Harley finds a Hero to continue India journey, alliance announcement likely this week

MUMBAI: Harley-Davidson isn’t heading into the sunset in India after all.Within a month of announcing exit plans, the iconic US bike maker has given concrete shape to a tie-up with India’s Hero MotoCorp, the world’s biggest two-wheeler company by volume. The partnership will likely be announced this week.Initially, both parties are set to announce a distribution agreement. The size – and scope – of that arrangement could extend into a mid-size motorcycle project (for 300-500 cc vehicles) in three to five years. That will enable Hero to enter the premium end of the home market, while Harley can take a stab at the segment now dominated by Royal Enfield.ET learns that Hero is being advised by Goldman Sachs on the proposed partnership. Goldman Sachs declined to comment on the queries. In response to ET’s query, Hero Motocorp said it does not comment on market speculation. Separately, Harley said it is evaluating options and would keep its ‘Indian dealers and customers informed.’The partnership is similar to the Bajaj-Triumph alliance, wherein both companies (Hero-Harley) will jointly develop the platform and use India as a production base for the world market.The move will reinforce Harley’s ‘Hard Wire’ plan to come out stronger and profitable by 2025.78611638“The distribution is the first step; the core of the discussions is the joint project, which is why both partners have come together. The reason is clear - India is the biggest mid-size motorcycle market in the world,” said an industry executive close to the development. “By partnering the local leader, Harley will be able to tap into the best-cost-quality manufacturing base with a high level of localisation.”To be sure, Triumph-Bajaj is expected to be ready with their mid-size motorcycle by 2022, and Royal Enfield is moving up the value chain to twin cylinder bikes.With this, the Street 750 cc will cease to exist. Instead of sourcing bikes in CKD form from Thailand, Harley will be importing the bikes in CBU form. Doing so from Thailand is cheaper due to the Free Trade Agreement.

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