Harley Davidson's India story is not over yet; here's why

Harley Davidson Inc, which recently announced to close its sales and manufacturing operations in India, is likely to sign distribution deal with Hero MotoCorp to sell its iconic cruiser bike in the country. The deal between the automakers is likely to be announced this week, as per media report.

The strategic tie-up with Harley Davidson will give Hero MotoCorp exclusive distributor rights to import and sell Harley bikes in India. As per Reuters report, Hero MotoCorp will become a contract manufacturer for at least one Harley motorcycle with 300-600 cc engine capacity, which the American auto major will launch later. The financial details of the deal are yet to be revealed.

The negotiations between the parties started last month after Harley Davidson announced to change its business model in India. Industry insiders say a deal to sell its assets to the Mumbai-based company is in the last stage and is likely to be announced soon.

This development comes after American motorbike manufacturer in September announced its exit from the Indian market, bringing to a close a decade long journey. The company is expected to complete the restructuring activities approved through September 23, 2020 within the next 12 months.

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In a SEC filing in the US, the company said it plans to shutter its factory in Bawal in Haryana and lay off at least 70 employees in India as part of its broader restructuring plan in the Rewire project that seeks to trim losses and optimise global dealer network.

Harley entered Indian market with much fanfare in 2009 hoping to profit in a market that was already one of the biggest for motorcycles around the world and had a young aspirational consumer base to boot. In these 10 years, Harley has sold only a little over 27,000 units in the country; segment leader Royal Enfield sells double of that every month. Last fiscal, it sold a mere 2,470 units and only about 100 motorcycles in the first quarter of this fiscal.  The coronavirus-led lockdown added to the woes of the company, which was already facing declining interest among young customers in markets around the world.

ALSO READ: Five reasons why Harley Davidson failed in India

Meanwhile, shares of Hero MotoCorp were trading at Rs 3,316.35, down 0.42 per cent, against previous closing price of Rs 3,330.35, on the BSE.

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By Chitranjan Kumar