While the talks with Hero are wide-ranging right from products, distribution and manufacturing, as the contours get refined and defined, Harley is keen on a distribution partner who could source bikes from Thailand, the company’s new Southeast Asia hub, and sell here, said people close to the development.
“A logical step one with Hero could be distribution, but it does not stop Harley from pursuing others if the joint project takes time. The core of Hero-Harley discussion is mid-size motorcycles, which may not happen in a hurry,” said a person in the know of the development, adding, “Till then how can the brand manage the existing dealer set up and the responsibilities emanating out of them winding up. Another distribution agreement can help.”
Since the beginning of 2020, Harley-Davidson has been on the lookout for an India partner and the company is understood to have had discussions with Bajaj Auto, Hero MotoCorp and Mahindra & Mahindra. The fact that it has taken so long to firm up the plans indicates that there are issues to be ironed out between the Indian motorcycle maker and the American company.
“If the tie-up with Hero was anywhere close, then Harley would have gladly announced it. Instead, it announced a closure of its operation last week, clearly indicating that there are multiple issues yet to be addressed, before calling it a done deal. Harley has already earned a lot of critical press,” said another person in the know, adding that its dealers and customers were worried because of its decision.
When ET sought Harley-Davidson’s comment, and asked if any differences had cropped up during the discussions with Hero MotoCorp, it responded by sending last week’s announcement. “Harley-Davidson announced that 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 said.
Hero MotoCorp said it “does not comment on market speculation”.
In the space of 750cc and above motorcycles, Harley remains the market leader with a share of over 50%, and it would want to continue to retain that strong position in the market.