Whereas the talks with Hero are wide-ranging proper from merchandise, distribution and manufacturing, because the contours get refined and outlined, Harley is eager on a distribution companion who might supply bikes from Thailand, the corporate’s new Southeast Asia hub, and promote right here, mentioned folks near the event.
“A logical the 1st step with Hero might be distribution, however it doesn’t cease Harley from pursuing others if the joint venture takes time. The core of Hero-Harley dialogue is mid-size bikes, which can not occur in a rush,” mentioned an individual within the know of the event, including, “Until then how can the model handle the present vendor arrange and the tasks emanating out of them winding up. One other distribution settlement might help.”
Because the starting of 2020, Harley-Davidson has been looking out for an India companion and the corporate is known to have had discussions with Bajaj Auto, Hero MotoCorp and Mahindra & Mahindra. The truth that it has taken so lengthy to agency up the plans signifies that there are points to be ironed out between the Indian bike maker and the American firm.
“If the tie-up with Hero was anyplace shut, then Harley would have gladly introduced it. As a substitute, it introduced a closure of its operation final week, clearly indicating that there are a number of points but to be addressed, earlier than calling it a performed deal. Harley has already earned numerous crucial press,” mentioned one other individual within the know, including that its sellers and prospects have been fearful due to its determination.
When ET sought Harley-Davidson’s remark, and requested if any variations had cropped up throughout the discussions with Hero MotoCorp, it responded by sending final week’s announcement. “Harley-Davidson introduced that as a part of ‘The Rewire’, an overhaul of its working mannequin and market construction, the corporate is altering its enterprise mannequin in India and evaluating choices to proceed to serve its prospects,” it mentioned.
Hero MotoCorp mentioned it “doesn’t touch upon market hypothesis”.
Within the house of 750cc and above bikes, Harley stays the market chief with a share of over 50%, and it might wish to proceed to retain that robust place available in the market.
The choice by the corporate to shut its manufacturing facility at Bawal and considerably cut back the dimensions of its gross sales workplace in Gurgaon has received the sellers fully off guard. Banks have additionally stopped stock funding. Sellers are caught with sizeable bike stocks, spare components and merchandise.
The Federation of Vehicle Sellers Affiliation pegged the losses to sellers from Harley-Davidson’s determination to wind up in India at Rs 130 crore. It additionally estimates a lack of 2,000 jobs.
In line with folks within the know, about 300 unsold bikes are within the system at the moment, together with unsold BS-IV and demo bikes and substantial inventory of components, equipment and merchandise.
“The publicity of merchandise and bikes shall be virtually the identical at dealerships, as we’re anticipated to inventory a sizeable quantity at any given level, mentioned a South-based vendor, talking on the situation of anonymity.
A high vendor could have stock amounting to Rs 2 crore, mentioned one other vendor, including that for others it might be Rs 50 lakh to Rs 1 crore.
Harley-Davidson has 22 vendor companions and 33 touchpoints in India and 16 of them have been with the corporate because it began operations right here a decade again.
Opening of latest dealerships had put strain on the older ones, “because the RoI (return on funding) was taking that for much longer”, a vendor mentioned.
And with banks staying away and Harley-Davidson not but out with a concrete plan, sellers say large reductions must be given to eliminate the stocks.
The corporate is predicted to get again to sellers early subsequent week with plans on compensation and reimbursement.
The sellers hope the federal government would ask banks to help them until such time they may tide by way of this disaster. “We’re on the mercy of the banks now. Banks have already began auditing inventory ranges at dealerships,” mentioned one in every of them.
The corporate has knowledgeable sellers that it might not be renewing contracts after December 31 this 12 months.