The iconic Harley-Davidson is expected to enter a distribution deal with Hero MotoCorp to sell its motorcycles, as it ends up manufacturing in India.
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Harley-Davidson announced its departure from India as part of a global restructuring process
Harley-Davidson Inc is in advanced talks with Hero MotoCorp of India for a distribution agreement that will allow the iconic motorcycles of the American firm to be sold in India, after it stops local manufacturing there, three sources told Reuters. It will halt sales and close its manufacturing plant in India, effectively exiting the world’s largest motorcycle market after a decade of unsuccessful efforts to gain a foothold. However, Harley is in talks with Hero MotoCorp to enter into a distribution agreement that will allow the Indian company to import and sell Harley motorcycles as its sole distributor, two sources familiar with the talks said. “Hero will be the premier Harley motorcycle dealer in India.
Read also: Harley-Davidson decides to discontinue operations in India
This will be a partnership, a strategic alliance, “said one of the sources, all of whom declined to be identified as the discussions were private. Discussions are also ongoing to allow Hero to become a contract manufacturer of at least one Harley motorcycle with 300- 600cc capacity engine, which will launch later, added the first source. Financial details of the deal were not immediately clear. When asked about the conversations with Hero, a Harley spokeswoman said that the company cannot comment on “rumors or speculation.”
Hero could also be a contract manufacturer of at least one 300-600cc Harley motorcycle under the new deal.
On Thursday, it said it was “changing its business model in India and evaluating options to continue serving customers.” Hero MotoCorp, which is India’s largest two-wheeler manufacturer by sales, said it does not comment on market speculation.
It produced 6.4 million scooters and two-wheelers in the fiscal year ending March 2020, a third of India’s total production. Harley made just 4,500 motorcycles during that period, largely assembled from kits. imported demountables at its plant near New Delhi, which will close as part of its announced restructuring. Harley’s decision to stop direct manufacturing marks another major departure from an automotive player in India and is a setback for Prime Minister Narendra Modi, who has been inviting foreign companies to increase local production.
Read also: Harley-Davidson Street 750 to be discontinued
Ford Motor and General Motors have reduced their operations in India in recent years. Harley, known for its heavy touring motorcycles, struggled in India mainly due to high import tariffs, which the United States
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President Donald Trump often criticized India for, and also because its locally assembled bicycles faced high taxes. Hero typically sells motorcycles with engine capacities of less than 200cc and a deal with Harley will help accelerate its entry into the mid and high engine segments. favored by cycling enthusiasts and young riders, the second source said. “In that segment, cycling is moving towards a leisure fashion purchase, weekend rides and Harley bikes will perform well with more local content,” the source said, adding that Harley was also likely to provide technological knowledge and inputs on quality standards to Hero. All 33 Harley dealers will likely be under Hero management under the new deal, one of the sources said.
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