The tie-up announced by Harley-Davidson with Hero MotoCorp is part of the corporate makeover by the American cruiser bike brand, which involves exits from nearly 40 global markets.
Background
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.
Details
- Harley-Davidson said it has decided to hand over sales, service, and distribution of its products to Delhi-based Hero MotoCorp.
- Hero will also take care of sales of parts, accessories, general merchandise, riding gear, and apparels of Harley-Davidson.
- This arrangement is similar to revamped distribution models being piloted by Harley in 16 other markets outside the United States, apart from India.
- 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.
- This is being defined as a non-equity tie-up — a distribution-based partnership that does not involve transfer of technology from Harley.
- A licensing agreement allows Hero to develop and sell a range of premium motorcycles under the Harley-Davidson brand name.
- Hero MotoCorp would sell Harley accessories and general merchandise, riding gear, and apparel through a network of brand-exclusive Harley-Davidson dealers and its existing sales network in the country.
- The partnership is expected to help both companies. While Harley-Davidson bikes will still have a presence in India, the robust and widespread sales and service network of Hero MotoCorp will now open up.
- In September, Harley had announced the closure of India operations after 11 years of poor performance, which saw the company sell only 25,000 units. Harley did not offer any clarity about the future of the Haryana factory in its statement.
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