Bajaj Auto rules out partnership with Harley Davidson

Bajaj Auto on Monday ruled out the possibility of any partnership with Harley Davidson. Speaking exclusively to CNBC-TV18, Bajaj said, “We are partners with KTM, Husqvarna and Triumph. So quite candidly Bajaj Auto cannot engage with Harley due to these partnerships”.

Harley Davidson which has been planning an India exit for several months had sent feelers to Bajaj Auto and KTM. Sources say Harley Davidson was even exploring if a Bajaj-Triumph type of partnership could be replicated in India. Bajaj Auto owns a 48 percent stake in KTM and has a non-equity partnership with Triumph motorcycles.

: Rajiv Bajaj in conversation with CNBC-TV18 on industry outlook

Harley Davidson has decided to end India operations on account of low sales and a global rewire strategy. The company which sold over 58,000 units in North America in the first six months of this year has sold just over 25,000 units in India in a ten year period.

Bajaj agreed that Harley could never really take off in India due to the high price point but said that Bajaj Auto’s partnership’s with KTM and Husqvarna show how brands like Harley can succeed in India. Bajaj Auto tied up with KTM in 2007 when the latter was selling 65,000 motorcycles a year and struggling and today KTM has surpassed Harley with a sale of three hundred thousand units a year.

“Unless you get the upstream right you will not get downstream of sourcing and manufacturing right. You need to focus on cost structures and adding value to strategy, design, development and technology. Focusing on distribution in emerging markets is also important. These two need to work in sync. This year we should make close to two hundred thousand KTM’s & Husqvarna’s for global sales including India. These bikes between 125-400 cc are very competitively prices and KTM can have distribution all over ASEAN and Latin America which KTM could not do so before. This should be the goal of brands like Harley Davidson also,” said Bajaj.

Harley Davidson is believed to be in advanced talks for a distribution partnership with Hero MotoCorp. Harley is looking to use its Thailand plant as a manufacturing hub for the Indian market and distribution of the products through an Indian partner.

The company which used to manufacture the Street 750 at its rented facility in Bawal has decided to stop all production, including the production of the 750 cc. Industry sources also say that Hero MotoCorp is keen on a technology sharing partnership with Harley Davidson for higher capacity segments.

Reacting to reports of talks between Harley and Hero for a distribution partnership, Bajaj said that a strong distribution tie-up will not be enough to generate demand.

“Distribution is about demand fulfilment and will not generate demand. If Harley is looking at making a 300-400cc motorcycle then they must get it absolutely right. The Street 750 did not succeed as it was considered a poor man’s Harley. You have to keep the essence of the brand and get the cost right. Unless you know how to calibrate the product for the market distribution by itself will do nothing,” he said.

The US motorcycle maker has also had meetings with Mahindra and Mahindra subsidiary Classic Legends for an India tie up over the last six months. Classic Legends which resurrected the Jawa brand over a year ago also owns brands like Yezdi and BSA. “We do not respond to rumours and speculation”, said a Mahindra spokesperson when asked about talks between M&M and Harley Davidson.