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2“For the company and for me personally, this is one of the most important announcements I have made in the last 25 years... through the new arrangement, Hero will be free to launch its own products, get its own R&D capability. ”
3“We are not selling off our stake in HHML to make money. We realized that Hero has its own vision and Honda, its own... when the joint venture was inked over two decades back, it was a totally different world... we had to respect their vision and had to unwind our holdings.”
4“The market can get hyper competitive and commoditized or it may get increasingly specialized as people bring more technology to bear and try to bring more differentiation
5“The split in Hero Honda partnership may affect the confidence of their dealers, who had enjoyed the market dominance for a long tim”.
The Indian automobile industry has come a long way since the manufacture of first car in Mumbai in 1898. The automobile sector today is one of the key sectors of the country contributing majorly to the economy of India. The industry bagged the position of being the seventh largest in the world in the year 2010. Following economic liberalization, Indian domestic automobile companies like Tata Motors, Maruti Suzuki and hiahindra and Mahindra expanded their production and export operations in and across the country and since then the industry has only shown signs of growth. Subsequent to independence and until the 1980s, foreign companies were not permitted to enter the Indian market. These restrictions were relaxed to a certain extent in the mid 1980s when foreign companies were allowed to enter the market through minority joint ventures. This period saw the setting up of numerous joint ventures along with foreign companies, and the Hero-Honda Company was one such example. The joint venture proved to be one of the most successful one in the history of Indian automobile sector overseas deals. However, in the year 2010, the news about Honda to sell its 26% stake in Hero Honda became talk of the town. The breakup of Hero Honda after a marriage spanning 25 years sent shockwaves across the entire Indian auto industry. The case focuses on the issues that led to the break-up and closes with a set of concerns that challenge Hero and Honda’s survival in the future.
Joint Venture(JV), Automobile Sector, Takeover Code, Royalty, Suplit, Competition
