Hero MotoCorp Forms Joint-Venture with Magneti Marelli

12/08/2013 @ 4:03 pm, by Jensen Beeler5 COMMENTS

Hero MotoCorp Forms Joint Venture with Magneti Marelli hmc mm hero motocorop magneti marelli 635x423

Once upon a time, Hero MotoCorp was Hero Honda, with the Indian brand relying on its Japanese counterpart to provide the technology that then went into the partnership’s emerging market motorcycles. The joint-venture was a stepping stone for Honda to launch into India, and for Hero it was a quick way to gain marketshare in its lucrative domestic market.

Fast-forward to present day, and Hero has not only become Hero MotoCorp, but it has also become the largest motorcycle manufacturer in India. Honda is a stand alone brand in India now, and trails only Hero MotoCorp with its motorcycle sales volume in India.

To maintain its position at the domestic leader, Hero MotoCorp has had to rely on replacing its technical partnership with Honda by forging alliances with various other brands around the world. Perhaps the most famous of these partnerships is the one with Erik Buell Racing, which includes the Indian brand sponsoring the American company’s racing efforts, and owning a sizable 49.2 % chunk of Erik Buell Racing’s private corporate stock.

Add a new brand to the list now though, as Hero MotoCorp has formed a joint-venture with the Italian electronics wizards at Magneti Marelli. There are bonus points for good timing as well, as the news comes just a few weeks before Hero MotoCorp is to be completely free of Honda’s technology.

The joint-venture sees the creation of a new company: HMC-MM Auto Ltd, which Hero MotoCorp owns a 60% of, while Magneti Marelli owns the remaining 40%. The companies are initially investing $8.5 million into HMC-MM, and plant to bring that total to $27 million by 2024.

With electronic systems becoming more and more an integral part to motorcycle design, the joint-venture should help Hero MotoCorp compete with the engineering prowess of Honda. A pressure that other Indian manufacturers will surely feel, HMC-MM says it will provide technology to other Indian brands, not just Hero MotoCorp.

The move is a win/win for Hero, as it will help smaller brands challenge Honda’s growing presence in India, as well as provide an extra revenue stream for Hero MotoCorp. Considering how hot the Indian market is right now, it is hard to fathom the competition heating up any further, but it is.

Source: Bike Advice

Comment:

  1. smiler says:

    Looks like Hero’s strategy is to make a joint venture to gain tech. once they have it then they drop that partnership and move on to the next company they need help from.
    Hope Honda do well in India and elsewhere.

  2. Sanjay says:

    Honda had a 100% plus growth in India , in their first year after exiting the JV with Hero .To be successful you need to take risks and come out with a product that is desirable. Hero has been playing it safe , so much so that they were overtaken by Bajaj in a segment they ruled for a long time ( http://www.zigwheels.com/news-features/news/bajaj-discover-trumps-hero-splendor-finally/14273/ ) .

    Hero need to do something interesting if they wish to recapture their market share . Through their joint ventures , they have the tools to do that. It remains to be seen if they can make it happen..

  3. paulus says:

    Honda make great electronics. So great and reliable that a few years ago an Italian (red) exotic brand dropped the use of troublesome Italian supplied (ahem) parts to use Honda electronics instead.

    Now that Hero have parted from Honda, they have possibly lost this great resource and need a new supply option.

  4. a tom says:

    smiler, it was technically Honda’s decision to exit the JV, that’s not on Hero’s owners (though Hero likely pushed them towards it). Indian laws have been fairly protective of domestic markets in the past, hence Honda had only been allowed 26% share in HHMCL (guess certain markets slowly opening up?), and couldn’t influence the management as they would have liked.

    Honda’s now obtained the control they wanted and despite the risks look to made the most of their opportunity. This is just Hero trying to do the same.

  5. Chad Stew says:

    Honda to India? Very interesting seems like a temporary venture, lets see how that goes for them hope all goes well