Hero MotoCorp’s royalty payment to its ex-partner Honda is expected to end soon. Hero has to pay royalty to Honda for four products – the Maestro, Passion X Pro, Ignitor and the Impulse.
The reason Hero has to pay a good amount of money to Honda is because all these four products use technology that has been sourced from Honda. When their partnership split, Honda let Hero use their technologies for a couple of years but for a price. Hero MotoCorp has paid Rs 50.02 crore in FY2012-13, Rs 116.67 crore in FY2013-14, Rs 121.41 crore in FY2014-15 and Rs 78.89 crore in FY2015-16 as royalty to Honda. The huge sum in 2013 and 2014 was a result of strong sales performance of the Maestro. This scooter uses the same engine as the Honda Activa, which is the highest selling scooter in India.
Hero’s other products, Ignitor, Passion X Pro and the Impulse didn’t really get a lot of sales for the company. In fact, the Impulse is not on sale anymore. The royalty payment will surely go down in the next couple of months as the Maestro Edge and the Duet are performing really well and both have been developed in-house. Hero plans to pull the plug off the Maestro in the next couple of months, helping itself reduce financial liability to Honda. It makes sense for Hero MotoCorp to pump in that money into R&D that’ll help the company churn out more and better products. The other two products in question will also be taken off the shelf as they’ve not being generating good business for the company.
Check out the on road prices of all Hero bikes here.
Source : autocarpro
