American bike maker Harley-Davidson has inked a deal with Hero MotoCorp, as it looks to exit the Indian market due to lackluster sales.
As per the distribution agreement, Hero MotoCorp will service and sell Harley-Davidson motorcycles, spare parts and general merchandise through Harley-Davidson dealers and Hero’s existing dealership network. Hero MotoCorp will also develop and sell a range of premium Harley-Davidson motorcycles under a licensing agreement. It, however, clarified that it won’t be taking over Harley-Davidson’s plant in India.
Last month, Harley-Davidson had discontinued its sales and shut down its manufacturing facility at Bawal in Haryana state. The move is part of its global restructuring initiative “rewire,” unveiled in July, under which it is planning to exit loss-making markets and focus on the US, Europe and parts of Asia Pacific. Harley-Davidson will be exiting about 40 loss-making markets and establish a dealer-direct or distributor model in 17 markets.
Though the Milwaukee-based cruiser bike maker has been in the Indian market for nearly a decade, it has so far managed to sell only 27,000 motorcycles, barely half of what the country’s segment leader Royal Enfield sells in a month.
For Hero MotoCorp this move will help enter the super-premium 300-600 cc segment. Though the Indian bike maker enjoys a 36% market share in the two-wheeler market, it has remained a volume-driven commuter bike maker with most models in the sub-200 cc segment.
While India remains a price-sensitive market, industry experts point out that the premium bike segment has been gaining popularity and attracting manufacturer interest. Harley’s rival Triumph has a partnership with Bajaj Auto under which its motorcycles are manufactured at Bajaj’s plant and its distribution is handled by its Indian partner.
Honda Motorcycle and Scooter India has recently entered this segment by introducing the Highness CB 350. It will compete with market leader Royal Enfield’s Classic 350 and other products.
Despite the Indian government’s efforts to promote the country as a manufacturing hub, the automotive sector has witnessed a churn with global brands such as General Motors, Fiat, Ssangyong, Scania, MAN and UM Motorcycles exiting the market.