Why Hero-Honda Separated?

We all know that Hero-Honda was one of the most successful ventures that ruled the Indian market for the production and sales of their bikes, there was a time when Hero-Honda was the first choice of every middle-class family. It was nothing short of nostalgia for our generation, don’t forget to read this blog on How Hero-Honda collaborated. In this blog, we will see how this successful venture broke down in 2010.

In our previous blog, we have seen how these two great companies come together and created a monopoly in the Indian market, their strategy was outperforming the competitors and ruling the market. There is a famous quote like this: Many who started with you won’t finish with you”. This literally happens with the Hero-Honda group.

Having Secrets is a red flag

Secrets are like parasites in a relationship that can eventually lead to a breakup. During the formation of the board members of Hero-Honda, Honda Group had 2 executive directors and the other two members were selected by Honda itself. So, overall Hero-Honda had four board members, but none of them were from the Hero group, which meant that the Honda group had all access to Hero-Honda's plans and strategies, but Hero did not.

Limited Export

Honda was selling their bikes all over the world including countries like the USA, Africa, and the middle east but Hero was allowed to sell their bikes in countries like Nepal, Bangladesh, and Sri Lanka only. Honda wanted to sell their bikes only by limiting the export of Hero bikes all over the world.

No More Dependency

Companies come together in a joint venture when they both have some dependency on each other, Hero was dependent on Honda for Engines and Honda was dependent on Hero for spare parts, but this dependency became extinct when Hero launched their new R&D (Research and Development) center in Jaipur and Honda started making their own bike spare parts.

 Subsidiary Competition

According to the NOC agreement, none of the companies will sell anything that comes under direct competition with each other but in 1999 Honda introduced their subsidiary company Honda Motorcycles and Scooters India Pvt Ltd (HMSIPL) which comes under direct competition and contradicts the agreement, from there onwards Hero was planning to work as a single entity.

Competition from each other

Honda and its subsidiaries were expanding day by day, they were making their own spare parts, having all executive board members from their side, establishing new R&D centers, selling bikes in and out of India, and were making profits from both Hero-Honda and Honda group.

Hero group on the other hand started the tagline "Hum Hai Hero" and they were producing their own bikes like Hero Splendor, Hero Passion Pro, Hero Splendor Plus, etc. Basically, they were making some minor changes to every previous bike and started launching them on the market to regenerate the sales.

Eventually, it ceased to be a joint venture and officially ended in December 2010.

Conclusion

So, this blog ends with why Hero-Honda separated after 26 years of dominance in the Indian market, the way they created a monopoly, customer segmentation, sales growth, etc. Everything was extraordinary.

Don't forget to read part 1 of this blog: Collaboration of Hero-Honda