Kinetic - Honda: When Honda’s first partnership ended

The Kinetic Group- Honda Motor Company partnership worked for almost 12 years till 1997.

As in Hero Honda Motors (HHML), Honda was an equal partner here too. But problems cropped up from 1998 over issues such as introduction of new models, advertising expenditure and marketing strategies.

Eventually, Honda sold out at about 50% discount to the market price.

Kinetic also signed an agreement with Honda to continue manufacturing and selling existing Kinetic Honda models.

Honda also agreed to continue providing technical know-how in return of royalty and technical fees from Kinetic.

Though the deal was skewed in Kinetic’s favour, it eventually could not manage to hold its own in the Indian two-wheeler market —- neither in scooters nor in motorcycles. In 1999, the scooter business was sold off to Mahindra & Mahindra.

Around the same time, Honda established its wholly-owned subsidiary Honda Motorcycle & Scooter India Ltd (HMSI) with an initial capacity of one lakh units per year. Today, it has 48% market share of the scooter market in India. It’s aiming to sell 1.6 million units in current fiscal year 2010-11.