Hero, Harley in tie-up to roll out bikes
Hero MotoCorp Ltd, India’s top two-wheeler maker, will sell Harley-Davidson, Inc. motorcycles in the country as the US automaker renews its stint in this potential growth market for premium motorcycles.
Under a distribution and licensing agreement between the two companies, New Delhi-based Hero will develop, sell and service Harley motorcycles in the country. The pact breathes fresh life into Harley’s operations in India as the company had last month announced its decision to close manufacturing operations in India due to sluggish volumes.
“Per a distribution agreement, Hero MotoCorp will sell and service Harley-Davidson motorcycles, and sell parts and accessories and general merchandise riding gear and apparel through a network of brand-exclusive Harley-Davidson dealers and Hero’s existing dealership network in India,” the companies said in a joint statement. “As part of a licensing agreement, Hero MotoCorp will develop and sell a range of premium motorcycles under the Harley-Davidson brand name.”
For Hero, the partnership with Harley could propel the company to become a significant player in the domestic market for mid-sized motorcycles, dominated currently by Eicher Motors Ltd’s Royal Enfield brand. Over the years, mid-size segment has seen several new entrants such as Honda Motorcycle and Scooter India, Triumph Motorcycles, BMW, and Ducati either through local assembly or by importing fully-built units.
The companies are hoping that higher disposable incomes and economic expansion will fuel demand among Indians for such premium motorcycles.
Hero, known for its fuel-efficient, affordable motorcycles, has also been trying to re-engineer its way into the premium motorcycle segment with a slew of 180cc-200cc products, and plans to also enter the 300cc-400cc space in the next couple of years.
Premium motorcycles are considered lucrative since they command higher profit margins. Harley on September 25 announced its decision to shutter its sole factory in India at Haryana and shrank its sales operations, ending 11 years of operations in the country. The company has been complaining about high taxes on import of semi-knocked down or completely built units, which raise the final cost of the product, discouraging several buyers.
Over the last two years, Harley has been scouting for local partners in India and China to bring down the cost of operations and develop cheaper motorcycles that cater to the local markets.
Hero and Harley have been negotiating a potential deal to develop mid-size motorcycles in India over the last two years.
“These actions are aligned with Harley-Davidson’s business overhaul, The Rewire, and the company’s announcement in September to change its business model in India. This arrangement is mutually beneficial for both companies and riders in India, as it brings together the iconic Harley-Davidson brand with the strong distribution network and customer service of Hero MotoCorp,” according to the joint statement.
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