MUMBAI: Japanese auto giant Honda’s attempts to cobble together the domestic spare parts business of its various Indian companies under a new entity continuous to be in a limbo due to opposition from the all-powerful Munjal family.
People close to the situation said Hero Honda has decided not to transfer its spare parts business to Honda Motors India (HMI) for the time being as the country’s largest motorcycle maker will not have any say in its operations.
ET had reported in its edition dated December 2, 2006, that Hero Honda didi not agree to Honda’s attempts to consolidate the spare parts business. Pawan Munjal, MD of Hero Honda, had said: “We have not had any discussions with Honda and we have no such plans. We have a thriving auto spare parts business.”
Hero Honda has a booming auto parts business thanks to its dominant position in the domestic motorcycle industry. The firm sells about two million vehicles per annum and is the market leader by a huge margin.
The Munjals, who control about 26% in Hero Honda, fear that they will lose this lucrative business if it is transferred to HMI. “HMI can squeeze margins or decide against sourcing components from these suppliers. There is also a fear that through these suppliers, Honda would start asserting larger control over Hero Honda,” sources said. Honda also owns a 26% in Hero Honda.
HMI, a fully owned subsidiary of Honda Motors Corp, Japan, was set up in July 2006 to handle spare parts, IT operations and corporate communication functions of all group companies. In the spare parts business, HMI works like a trading company, where it acquires components from various vendors of all four group companies, and supplies them to distributors.
HMI is looking at combining the synergistic activities of Honda Siel Cars India, Honda Motorcycle and Scooters India, Honda Siel Power Equipments and its joint venture Hero Honda. HMI is also facing problems in integrating the spare parts business of Honda Siel Power Products.
While HMI has managed to takeover the parts operations of Honda Siel Cars India (HSCI), multiple locations have slowed down integration of Honda Siel Power Products and Honda Motorcycles & Scooters. The company is in the process of figuring out the logistics of the spare parts business of various group companies as they are located in different states like Noida in UP and Gurgaon in Haryana.
In its reply to an email query, HMI said it has begun functioning by taking over the parts operations of Honda Siel Cars India (HSCI). Similarly, the parts operations of Honda Siel Power Products will be integrated during this fiscal and Honda Motorcycles & Scooters India will be gradually brought in.
“HMI is studying the possibility of establishing a similar synergistic relationship with the Honda’s joint venture company, Hero Honda Motors. This is a business decision for the company. If HMI is able to demonstrate that there is enough merit in doing centralised business of spare parts through a specialised company like HMI, Hero Honda at some stage will definitely join HMI.”
A spokesperson of Hero Honda added that,”All such decisions are taken with the mutual consent of the two joint venture partners, keeping in mind the interest of all stakeholders of our company. The same practice would be followed in this case also.”
In the middle of 2006, Honda issued a press release, which said Takedagawa will be in charge of co-ordinating the three Honda businesses in India — two-wheelers, automobiles, and power products to make the best business strategy suited for India. The company targets a turnover of Rs 180 crore for 2007-08
People close to the situation said Hero Honda has decided not to transfer its spare parts business to Honda Motors India (HMI) for the time being as the country’s largest motorcycle maker will not have any say in its operations.
ET had reported in its edition dated December 2, 2006, that Hero Honda didi not agree to Honda’s attempts to consolidate the spare parts business. Pawan Munjal, MD of Hero Honda, had said: “We have not had any discussions with Honda and we have no such plans. We have a thriving auto spare parts business.”
Hero Honda has a booming auto parts business thanks to its dominant position in the domestic motorcycle industry. The firm sells about two million vehicles per annum and is the market leader by a huge margin.
The Munjals, who control about 26% in Hero Honda, fear that they will lose this lucrative business if it is transferred to HMI. “HMI can squeeze margins or decide against sourcing components from these suppliers. There is also a fear that through these suppliers, Honda would start asserting larger control over Hero Honda,” sources said. Honda also owns a 26% in Hero Honda.
HMI, a fully owned subsidiary of Honda Motors Corp, Japan, was set up in July 2006 to handle spare parts, IT operations and corporate communication functions of all group companies. In the spare parts business, HMI works like a trading company, where it acquires components from various vendors of all four group companies, and supplies them to distributors.
HMI is looking at combining the synergistic activities of Honda Siel Cars India, Honda Motorcycle and Scooters India, Honda Siel Power Equipments and its joint venture Hero Honda. HMI is also facing problems in integrating the spare parts business of Honda Siel Power Products.
While HMI has managed to takeover the parts operations of Honda Siel Cars India (HSCI), multiple locations have slowed down integration of Honda Siel Power Products and Honda Motorcycles & Scooters. The company is in the process of figuring out the logistics of the spare parts business of various group companies as they are located in different states like Noida in UP and Gurgaon in Haryana.
In its reply to an email query, HMI said it has begun functioning by taking over the parts operations of Honda Siel Cars India (HSCI). Similarly, the parts operations of Honda Siel Power Products will be integrated during this fiscal and Honda Motorcycles & Scooters India will be gradually brought in.
“HMI is studying the possibility of establishing a similar synergistic relationship with the Honda’s joint venture company, Hero Honda Motors. This is a business decision for the company. If HMI is able to demonstrate that there is enough merit in doing centralised business of spare parts through a specialised company like HMI, Hero Honda at some stage will definitely join HMI.”
A spokesperson of Hero Honda added that,”All such decisions are taken with the mutual consent of the two joint venture partners, keeping in mind the interest of all stakeholders of our company. The same practice would be followed in this case also.”
In the middle of 2006, Honda issued a press release, which said Takedagawa will be in charge of co-ordinating the three Honda businesses in India — two-wheelers, automobiles, and power products to make the best business strategy suited for India. The company targets a turnover of Rs 180 crore for 2007-08