Hero MotoCorp proposes to have high-end bikes under its own brand developed alongside machines that are being made for Harley-Davidson, marking the start of its biggest-ever bet in the premium motorcycle segment.
Following the arrangement with the iconic American cruiser maker announced in October 2020 to develop mid-capacity bikes for Harley, it is now learnt that the Munjal-family promoted Hero MotoCorp would have bikes with the same capacity for the Hero brand as well.
While these bikes are expected to have engine capacities in the range of 500cc and above, Hero has never ventured beyond 225cc bikes, making this a first of its kind.
Neither companies have provided details of the size of the engine expected on these new bikes but have said that they will be part of the middle-weight segment.
Globally, the middle-weight segment is defined as bikes with engine capacities between 500cc and 900cc. However, the Indian definition of the middle-weight category could mean those starting at 350cc since the entry models offered by Eicher Motors-controlled Royal Enfield have engine size, which begins at 350cc.
The segment controlled by Royal Enfield is the segment of interest for Hero MotoCorp and Harley Davidson.
Speaking to analysts, 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.”
Though there is no confirmation about launch timelines for the first bikes under the partnership, Gupta added that dedicated teams have already started working and progressing on the development of bikes.
While brand Harley is at the premium end of the market, brand Hero is known for budget bikes like Splendor and HF Dawn, making them the two opposite ends of the price spectrum.
The Delhi-based company has started selling Harley-Davidson bikes through its own appointed network of 14-15 dealers.
Hero is desperate to create a brand in the premium segment after multiple failed attempts. Hero’s biggest bike till date has been the 225cc Karizma ZMR, which was withdrawn in 2019 after a fruitless run since 2003.
Hero now has three bikes with 200cc engines – XPulse 200, XPulse 200T and XTreme 200S – premium motorcycle segment controlled by the Bajaj-KTM combine.
A wider presence in the premium segment will boost Hero’s margins.
“While Hero’s volumes are one-and-a-half-times bigger than Bajaj’s two-wheeler sales, its profit is just over one-third of Bajaj’s. This is because of the difference in product mix. Bajaj earns twice the profit margin on the Pulsar compared to the Splendor of Hero”, said a Mumbai-based analyst.
Known for making fuel-efficient motorcycles, Hero holds over 70 percent share of India’s entry-level, budget bike category with engines in the 100-110cc range.
Splendor, Passion Pro and HF Deluxe are the entry-level models that generate the bulk of Hero’s volumes.
A few years ago, the company had bought equity in the US-based performance bike making company, Erik Buell Racing (EBR), with the hope of jointly developing premium motorcycles. The Delhi-based company had to abort those plans when EBR went bankrupt.