This distribution deal will permit Harley-Davidson’s motorcycles to be sold in India after the Milwaukee-based company stops local manufacturing in India.
Harley-Davidson will likely enter into a distribution arrangement with Hero MotoCorp, allowing the Indian company to import and sell Harley bikes as its sole distributor. This distribution deal will permit Harley-Davidson’s motorcycles to be sold in India after the Milwaukee-based company stops local manufacturing in India.
One of the sources said, “Hero will be the master distributor for Harley bikes in India. This will be a partnership, a strategic alliance.”
Hero is also in talks of becoming a contract manufacturer for at least one Harley motorcycle with 300-600 cc engine capacity, which it will introduce later.
Hero MotoCorp’s deal with Harley will help speed up its entry into the mid- and high-engine segments, favored by biking enthusiasts and young leisure riders.
“In that segment, biking is moving to a fashion purchase for leisure, weekend rides, and Harley bikes will do well with higher local content. Harley was also likely to provide technical know-how and inputs on quality standards to Hero,” the source stated.
Under the new arrangement, Harley’s 33 dealerships will likely come under Hero’s management.
FADA calls for Franchise Protection Act
The Federation of Automobile Dealers Association (FADA) called for the need for a Franchise Protection Act in India to avert brands from abruptly closing their operations leaving their channel partners and customers in a fix. FADA’s statement came in response to the announcement made by Harley-Davidson to close its India manufacturing facility.
The association said in a statement, “The company has not informed any of its dealer partners about its closure plans and dealers are yet to receive any official communication. It goes without saying that dealers who have invested their hard-earned capital in this iconic brand are left like an abandoned baby without any compensation package.”
Therefore, FADA called for a Franchise Protection Act in the country.
“With every brand closing its shop in India, India's capital flow goes down the drain. With a luxury brand like Harley, setting up its dealership costs anywhere between Rs 3-4 crore, and with a total of 35 dealerships, Rs 110-130 crore will go down the drain. Moreover, there will be customers who will not receive glitch-free service as spares will now be in shortage thus leading to cases and harassment to dealers from their customers,” the statement added.
On average, Harley-Davidson’s dealership employs 50 people. With 35 Harley dealers, around 1,800-2,000 people at dealerships will lose their jobs.
The company had said in a statement, “Harley-Davidson plans to close its manufacturing facility in Bawal and significantly reduce the size of its sales office in Gurgaon (Gurugram). The company is communicating with its customers in India and will keep them updated on future support. The Harley-Davidson dealer network will continue to serve customers through the contract term.”