Hero may use Honda’s current technology for future models

Hero Honda may utilise erstwhile promoter Honda’s technology used in its current models for developing future products.

After deciding to part ways on their 26-year-old joint venture, the Hero Group and Honda signed a new licensing agreement under which the Indian firm will pay its Japanese counterpart 45 billion yen (about Rs 2,450 crore) till 2014.

“We have the right to use the (Honda) technology in perpetuity for the existing models as part of the arrangement,” said Mr Ravi Sud, Chief Financial Officer, Hero Honda Motors Ltd.

Under the agreement, Hero Honda is free to modify or use the platforms of all the existing products, including Splendor, Passion, CBZ to develop new models, he said.

“Earlier, we had to take Honda’s permission to make a change even on the design graphics but now we can change the engine or gearbox or develop on the platforms, if we wish, on our own,” Mr Sud said.

Asked if Hero Honda will use the existing technology for developing future products, he said: “Well, we have the rights and we would like to use it“.

Apart from considering using Honda’s technology, the company is also building up its own R&D capabilities, both manpower and logistics.

The company has earmarked up to Rs 800 crore as capital expenditure for 2011—12 financial year, mainly for setting up its fourth plant and also for R&D activities.