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Honda's plea for export exemption snubbed - Views on News from Equitymaster
 
 
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  • Oct 7, 1999

    Honda's plea for export exemption snubbed

    Honda Motors' plea for an exemption from compliance with its export obligation has been shot down by the government. This was revealed by a leading financial daily.

    Honda Motors is a wholly-owned subsidiary of Honda Motors Japan. It plans to manufacture scooters and motorcycles having 50 to 220 cc capacity. Earlier the company had generated some controversy, when the government had disallowed it to from manufacturing some of Kinetic Motors' models. (Honda has a technical tie-up with Kinetic Motors).

    Honda's entry into scooters and motorcycles will make the two-wheeler segment even more competitive. The company will have the advantage of superior technology given its parent's credentials. Even arranging finance will not be a problem for the company. Moreover, since it is wholly-owned, it will not carry the burden of a partner and can take decisions and execute them quickly. Its experience of Indian market conditions (through ventures with the Kinetic and Hero groups) will also stand it in good stead.

    However, Honda will find it a struggle to break the stranglehold of companies operating in the scooter and motorcycle segments. Manufacturers like Hero Honda, Bajaj Auto and TVS Suzuki have developed brands and extensive distribution networks. Honda will find it difficult to duplicate that overnight.

     

     

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