reinforcement of the brand http://trak.in/tags/business/2010/12/21/real-reason-hero-honda-split/ http://trak.in/tags/business/2010/12/18/hero-honda-divorce-brand-identity/ http://trak.in/tags/business/2011/03/18/hero-honda-rebranding-new-logo/ http://trak.

in/tags/business/2010/12/17/hero-honda-split/ Joint Venture A joint venture between the Hero Group and Honda Motor Company was established in 1984 as the Hero Honda Motors Limited At Dharuhera India. Hero is the brand name used by the Munjal brothers for their flagship company Hero Cycles Ltd. Munjal family and Honda group both own 26% stake in the Company.

Statistics
Hero Honda has been the largest manufacturer of twowheelers since a decade. With a market share of 60% in motorcycles and 43% in two wheelers, Hero Honda has been the leader by far. Annual growth (2-wheelers) Annual growth (Hero-Honda) Sales Product offerings Export (by number)

Break-up
Hero Honda group split in the end of 2010. After the split the Munjal family bought Honda Motors 26% stake for around $1 billion, or a little less than half the current value of the stake in the stock market.[1]

Benefits
New Markets: The Hero Group will gain from dissolving the partnership with Honda Motor by being able to export more motorcycles and scooters around the world. Hero Honda, which has a 44 percent domestic market share, is currently limited to exporting motorcycles only to Indias neighbouring countries due to Hondas global presence. "We will be able to make our own global presence felt in global markets," Hero Honda managing director Pawan Munjal told a news conference.

New segments: Motor cycles have been surging in line with the rising incomes of Indias middle class, who number up to 350 million, which has been aiming at high-end customers, now will target the large entry-level segment. The Hero Group has been responsible for marketing and distributing Hero Hondas motorbikes while Honda mainly provided technology. Hero will now leverage the plus. Hero Honda said that the royalty costs for Honda technology would either remain steady or fall as a result of the deal, in contrast to media reports and the technology would be shared till 2014 to fill the gaps, if any.

How will this affect the Hero Group?

This divorce would affect the Hero Group at three different levels:

Customers Communication Competitors

Hero Honda has built its massive customer base because it is HERO HONDA! The fact that there wouldnt be any Honda after 2014 (the time till which they can use the Honda name) has excited the competitors. A decade of leadership hasnt really given the competitors an opportunity to do something special. Because something special for them is fantastic for Hero Honda! The name is what attracts people to Hero Honda because it is associated with trust and quality. But then communication too is important for the top of the mind recall for customers, isnt it? The Fill it Shut it Forget it as well as Desh Ki Dhadkan campaigns of Hero Honda are probably some of the most famous ad campaigns in the country. With Hero breaking up from Honda, the Hero Group would have to come up with an entire new communication strategy. The branding campaign would have to be completely changed because people wouldnt be able to associate with the Hero Group so readily. And this is the reason they have asked JWT to help them. Their plans include using a branding strategy for motorcycles even though they are present in the bicycles segment as well. The most important thing they need is reinforcement of the brand and smooth transition from being Hero Honda to just Hero. The ones who are grinning from ear to ear at this divorce are Hero Hondas competitors. Launching of new products, poaching their employees and dealers as well as greater spending on R & D Hero Hondas competitors are licking their lips.

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. 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?

Future?
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.