Hero MotoCorp And Harley-Davidson To Ride Together In India
In the global motoring landscape, Hero MotoCorp Ltd. and Harley-Davidson Inc. are polar opposites. Yet, they are now in partnership to make and sell motorcycles in the world's largest two-wheeler market.
The maker of 100 cc Splendor motorcycles has signed agreements with the 1,800 cc Fat Boy maker to develop and sell a range of premium motorcycles under the Harley brand name, according to an exchange filing on Tuesday. India’s largest two-wheeler maker will also take over the existing sales and service operations of the American company in India.
The development comes a month after the Milwaukee, U.S.-based motorcycle maker exited India to boost restructuring expenses at home and cut costs globally.
Hero MotoCorp has been working on a 300-400 cc motorcycle at its Jaipur R&D centre, and the tie-up can accelerate this product’s development, a person privy to the matter told BloombergQuint on the condition of anonymity. Hero MotoCorp will also have an option to sell the premium high-end motorcycle with either brand names in both domestic and global markets, this person said, but the focus will be on India for now.
Globally, Harley-Davidson plans to focus on about 50 markets, and India is one of them, Chief Executive Officer Jochen Zeitz said while declaring the firm’s September quarter earnings on Tuesday.
Harley is exiting 39 markets where weak volumes and profits don’t generate enough cash to support investment. It will focus on 50 key markets, and in 17 of those it will rely on outside distributors to sell bikes—in India, that’s Hero MotoCorp.
Zeitz, the former CEO of sneaker company Puma SE, has narrowed the motorcycle maker’s focus to core markets and model segments and scaled back ambitions for expansion overseas. Motorcycle sales in the U.S., Harley’s biggest market, logged a 15th consecutive quarterly decline—falling 10%. But that was better than the 27% drop in the previous quarter.
The Sales Comparison
According to Hero MotoCorp’s exchange filing, the Pawan Munjal-led firm has sold more than 95 million motorcycles and scooters since inception. It’s the largest two-wheeler maker in India by sales, clocking over five lakh units per month even during the pandemic.
Harley’s India ride, however, was bumpy at best. After entering India in a motorcycles-for-mangoes deal between India and the U.S. in 2007, the V-Twin behemoth quickly set up dealerships across most urban centres to cater to initial demand, which eventually petered out in the face of competition from Triumph Motorcycles U.K., Italian bikemaker Ducati, and homegrown icon Royal Enfield.
To be sure, Hero and Harley’s sales numbers aren’t comparable, since one can buy 75 Splendors for the price of one Fat Boy. Harley did try its hand at making middleweight motorcycles at its Bawal plant in Haryana to limited success.
Hero MotoCorp, on the other hand, has six manufacturing facilities in India, and one each in Colombia and Bangladesh, according to its website, with total production capacity of nine million units per annum.
While Harley-Davidson Inc. stands to benefit from the manufacturing and distribution might that Hero MotoCorp brings to the table, the Indian company will look to leverage Harley’s technical know-how to make higher capacity premium motorcycles.
Hero MotoCorp’s current line-up of motorcycles tops out at 200 cc, and the biggest bike it has ever made is the 223 cc Karizma, based on an engine derived from its former partner Honda Motor Co. Ltd. In comparison, Harley-Davidson’s smallest motorcycles are the Street 500 and 750.
Hero showcased a 300 cc ADV concept in February this year, and has forayed into motorsports—signs that it aims to look beyond commuter motorcycles.
Competition Waits & Watches
The Hero-Harley partnership is the latest in a series of deals that global two-wheeler makers have struck with Indian manufacturers to make the most of the economies of scale that the local companies possess.
- Bajaj Auto owns nearly 47% stake in KTM AG and has been making and selling the Austrian motorcycles in India for close to a decade now. The Rajiv Bajaj-led firm has also tied up with Triumph Motorcycles U.K. to make 200-800 cc motorcycles in India.
- TVS Motor Co. Ltd. has a licensing agreement with Germany’s BMW Motorrad to make two 310 cc motorcycles in Chennai, for the world. TVS Motor also acquired the legendary Norton Motorcycles recently.
- Mahindra & Mahindra Ltd., through its subsidiary Classic Legends Pvt. Ltd., resurrected the Czech motorcycle brand Jawa in 2018. It currently sells three 300 cc motorcycles—the Jawa Classic, Jawa 42 and Perak—in India. M&M also owns the rights to use the BSA brand of motorcycles globally.
That leaves Royal Enfield, which is going after Harley-Davidson in the U.S. even as it faces a new challenger at home. It remains to be seen, then, how the Hero-Harley alliance shapes up in such a crowded arena.
BloombergQuint’s Nishant Sharma in Delhi contributed to this story.