After 27 years of association with Honda, Hero Group finally parted ways. Although till 2014 Honda will provide technical assistance as the companies have signed a technical agreement but what after 2014? Hero MotoCorp cannot rely on Honda for long as after 2014 both the companies will completely disassociate and Hero will have to look for another source. As being reported, Hero is in talks with US motorcycle firm Eric Buell Racing and will sign a pact early next financial year. According to the deal, Hero will be able to buy technology from Eric Buell Racing without sharing any profits or ownership.
image – Buell 1190RS
Hero MotoCorp MD and CEO Pawan Munjal said,
“We have a flexible free-flowing pact with EBR, which would be developed into a equity partnership. The move is aimed at securing uninterrupted technological support from the US racing motorcycle maker once associated with iconic brand Harley-Davidson. By buying a stake, Hero can have a higher say in the US marquee firm and use the partnership to get a foothold in overseas markets. As we turn global, which is our long cherished aim, EBR is a strategic fit that will help us gain traction in overseas markets. We are open to all options as we move into being a diversified automotive company.”
EBR chief promoter Erik Buell said,
“We would look forward to have both technological alliance and partnership with Hero Moto-Corp in the future. A marriage would lead to huge synergies in the long-term. EBR has an annual capacity of 15,000 units. Hero has not ruled out more such partnerships.”
Nothing has been disclosed by the Munjal Group, owner of Hero MotoCorp, as negotiations are still being done. This new pact will definitely help Hero develop its own R&D technologies and we do hope this deal turns out positive. This is quite similar to the kind of arrangement we see between Bajaj Auto India and KTM who have been working together and Bajaj has bough a significant minority stake in KTM. This leads to a trustworthy long term cooperation between two brands with mutual technology support and sharing arrangements in place.
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