Now that Hero MotoCorp and Harley-Davidson have struck a partnership for India, reports suggest that Hero may finally look to enter the lucrative middleweight segment, which is currently dominated by Royal Enfield.
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Speaking about the same, Niranjan Gupta, chief financial officer, Hero MotoCorp said, “The key part of the Harley Davidson tie-up is the license to build the middle-weight segment, which is a very profitable segment, and the lead player has a market share of around 90 percent. So, there is this whole thing of developing the bike and putting it out in the market, both under the Harley and Hero name.”
Of course, there is no clear timeline on the launch of these motorcycles, but Gupta said that teams at Hero MotoCorp and Harley-Davidson have already started working on the development of such models. It is likely that these motorcycles will be manufactured with a brand new platform. With Bajaj Auto partnering up with Triumph Motorcycles and already having KTM and Husqvarna brands under it and TVS partnering with BMW Motorrad, Hero MotoCorp was the one last Indian two-wheeler manufacturer who hadn’t struck a partnership with a premium two-wheeler manufacturer at a global level. Royal Enfield of course, is a different story altogether.
Another viewpoint could be that Hero as a company may look to increase its margins on units sold. A presence in a premium segment is likely to increase Hero’s margins as well. For example, Hero sales volumes are roughly the one and a half time of what Bajaj Auto sells but the company’s profits is just one-third of what Bajaj makes. A key reason for the same is that margins on units sold. Bajaj is said to earn twice the profit margin on the Pulsar range as opposed to Hero earning on the Splendor range.