Hero Motocorp stops paying royalty to Honda

A report in Economic Times states that Hero MotoCorp has stopped paying royalty to Honda. The company last made a payment on June 30, 2017.

Hero MotoCorp recently discontinued the Hero Passion Pro TR, Hero Passion XPro, Hero Ignitor, Hero Karizma, Hero Hunk, Hero Xtreme, Hero HF Dawn, Hero Splendor iSmart and Hero Splendor Pro Classic. These products used Honda engines for which Hero would not have to pay Honda anymore.

Hero though is still using the Honda sourced 102 cc mill in the Hero Pleasure, the 125 cc mill from the Hero Glamour and 97 cc powerplant seen in the Hero Splendor+ and Hero Passion. The Hero Xtreme Sports too uses the 150 cc mill, sourced from Honda. These products would have to be replaced with indigenous vehicles if Hero wants to keep its presence in all segments. Hero's R&D team, headed by Markus Braunsperger, a BMW veteran of 25 years, has to work overtime to achieve this task.

Hero MotoCorp aims to launch six new products in the financial year 2017-18 of which two will be available in the market by September 2017. This is expected to include the 125 cc Hero Dare showcased at the 2014 Auto Expo.

Since the dissoution of the Hero Honda joint venture in 2010, Hero Motocorp has paid a total of INR 388.96 (Rs 2 073 300 000) to Honda in annual royalties, the last such payout being INR 18.44 (Rs 98 289 000) for 2016-17, the report cites. The company can utilise the money saved from royalty on research and development.

Hero's entry to the premium motorcycle segment is expected to begin with the Hero Xtreme 200S which is expected to launch at the 2018 Auto Expo.