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Hero Motors In Trouble Post Split
The BS IV norms are slated for making to mandatory in 2015 when all the two wheelers will have to meet them. Such implementations will make the manufacturers to abide the norms which would require heavy amount of investments for refreshed technology. The global players like Honda, Yamaha and Suzuki are already on the move as they have initiated such steps at the expense of large amount. The corresponding upgrading in 2015 is that the European countries would have reached BS V when the Indian roads got BS IV on force. It is estimated that in another 5 years, Indian roads may be filled with 15 million two wheelers every year. Of the outgoing partners, Honda is well versed in fuel injection systems to meet the prescribed emission norms in India. Hero would lose this technology know-how from Honda once the split came into force.
Another problem that Hero Motors is facing is the unmentioned royalty amount payable to Honda which the shareholders and investors have since been objecting. They fear that the sharing of technology for the next stage of emission norms would invite huge expense by way of more royalty. So far Hero Honda is not confident of meeting the conversion mandate to BS III from BS II within the deadline - March 31, 2011. The company is seeking the mercy of the government"s possible extension of time. The lone product which runs on this BS III has been the fast selling Splendor and that too after a two months delay. In addition the RTO officials too declined to register the vehicle on the reasons best known. Whereas Honda would go along with its own subsidiary Honda Motorcycles and Scooters India Ltd, leaving Hero Motors to run on its new and own logo and brand.
Hero believes on trust equity to steal the show. Hero Motors rely much on its strong dealer base to support till it sustains the compensation arising out of this split. The Chairman and his son made an instant appeal to the dealers to continue as of now which has got shape for these 25 years. To meet the challenge ahead, the company has been heralding the motto of 3A strategy - Availability, Accessibility and Affordability. The consultant for Hero Motors seemed to have stressed the embellishing of the on going process of all these years. In the meantime the company is deputing a team to London to make a study on designs for creating a new logo and identity. He made it clear that the pattern in coming days will be based on innovation that the product will be on individual brands rather than on corporate image of Hero.
The split has received mixed responses from many corners and there has been no concrete reply from Hero too. The Chairman of Bajaj, the second largest two wheeler company in India, said everything about Hero Motors will materialize only after 2015 and this seems to be quite true of the matter in discussion.
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