Harley Davidson, which announced an end to sale and manufacturing operations in India last month, is likely to seal a distribution agreement with Hero MotoCorp this week, industry sources told CNBC-TV18.
They said Harley Davidson has been engaging with Hero MotoCorp for a while now to finalise a distribution arrangement for India. Under the deal, Hero MotoCorp would be the exclusive distributor for Harley Davidson bikes imported into India from Thailand.
For Hero MotoCorp, the priority is to identify a collaboration that allows sharing of technology for a middle weight motorcycle. One of the reasons why negotiations between the two companies have been on for months is because Hero MotoCorp wanted more than just a distribution partnership, said an industry source requesting anonymity.
CNBC-TV18 has learnt that the immediate deal would focus only on distribution and managing Harley's 33 outlets in India. "Harley Davidson is looking at all models to maintain a presence in India. Harley may be open to a technology sharing pact or contract manufacturing with Hero at a later date", said a source.
Having announced an India exit, Harley Davidson is now keen to conclude a distribution agreement for India by end of October, in order to give transition time to the new distribution partner. The company wants to assuage the concerns of dealers and the rider community in India. The company had already informed dealers that the company would renew service contracts in case a distribution model is not finalised by the year-end.
Dealers of Harley Davidson have been worried about unsold inventory, investments into setting up state of the art showrooms and their employees. Some have even been considering legal options to put pressure on the company. At the same time, the company has been receiving a lot of queries from customers about Harley's future operations in India and whether Harley's new global launch, the Pan America would come to India as well. "Since Harley announced an India exit I have sold only 3-4 bikes. There is a lot of uncertainty and people don't know what is going to happen to the company. Hope the company clears the air soon", said a Harley dealer requesting anonymity.