India: Honda Hero to Cease?

Honda Hero

Honda Motorcycles will formally decide as early as later this month to dissolve a motorcycle joint venture in India by selling its stock holdings, people familiar with the matter said Saturday, Kyodo News reported.

Honda is also mulling construction of a new factory for its wholly owned subsidiary in India to promote the motorbike business independently in the fast-growing market, according to the sources.

The Japanese automaker is considering selling the shares of Hero Honda Motors Ltd. to its business partner in India and a fund, and the sale price is likely to reach up to Y100 billion ($1.2 billion), the people said, according to Kyodo.

Hero Honda, owned by Honda and its local partner at 26% each, has a roughly 50% share of the Indian motorcycle market, and sold some 4.3 million motorbikes in 2009.

Sales of the wholly owned subsidiary, meanwhile, came to around 1.1 million in 2009, with Honda’s total market share in India predicted to decline in the short term.