Harley-Davidson Partners Hero MotoCorp to Develop & Sell its Product in India

With the change in the consumer demand and behavior, the two-wheeler market of India is witnessing continuous growth. Not just that but the demand of premium motorcycle segment is rising in India. According to ResearchAndMarkets, the two-wheeler market in India is forecasted to grow at a CAGR of 7.33 percent, and reach a sales volume of 24.89 million units by 2024, from 21.19 million in 2019. A significant chunk of this could come from the premium high-performance motorcycles, as the demand for such motorcycles is rapidly increasing in the Indian market. Looking at such demand generating in the country, many global two-wheeler manufacturer are showing interest for business in India. However, for Harley-Davidson the scenario is something different.

Harley-Davidson, the American cult bike manufacturer has announced its partnership with Hero MotoCorp, the world’s largest maker of motorcycles and scooters in terms of unit volumes, for a distribution agreement. Under this distribution and licensing agreement, 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. “As part of a licensing agreement, Hero MotoCorp will develop and sell a range of premium motorcycles under the Harley-Davidson brand name. 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,” Harley-Davidson said.

As part of a licensing agreement, Hero MotoCorp will develop and sell a range of premium motorcycles under the Harley-Davidson brand name

The company’s dealer network will continue to serve customers through the contract term, Harley Davidson said. “As part of The Rewire, an overhaul of its operating model and market structure, the company is changing its business model in India and evaluating options to continue to serve its customers,” it noted. In a separate SEC filing, the American firm said that between August 6, 2020, and September 23, 2020, the company approved commitments to additional restructuring actions under ‘The Rewire’ related to optimizing its global dealer network, exiting certain international markets, and discontinuing its sales and manufacturing operations in India. The India action will include an associated workforce reduction of around 70 employees, it added.

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 and Harley have been negotiating a potential deal to develop mid-size motorcycles in India over the last two years. In the meantime, as part of its project Rewire, Harley’s top management decided to prune the company’s overall cost structure by closing some of its loss-making units as covid-19-led disruptions impacted profitability.