Honda Announces Split From Indian Partner

As reported earlier this month, Honda will sell its 26% share of Hero Honda Motors, a joint venture established in 1984 which currently owns more than half of the market share of motorcycle sales in India.

Honda will sell its shares of the company to its former partners the Munjal family, which also held a 26% share in Hero Honda Motors. Terms of the sale were not released, but Honda will reportedly be selling its $2 billion stake at a substantial discount, rumored to be 30-50% less than market value.

Honda and Hero Honda will also sign a new licensing agreement to continue producing motorcycles and providing service for current products until 2014. Hero Honda is also expected to change its name by then, but it may continue to sell licensed Honda products.

We would like to extend our sincere gratitude to our Partners who made possible Hero Hondas growth to date, says Fumihiko Ike, Hondas managing director and chief operating officer for regional operations (Asia & Oceania). Our joint venture agreement will be dissolved, but our positive relationship will continue. And 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 a license for new products. I would like to take this opportunity to express our sincere gratitude to the Indian government and related authorities, the customers, and all our stakeholders who have supported Hero Hondas growth to date. Honda wishes for the success of Hero Group. And Honda will continue exerting our efforts for our customers in India and for further development of the Indian market.

Honda is expected to refocus its resources on its own wholly-owned subsidiary, Honda Motorcycle and Scooter India. HMSI is opening a new production facility with plans to build 600,000 units in 2011.

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