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Honda Expresses Dissatisfaction Of Hero Stake
But Honda, keen on closing the deal on somewhat current price, is in the mood to compensate the difference by getting a considerable stake from Hero for an undisturbed continuation of the JV. At present both the companies hold 26 percent stake each in Hero Honda making the venture the world largest in two wheeler segment. The final outcome of the deal may materialize in Bangkok during the dawn of 2011, it is anticipated.
The JV has been in the run for almost more than 25 years in the Indian two wheeler market making it a high profile business. The JV has been on the lines of Maruti Suzuki for the four wheeler sale in the country.
The JV is alive after the agreement was extended in 2004 for ten years making Honda to offer the technological back up for the Indian partner. The sale of the bikes from this JV pricked up with attractive marketing strategies like the slogans Fill it Shut it Forget it highlighting the fuel economy. The JV has overcome many sort of competitions in all these years even pushing the country"s largest scooter maker Bajaj behind.
The negotiations are on amidst Hero Honda securing its highest ever sale for a single month in October with the sale of 505553 units making the rise by 42.75 percent against the same period of 2009. Honda"s intention is to stabilize its share in the JV by demanding more royalty which is yet to come off.
The reason cited for this inability has been the whooping sale from the JV"s two premier models Splendor and Passion. Honda"s displeasure is severed with Hero refusing to route the spare parts through the Japanese partner. The industry and particularly the shareholders are very anxious over the on going slaughter of this JV.
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