Honda to continue as technology partner: Hero Grp

Honda to continue as technology partner: Hero Grp: Hero group is going to acquire 26% stake from Honda. Ravi Sud of Her Honda said that Hero Honda said that as a company – both companies got an excellent deal. He added that the definitive agreement would be signed in the next 2-3 weeks. Only a joint venture dissolution pact will be signed with Honda Motor, he said.

Analysts have had a mixed reaction to the news, with some saying that Hero Honda would see a spike in research and development costs. Sud agrees that meeting R&D and technology requirements would prove to be a challenge but said that Honda would continue to be its technology partner. He, however, said the auto company would explore other international companies in terms of technology

Sud sad the company would continue to use the joint Hero Honda brand through transition period till 2014. but incase of a change in technology partner, the brand would then see a change in name.

Sud added that meeting existing demand and tapping and developing markets globally too would be a problem.

Sud further said that royalty payments to Honda would be at 3-5% of sales and that all existing products would have no royalty after 2014. He added that royalty on new products would be in line with the current rates