to the JV.<br />It was to come up for renewal in 2014.<br /><br />Hero Honda shares today jumped 3.57 per cent and closed at Rs 1,679.10 a piece.</p>
<p>The Hero Group and Honda hold 26 per cent each in Hero Honda that started operations in 1984 to become the world's largest two-wheeler maker today.<br /><br />As part of a new licensing agreement with Honda, the Hero Group will buy Honda's 26 per cent stake in Hero Honda.<br /><br />"This is the most important announcement I have made in last 25 years... The board has approved an MoU between Hero Honda and Honda," Hero Honda Managing Director and CEO Pawan Munjal told reporters here.<br /><br />Hero Honda will continue to produce and sell the existing models with "continuous flow of new models", he added.<br /><br />However, all future products will be rolled out under the new licensing agreement between Hero Group and Honda.<br /><br />Commenting on the deal, Honda Managing Director and COO Regional Operations (Asia and Oceania) Fumihiko Ike said: "In order to assure service to the customers, Honda will grant the necessary license to enable continued production and sales of current products as well as license for new products."<br /><br />With the promoters parting ways, the Hero Honda brand name will be changed over time, the company said.<br /><br />Munjal said the two companies will sign a definitive agreement within the next few weeks.<br /><br />He, however, declined to share the deal value saying that the amount will be funded through debt.<br /><br />"Royalty to remain in line or even lower... it is incorrect that royalty will go up to 8 per cent," Munjal said.<br /><br />The royalty paid in 2009-10 on an average stood at 2.3 per cent to 3 per cent of sales.<br />The two-wheeler major will also start exporting products across the globe and look for manufacturing opportunities.<br /><br />"Hero Honda can go out and can make its presence felt globally," Munjal said, adding that the company can now establish distribution networks across the globe. <br /><br />Besides, the two-wheeler major is free to set up its own R&D capabilities and acquire technology.<br /><br />"It will be business as usual for the time being at Hero Honda and there will be no change in ground operations in the immediate future.<br /><br />The two companies have also put in place processes and means of support to ensure a gradual and smooth transition," the domestic auto maker said.<br /><br />Hero Honda had sold 4.6 million two-wheelers in the last fiscal, grabbing 48 per cent of the Indian two-wheelers market, which is the second biggest in the world after China.<br />In 2004, the Hero group and Honda had extended their agreement for 10 years.<br /><br />Under it, the Japanese partner would continue to provide technology to the JV.<br />It was to come up for renewal in 2014.<br /><br />Hero Honda shares today jumped 3.57 per cent and closed at Rs 1,679.10 a piece.</p>