Harley close to deal with India's Hero after stopping local manufacturing

WION Web Team New Delhi, Delhi, India Sep 25, 2020, 08.01 PM(IST)

Harley Davidson Photograph:( Reuters )

Story highlights

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-Davidson Inc is in talks with India's Hero MotoCorp for a distribution deal which will allow the US company's motorcycles to be sold in India.

This comes close on the heels of the US company stopping local manufacturing there.

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.

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.

On Thursday, Harley 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, 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 knock-down 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 -- which US President Donald Trump often criticised India for -- and also because its locally assembled bikes faced high taxes.

Harley's 33 dealerships will likely come under Hero's management under the new arrangement.

(with inputs)

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