It looks like Harley-Davidson (Harley) will remain in the Indian market. In a press release, Harley-Davidson and Hero MotoCorp ( Hero) say that they have reached a mutually beneficial business arrangement regarding Harley’s products.
The Harley and Hero agreement
Under the agreement, Hero will sell and service Harley-Davidson motorcycles. In addition, they will sell parts, accessories, riding gear and apparel, and general merchandise.
Sales will occur through a network of brand-exclusive Harley-Davidson dealers as well as Hero MotoCorp’s existing dealer network. The deal gives the Harley-Davidson brand a strong distribution and customer service network in India.
But the partnership does not stop with Harley sales and service. As part of a licensing agreement, Hero will develop and sell a range of premium motorcycles under the Harley-Davidson name. The licensing agreement is likely why Hero agreed to the partnership.
Hero already has an extensive and broad presence in India. It is already the world’s largest maker of motorcycles and scooters in terms of unit volume. As such, the sale of a small number of Harley’s in India would not be a very large incentive for Hero.
The licensing agreement
But under the included licensing agreement, Hero can design, develop and sell its own motorcycles using the Harley brand. Harley’s name brings a “premium” cachet and “premium” branding often brings bigger profits.
But letting another company design, develop, and sell motorcycles as a Harley is a big step for the MoCo. The agreement means the “all-American” brand is no longer “all-American”.
Harley has been producing machines outside of the US for quite some time. But this agreement lets a different company take control of the build, design, and sales of Harley branded motorcycles. Exactly how much control has been given is not clear. Still, it could be a huge win for the Indian manufacturer.
The deal is not just a manufacturing agreement. It’s much more. It’s one that gives a “foreign” company control of Harley branded motorcycles. That’s a huge difference.
Perhaps Harley hopes that Hero will be successful and re-invigorate the brand name in India. If they are successful, Harley may have a better foothold in a huge market where it has struggled in the past.
Part of the Rewire plan?
Interestingly, the press release also says the agreement is aligned with Harley’s Rewire business overhaul and the company’s September announcement to change its business model in India. That seems like a bit of a stretch. Trimming product lines and cutting costs is one thing. Letting another manufacturer design and build motorcycles under your brand name is quite another.
What do you think of the Harley – Hero deal? Do you think it’s good for both companies or only good for one of them? Let us know in the comments below.