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Hero or Mahindra? Harley Davidson to look for a partner in Asia to build small displacement bike

Iconic US bike maker Harley Davidson on Monday announced it will form an alliance with an Asian manufacturer to develop a small displacement (250-500cc) mobike for emerging markets like India and other Asian countries.

Sumant Banerji        Last Updated: July 30, 2018  | 19:47 IST
Hero or Mahindra? Harley Davidson to look for a partner in Asia to build small displacement bike

Iconic US bike maker Harley Davidson on Monday announced it will form an alliance with an Asian manufacturer to develop a small displacement (250-500cc) mobike for emerging markets like India and other Asian countries.

Harley's announcement follows the same template as that of arch rival Triumph Motorcycles and BMW Motorrad. Triumph has tied up with Indian motorcycle giant Bajaj Auto to develop a range of smaller bikes for the domestic market. Earlier this month BMW launched a 300cc bike-- G310R and G310S, that was developed in collaboration with Chennai based TVS Motor Company. While these two are taken, that leaves just Hero MotoCorp, India's largest motorcycle manufacturer and Mahindra Two wheelers as potential candidates for an alliance. The only other domestic two wheeler maker of any note is Royal Enfield, which itself is the leader in cruiser bikes in India and a fierce rival to the Milwaukee based firm. A collaboration between the two is considered highly unlikely.

"We expect this plan will result in an engaged, expanded Harley-Davidson community with a more diverse rider base, along with industry-leading margins and cash flow," said Matt Levatich, President and Chief Executive Officer, Harley-Davidson, Inc. "Alongside our existing loyal riders, we will lead the next revolution of two-wheeled freedom to inspire future riders who have yet to even think about the thrill of riding."

Harley Davidson would also introduce a new modular 500cc to 1250cc middleweight platform of motorcycles that would span three distinct product spaces and four displacements, starting with the company's first Adventure Touring motorcycle, the Harley-Davidson Pan America 1250, a 1250cc Custom model and a 975cc Streetfighter model, all of which are planned to be launched in the beginning of 2020. Additional models to broaden coverage will follow through 2022. Further in 2019 it would launch an electric motorcycle LiveWire that would be the first in a broad, no-clutch "twist and go" portfolio of electric two-wheelers designed to establish the company as the leader in the electrification of the industry.

The announcements come at a time when the company has found it tough to grow in its traditional markets like US and Europe where customers are shying away from motorcycling. In 2017, the company reported a 6.7 percent decline in worldwide retail sales while it has lowered its expectations for 2018 at 231,000-236,000 units against 241,498 units of 2017. Motorcycle ales in 2017, was at a 6 year low. At the same time its foray in emerging markets like India has not delivered the expected results beyond the initial hype. In the first half of this fiscal, the company registered a more than 20 percent decline in sales in India at just 707 units.

"We are iconic because we've never been static," said Levatich. "In moving forward, we are tapping into the spirit that drove our founders back in 1903 and every one of the employees and dealers who rose to the challenges faced along the way. Our plan will redefine existing boundaries of our brand - reaching more customers in a way that reinforces all we stand for as a brand and as a company and we can't wait to kick it into gear."

The company plans to fund the new platforms entirely through cost reduction and reallocation of previously planned investment and resources including operating investment through 2022 of $450 to $550 million and capital investment through 2022 of $225 to $275 million. In total, the company hopes it would be able to generate more than $1 billion incremental annual revenue in 2022 as compared to 2017.

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