Honda leaves India venture despite strong motorcycle sales

By Emerging Money>,

Shutterstock photo

New vehicle sales figures reveal that Honda's joint venture is still the top motorcycle manufacturer in India, growing at a spectacular rate of 23% a year. So why is the company leaving? Honda ( HMC , quote ) still owns 26% of Hero Honda, which sold 472,000 motorcycles in India last month -- 23% more than it did in February 2010 and more than all the cars India's automotive manufacturers put together sold in the same period But back in December, Honda agreed to exit the venture at a discount to its stake's fair market value of about $1.9 billion. Granted, its stake was still worth a lot more than its initial investment back in 1984, so it is not like the gigantic Japanese manufacturer is cutting out at a loss. Emerging markets are crucia l for HMC, so if anything, Hero Honda might have been holding Honda back. The company's solo-owned Indian operation saw its sales soar 44% last year -- admittedly from a low base, but much faster than the broad vehicle market. While passenger cars are getting more traction in emerging Asia, the motorcycle is still king in places like India. Nonetheless, Tata Motors ( TTM , quote ) and other Indian car companies also saw strong sales in February -- TTM sales were up 11.7%.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks
Referenced Stocks: HMC , TTM

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