Honda Motorcycle to Shift R&D Base to Manesar

Move will be the last part in the amicable separation of Honda Motor Co and HeroCorp

The last part in the amicable separation between the Hero Group and the Honda Motor Company is being initiated,making the separation of the leading players in the Indian two-wheeler market complete.Honda Motors Indian subsidiary,Honda Motorcycle & Scooter India (HMSI),will be moving its research and development base for two wheelers in India from Gurgaon to Manesar plant,even as Hero MotoCorp is forging new alliances and ties to set up its own full-fledged R&D centre.The move will help HMSI,the second largest domestic two wheeler maker today,to churn out new models faster especially in the mass market category and take on its erstwhile partner Hero Group head-on to achieve its long term goal of becoming the Number 1 two wheeler maker in the country.

ET learns that the R&D centre,which runs under the company called Honda R&D India (HRID),will move from a rented set up of IFFCO chowk in Gurgaon to an integrated R&D set up in the HMSI Manesar plant,where a new building is being currently set up.The centre is likely to be operational in the next three to six months time.Honda Motor is expected to invest several hundred crore in this expanded set up and aims to more than double the number of engineers to 200-300,said people close to development.

The new set-up will move beyond developing minor model changes to styling and design,prototype development,testing and validation,component development with vendor to offer products faster at lower cost.An e-mail query to HMSI and Honda R&D India did not elicit any response.The Hero MotoCorp spokesperson told ET that it is their internal matter and such a development,if any,will have no effect whatsoever on our product launch plans.

We are strengthening our own capabilities both organically as well as through strategic tie-ups,such as with EBR and AV, the spokesperson added.Before the break-up,HRID used to work for the erstwhile Hero Honda and Honda Motorcycles future product.Now,it will solely focus on the needs of HMSI.When Honda was Hero Groups partner,HMSI was barred from entering mass market,but now with both the companies on their own,the HRID will be working aggressively on developing new mass market motorcycles and will be in a position to react to market needs more quickly with new models.If you want to compete with Hero,then you need to have capabilities in house.With this move,HMSI will be able to bring newer models at quick pace.

Apart from model improvement,the introduction time will improve dramatically, said an official familiar with the matter.The Honda Motors technology agreement with the Hero Group expires in June 2014,and the Pawan Munjal-promoted company will however continue to source products and technology from Hondas R&D bases in Thailand and Japan.In fact there are two or three new products lined up by the Hero Group with the support of Honda technology which will be launched in the next 12-24 months and these includes 100 cc bike Passion XPro and a 125 cc Bike Ignitor,which the company showcased at the Auto Expo.Hero Group and Honda had signed a new licensing agreement in March,under which the Indian firm will pay its Japanese counterpart 45 billion yen (about.2,450 crore) till 2014.