Hero Honda started its operations in 1984 as a joint venture between Hero Cycles of India and Honda of Japan.[6][7] In June 2012, Hero MotoCorp approved a proposal to merge the investment arm of its parent Hero Investment Pvt. Ltd. with the automaker. This decision came 18 months after its split from Hero Honda.[8]
"Hero" is the brand name used by the Munjal brothers for their flagship company, Hero Cycles Ltd. A joint venture between the Hero Group and Honda Motor Company was established in 1984 as the Hero Honda Motors Limited at Dharuhera, India. Munjal family and Honda group both owned a 26% stake in the company.
During the 1980s, the company introduced motorcycles that were popular in India for their fuel economy and low cost. A popular advertising campaign based on the slogan 'Fill it – Shut it – Forget it' that emphasized the motorcycle's fuel efficiency helped the company grow at a double-digit pace since inception. In 2001, the company became the largest two-wheeler manufacturing company in India and globally.[3] It maintains global industry leadership to date.[3] The technology in the bikes of Hero Motocorp (earlier Hero Honda) for almost 26 years (1984–2010) has come from the Japanese counterpart Honda.[9]By December 2010, the board of directors of the Hero Honda Group had decided to terminate the joint venture between Hero Group of India and Honda of Japan in a phased manner. The Hero Group would buy out the 26% stake of the Honda in JV Hero Honda.[10] Under the joint venture, Hero Group could not export to international markets (except Nepal, Bangladesh and Sri Lanka) and the termination would mean that Hero Group could now export. From the beginning, the Hero Group relied on their Japanese partner Honda for technology.[11]
Honda exited the joint venture through a series of off-market transactions by giving the Munjal family, which held a 26% stake in the company, an additional 26%. Honda, wanting to focus only on its independent fully owned two-wheeler subsidiary, Honda Motorcycle and Scooter India (HMSI), exited Hero Honda at a discount and get over ₹6,400 crore (equivalent to ₹120 billion or US$1.6 billion in 2020) for its stake. The discount was between 30% and 50% to the current value of Honda's stake as per the price of the stock after the market closed on 16 December 2010.[12]
The rising differences between the two partners gradually emerged as an irritant. Differences had been brewing for a few years before the split over a variety of issues, ranging from Honda's reluctance to fully and freely share technology with Hero (despite a 10-year technology tie-up that expired in 2014) as well as Indian partner's uneasiness over high royalty payouts to the Japanese company. Another major irritant for Honda was the refusal of Hero Honda, mainly managed by the Munjal family),to merge the company's spare parts business with Honda's new fully owned subsidiary, HMSI.[12]
As per the arrangement, it was a two-leg deal: In the first part, the Munjal family, led by Brijmohan Lal Munjal group, formed an overseas-incorporated special purpose vehicle (SPV) to buy out Honda's entire stake, which was backed by bridge loans. This SPV was eventually opened for private equity participation, and those included Warburg Pincus, Kohlberg Kravis Roberts (KKR), TPG, Bain Capital and Carlyle Group.[13]The name of the company was changed from Hero Honda Motors Limited to Hero MotoCorp Limited on 29 July 2011.[3] The new brand identity and logo of Hero MotoCorp were developed by the British firm Wolff Olins.[14] The logo was revealed on 9 August 2011 in London, to coincide with the third test match between England and India.[14]
Hero MotoCorp can now export to Latin America, Africa and West Asia.[14] Hero is free to use any vendor for its components instead of just Honda-approved vendors.[14]
On 21 April 2014, Hero MotoCorp announced its plan on a ₹254 crore (equivalent to ₹345 crore or US$45 million in 2020) joint venture with Bangladesh's Nitol-Niloy Group in the next five years to set up a manufacturing plant in Bangladesh. The plant started production in 2017 under the name "HMCL Niloy Bangladesh Limited". Hero MotoCorp owns 55% of the manufacturing company and the rest 45% is owned by Niloy Motors (A subsidiary of Nitol-Niloy Group).[15] Hero also updated its 100cc engine range in 2014 for 110cc bikes except for Hero Dawn.
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