Harley may be close to pact with India's Hero

DISTRIBUTION DEAL

NEW DELHI • Harley-Davidson Inc is in advanced talks with India’s Hero MotoCorp for a distribution deal which will allow the U.S. company’s motorcycles to be sold in India, after it stops local manufacturing there, three sources told Reuters.

The Milwaukee-based company said on Thursday it will stop sales and shut its manufacturing plant in India, effectively abandoning the world’s biggest motorcycle market after a decade of unsuccessful efforts to gain a foothold.

Harley, however, is in talks with Hero over a distribution arrangement that will allow the Indian company to import and sell Harley bikes as its sole distributor, two sources with familiar with the talks said.

“Hero will be the master distributor for Harley bikes in India ... This will be a partnership, a strategic alliance,” said one of the sources, all of whom declined to be named as the discussions were private.

Discussions are also ongoing to let Hero become a contract manufacturer for at least one Harley motorcycle with 300-600 cc engine capacity, which it will launch later, the first source added.

The financial details of the deal were not immediately clear.

Asked about talks with Hero, a Harley spokeswoman said the company would not comment on speculation. On Thursday, it said it was changing its business model in India evaluating options to continue to serve customers.

Hero MotoCorp, India’s largest two-wheeler manufacturer by sales, also declined to comment on market speculation. It produced 6.4 million two-wheeler scooters and motorcycles in the fiscal year ending March 2020, a third of India’s total output.

Harley manufactured 4,500 motorcycles during that period, largely assembled from imported knockdown kits at its plant near New Delhi, which it will shut as part of its restructuring.

Harley’s decision to stop direct manufacturing marks another major exit by an automotive player in India and is a setback for Prime Minister Narendra Modi, who has invited foreign firms to ramp up local production. Ford Motor and General Motors have both cut back their India operations in recent years.

Harley, known for its heavy touring motorcycles, struggled in India mainly because of high import duties and also because its locally assembled bikes faced high taxes.

HERO WILL BE THE MASTER DISTRIBUTOR FOR HARLEY

BIKES IN INDIA.