Distribution Strategy: Harley-Hero

Updated: Dec 7, 2020

Author: Karan Sharma

Hero MotoCorp is all set with a sales and distribution strategy for Harley-Davidson motorcycle. This new union between the companies is expected to begin by the end of 2020 and will likely result in the pruning of Harley’s existing dealer network.

What is the Transition Plan?

Harley Davidson in India has 33 outlets and approximately 21 dealer partners, Hero MotoCorp is going for some of the larger dealers with high market share and high investments over a 10-year period. As per reports, around 11-13 existing Harley dealers will be onboarded by Hero MotoCorp, even right now 10 dealers have signed the letter of intent with Hero MotoCorp.

Problems with cutting ties

Although the formal announcement is yet to be made, Harley has kick-started the transition process by compensating dealers who are facing closure. The compensation plan is reported to be in the range of 1-1.5 crore for the average sales margin for a short period of 6 months and Rs.1500 per square feet of infrastructure investment with 10% depreciation, but many of the dealers who are likely to shut are arguing that this is a very small amount considering the investments they have made in their dealership over the last few years. The dealers say Harley-Davidson never intimated them about the company's plans to exit the Indian market, and they only got to know about the news through media reports.

Harley-Davidson dealers say that they have facilitated and nurtured the entry and growth of the iconic American motorcycle brand in India for 11 years, and each dealership adhered to all the norms stated by Harley-Davidson and set up state-of-the-art showrooms by investing approximately ₹ 4 crores in each location. The dealers further invested and built world-class service facilities with tools, equipment, and trained manpower, costing approximately ₹ 1 crore per dealership. The dealers now say that they have appointed law firm AZB & Partners and are exploring legal options as well.

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