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Harley in talks with Hero for distribution deal after exiting India

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by Aditya Kalra & Aditi Shah from Reuters and https://www.business-standard.com

Harley, known for its heavy touring motorcycles, struggled in India mainly because of high import duties. Harley’s 33 dealerships will likely come under Hero’s management under the new arrangement, said one of the sources.

Harley-Davidson Inc is in advanced talks with India’s Hero MotoCorp for a distribution deal which will allow the U.S. firm’s iconic motorcycles to be sold in India, after it stops local manufacturing there, three sources told Reuters.

The Milwaukee-based company said on Thursday it will stop sales and shut its manufacturing plant in India, effectively abandoning the world’s biggest motorcycle market after a decade of unsuccessful efforts to gain a foothold.

Harley however is in talks with Hero MotoCorp to enter into a distribution arrangement that will allow the Indian company to import and sell Harley bikes as its sole distributor, two sources with familiar with the talks said.

“Hero will be the master distributor for Harley bikes in India … This will be a partnership, a strategic alliance,” said one of the sources, all of whom declined to be named as the discussions were private.

Discussions are also ongoing to let Hero become a contract manufacturer for at least one Harley motorcycle with 300-600 cc engine capacity, which it will launch later, the first source added.

The financial details of the deal were not immediately clear.

Asked about talks with Hero, a Harley spokeswoman said the company can’t comment on “rumours or speculation”. On Thursday, it said it was “changing its business model in India & evaluating options to continue to serve customers.”

Hero MotoCorp, which is the India’s largest two-wheeler manufacturer by sales, said it doesn’t comment on market speculation. It produced 6.4 million two-wheeler scooters and motorcycles in the fiscal year ending March 2020, a third of India’s total output.

Harley manufactured just 4,500 motorcycles during that period, largely assembled from imported knock-down kits at its plant near New Delhi, which it will shut as part of its announced restructuring.

Harley’s decision to stop direct manufacturing marks another major exit by an automotive player in India and is a setback for Prime Minister Narendra Modi who has been inviting foreign firms to ramp up local production. Ford Motor and General Motors have both pared their India operations in recent years.

Harley, known for its heavy touring motorcycles, struggled in India mainly because of high import duties – which U.S. President Donald Trump often criticized India for – and also because its locally assembled bikes faced high taxes.

Hero typically sells motorcycles with engine capacities of under 200 cc and a deal with Harley will help speed up its entry into the mid- and high-engine segments favoured by biking enthusiasts and young leisure riders, the second source said.

“In that segment, biking is moving to a fashion purchase for leisure, weekend rides and Harley bikes will do well with higher local content,” said the source, adding Harley was also likely to provide technology know-how and inputs on quality standards to Hero.

Harley’s 33 dealerships will likely come under Hero’s management under the new arrangement, said one of the sources.

Harley-Davidson to shut sales and manufacturing operations in India

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from https://indianexpress.com and https://www.reuters.com

The announcement comes two months after Harley unveiled a strategy to shift focus back to more profitable motorcycles and core markets such as the United States.

Harley-Davidson Inc said on Thursday it would discontinue its sales and manufacturing operations in India, effectively abandoning the world’s biggest motorcycle market after a decade of unsuccessful efforts to gain a foothold.

Harley had spent recent months moving dealerships in the country to cheaper locations, and the announcement followed speculation in Indian media a month ago that executives had played down.

The move involves $75 million in restructuring costs, some 70 redundancies and the closure of its Bawal plant, walking away from a market worth about 17 million bike and scooter sales a year. It will retain only a scaled-down sales office in Gurgaon, south of New Delhi.

The departure is also the latest setback for Prime Minister Narendra Modi’s strategy to encourage domestic manufacturing that would keep more of the fruits of a gigantic home consumer market in India.

Harley has been scrambling for years to grow sales beyond baby boomers in the United States and has not posted retail sales growth there in the past 14 quarters.

Chief Executive Officer Jochen Zeitz, who took the reins at the company in February, unveiled a major “Rewire” in July to boost profits by reducing Harley’s product portfolio by 30% and investing in 50 markets with growth potential in North America, Europe and parts of Asia Pacific.

India was one of the markets the company at that point committed to investing in more heavily. Thursday’s statement said the move to leave had been pushed through since Aug. 6.

Harley said it now expects total restructuring costs of about $169 million in 2020, but warned that the restructuring program – referred to internally as “The Rewire” – was likely to incur more charges.

India, still far cheaper and poorer than many of the developing economies with which it competes for investment, has proven an inhospitable market for other auto industry players.

Harley books $75 mln in fresh restructuring costs, discontinues India operations

Sept 24 (Reuters) – U.S. motorcycle maker Harley-Davidson said on Thursday it expects to report $75 million in additional restructuring costs for 2020 related to actions including discontinuing its sales and manufacturing operations in India.

The company said it now expects total restructuring costs of about$169 million in 2020.

(Reuters) – Harley-Davidson Inc HOG.N said on Thursday it would discontinue its sales and manufacturing operations in India, effectively abandoning the world’s biggest motorcycle market after a decade of unsuccessful efforts to gain a foothold.

Harley had spent recent months moving dealerships in the country to cheaper locations, and the announcement followed speculation in Indian media a month ago that executives had played down.

The move involves $75 million in restructuring costs, some 70 redundancies and the closure of its Bawal plant, walking away from a market worth about 17 million bike and scooter sales a year. (bit.ly/3mPHZnx) It will retain only a scaled-down sales office in Gurgaon, south of New Delhi.

The departure is also the latest setback for Prime Minister Narendra Modi’s strategy to encourage domestic manufacturing that would keep more of the fruits of a gigantic home consumer market in India.

Harley has been scrambling for years to grow sales beyond baby boomers in the United States and has not posted retail sales growth there in the past 14 quarters.

Chief Executive Officer Jochen Zeitz, who took the reins at the company in February, unveiled a major “Rewire” in July to boost profits by reducing Harley’s product portfolio by 30% and investing in 50 markets with growth potential in North America, Europe and parts of Asia Pacific.

India was one of the markets the company at that point committed to investing in more heavily. Thursday’s statement said the move to leave had been pushed through since Aug. 6.

Harley said it now expects total restructuring costs of about $169 million in 2020, but warned that the restructuring program – referred to internally as “The Rewire” – was likely to incur more charges.

India, still far cheaper and poorer than many of the developing economies with which it competes for investment, has proven an inhospitable market for other auto industry players.

Last year, Ford Motor Co F.N pared back its interests and ceased independent operations in India by entering into a joint venture with Indian automaker Mahindra & Mahindra MAHM.NS.

General Motors GM.N, which stopped domestic sales in 2017, also plans to stop manufacturing and exports from India by the end of this year.

Growth in domestic sales has slowed of late – with sales of cars and motorbikes falling 18% in the last fiscal year to March 31 from a year ago.

ALYI Expects To See Orders For ReVolt Electric Motorcycles Double Next Month

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from https://www.prnewswire.com

DALLAS, Aug. 27, 2020 /PRNewswire/ — Alternet Systems, Inc. (USOTC: ALYI) today announced that it expects a new fleet order for its ReVolt Electric Motorcycle to double the company’s current production outlook. Earlier this month the company announced entering into discussions regarding additional fleet orders. Management now expects to sign an order resulting from those discussions by the end of September.

ALYI currently has already entered into an initial $20 million electric motorcycle order and an additional letter of intent for a $30 million contract. Both agreements cover six-year durations resulting in an overall $300 million revenue opportunity for ALYI. The new order expected to be signed next month would edge ALYI toward a $500 million revenue opportunity.

Over two years ago, ALYI piloted an electric motorcycle that in its first rendition was a BMW R71 clone retrofitted with an electric motor. The BMW R71 is a breathtaking iconic image popularized through decades of frequent Hollywood screen appearances in addition to the real engineering breakthroughs that maintain the bike’s relevance.

Still drawing on the BMW R71 original design and look, after several design iterations, the ReVolt Electric Motorcycle today is an innovation feat. When ALYI unveils the production version of the ReVolt Electric Motorcycle, it will be an industry changing event. The ReVolt Electric Motorcycle is a connected, state of the art electric motorcycle, ergonomically optimized for its target market while still maintaining an iconic look.

ALYI expects to be in production later this year.

Covid-19 puts low-cost 350cc Harley-Davidson bike plans in danger

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by Pradeep Shah from https://www.financialexpress.com

The proposal by Zeitz suggests scrapping 30 percent of the current models in the favour of a more sorted lineup. So far, the models that would be axed have not been revealed but expect a lot of bikes to retire especially from the Softail family that includes as many as 14 models. Here is why the upcoming India-bound 350cc Harley might be in danger.

The year 2020 is no less than a nightmare for multiple sectors and the automotive space is no different! Not only the production of the vehicles is getting affected but the sales have taken a severe hit too. America has been one of the worst affected nations by Covid-19 and hence, for obvious reasons, the industries and companies there are seeing some of the worst days. One such manufacturer is Harley-Davidson that has reported a loss of USD 92 million. Now, in order to offset the losses a bit, the company has came up with a new ‘Hardwire’ plan that includes aborting some of the models that the brand was planning to bring in the coming months. Now the worst piece of news is that the company’s strategy might include a 350cc low-cost motorcycle that was meant for Indian and some of the Asian markets.

Previously, the brand had announced the introduction of as many as 50 new models over the next five years. As a part to rejig strategies, the proposal of Jochen Zeitz, President, CEO and Chairman, Harley-Davidson suggests scrapping 30 percent of the current models in the favour of a more sorted lineup. So far, the models that would be axed have not been revealed but expect a lot of bikes to retire especially from the Softail family that includes as many as 14 models. Now here comes the worrying part. During one of the conversations, Zeitz said that complexity needed to be dramatically reduced and goals set needed to be achievable and realistic. He adds that the company is streamlining its motorcycle models by approximately 30 percent with plans to further refine its product portfolio.

This will enable the brand to invest in the products and platforms that matter the most while better balancing the company’s investment in new, high-potential segments. The reason why we think that India-bound 350cc Harley might not be a part of the plans now is because Zeitz further stated that “the brand is not willing to sacrifice the strength of its legacy in a quest for pure volume growth going forward”.

Motorcycles Sales Bounce Back Post Pandemic Slump

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by Sabrina Giacomini from https://www.rideapart.com

Rising from the ashes.

To say that 2020 has been an eventful year so far is an understatement. “2020, written by Stephen King” is probably the best description of this year’s events we found so far. Of course, with a pandemic forcing most of the global population into lockdown, the health crisis was bound to have an impact on the motorcycle industry.

For several manufacturers, between suspended production and customers shying away from the dealers, the months of April and May 2020 have been challenging to say the least. Thankfully, with life gradually resuming, so are sales, and the numbers are bouncing back.

Things Are Going Better Than Expected:

An increasing number of people and publications suggest that the pandemic will encourage more people to turn to motorcycles and scooters for transportation—the perfect type of commuter for social distancing.

In the U.S., buyers didn’t waste any time running for the hills—literally—as soon as COVID-19 poked its ugly head. Honda, BMW, Suzuki, and Yamaha’s North American branches reported that sales are thriving since the beginning of the year, particularly in the off-road segment. For instance, American Honda Motor Co. confirmed that motorcycle sales for May 2020 have more than doubled over May 2019—both in the road and off-road segments (+103% and +172% respectively). For BMW North America, while official sales numbers were not disclosed, the spokesperson did say that May 2020 sales were far exceeding last year’s.

The European market is showing a similar, positive trend. Italian sales numbers for June 2020 show a 37-percent increase over June 2019—not even over the catastrophic month of May 2020. More bikes and scooters sold in Italy post-pandemic than last year, back when nobody had even heard of a coronavirus. A total of 39,085 motorcycles, scooters, and mopeds have been registered in Italy in June.

The market is also on the mend in India where local branches are finally seeing the light at the end of the tunnel. Though the June sales numbers remain significantly below the 2019 numbers, they are on the rise after the May 2020 slump. For Honda Motorcycle & Scooter India, the 210,879 units moved in June represent a 153 percent increase in sales over May. For Hero, sales increased by a staggering 300 percent between the two months. Royal Enfield is also back in the green with a total of 38,065 motorcycles sold in June versus 18,429 in May.

Despite a rocky start to 2020, it looks like the motorcycle industry is faring far better than we initially anticipated.

Harley-Davidson To Drop From S&P 500 As Coronavirus Batters Struggling Motorcycle Maker

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by Bill Roberson from https://www.forbes.com/

Iconic American motorcycle maker Harley-Davidson [HOG] continues to struggle. The company will move off the S&P 500 in the next week and will land on Standard and Poor’s MidCap 400 list of stocks instead, according to the Milwaukee Journal Sentinel. Clothier Nordstrom Inc. and Alliance Data Systems Corp. will also fall off the S&P 500.

With a two-month work stoppage (since resumed) due to the pandemic coupled with an expected deep dive in sales due to the general halt in economic activity, the near future could be a rough ride. The most recent report on sales from the company show the numbers were down close to 18% year over year as of late April.

The S&P 500 delisting, set for June 22, comes while Harley-Davidson continues to navigate rough waters, including a personnel shuffle that included the CEO and a stock price that has hung in the $25 range during the pandemic but was as high as $73 in 2014 and over $40 per share in the last year. In the depths of virus-fueled market turmoil in April of this year, the share price dipped to nearly $15 but has since rebounded, almost reaching $30 just about a week ago. The drop from the index could hurt the stock price since many investors include companies in the S&P 500 as part of their portfolios.

Before the coronavirus and COVID-19 outbreak, the Milwaukee,Wisconsin-based maker of heavyweight cruisers – and a fully electric model – had been on a sales and stock price slide for several years as the company searched for new buyers. Their core – and highly loyal – customer base has slowly eroded due to age and competition, notably from a resurgent Indian, which was once Harley’s main sales and racing competitor before shuttering post-WWII. The brand was recently revived by outdoor recreation equipment Polaris and has targeted Harley’s market while also attracting new riders with their Scout and FTR models.

Under the tenure of now-departed CEO Mark Levatich, Harley embarked on a risky tangent into the world of electric vehicles and debuted the all-electric LiveWire motorcycle two years ago. While the bike has received favorable reviews, a price tag near $30,000 has been a tough sell while pioneers in the electric motorcycle space like Zero sell models with similar performance for nearly a third less. Before Levatich left the Motor Company, as Harley is also known, the CEO said more electric models, including bicycles, were on the way. New CEO Jochen Zeitz, a longtime board member known as a turnaround specialist, hasn’t yet laid out the specifics for Harley’s future, saying he plans to “rewire” the company with a 5-year plan for growth.

Part of Harley’s current conundrum is a perfect storm of a waning traditional customer base, expensive motorcycles, and young people who have high debt, myriad transportation options and little brand loyalty. Harley-Davidson has been working to build their international markets over the years and growth there has been a strong point along with their finance arm, but slumping overall sales have driven the company’s market cap to under $4 billion, or nearly half of what the S&P 500 regards as a minimum to make the list.

Tyler Technologies Inc., Bio-Rad Laboratories Inc. and Teledyne Technologies Inc. will all join the index, according to the Milwaukee Journal Sentinel.

Harley-Davidson Leads the List in Peak Demand for Motorcycles

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by Daniel Patrascu from https://www.autoevolution.com

Like most other countries in the world, the UK is set to relax its distancing measures as of this week, despite the health crisis being more severe than ever. Among the distancing measures to be kept is the obligation for the Brits to wear face-coverings on all public transport means on the island.

That decision seems to have scared people who would normally ride the tube or buses, and that is visible in the number of online searches for alternative means of transportation. Motorcycles and their derivatives seem to be in high demand these days, according to the figures provided by Auto Trader.

The organization says that compared to the same period last year, sales of motorcycles and mopeds exploded, reaching 180 and 2019 percent, respectively. Keep in mind this happens as sales of cars are dropping to levels not seen since the 1970s.

Online interest for such two-wheeled machines is at a peak as well, and the idea that this is not a passing trend is backed by other data as well: Brits are hell-bent on becoming motorcycle riders, and proof to that is the doubling of Compulsory Basic Training (CBT) riders must take before being allowed on the roads.

“It seems to be part and parcel of getting into a ‘new normal’. They’re relatively cheaper options for commuting, they can help you get around easily in congested urban areas, and they’re easier to park in tight spots,” said in a statement Auto Trader’s Rory Reid.

“They can also be a much more viable option than walking or cycling for the majority of people whose commute is longer than five miles.”

As far as what type of motorcycles the Brits prefer, two Harley-Davidson families, the Sportster and Softail, are among the most sought after, followed by the Yamaha R1 CBR1000RR and the Honda Fireblade.

Harley appoints turnaround specialist Jochen Zeitz to revive sales

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by Rachit Vats, Sanjana Shivdas from https://www.reuters.com/

(Reuters) – Harley-Davidson Inc (HOG.N) on Thursday appointed board member and turnaround specialist Jochen Zeitz to the role of chief executive officer, as the struggling motorcycle maker looks to tap into his expertise to woo customers and revive sales.

Shares of Harley, which were down 47% this year as of last close, rose 5% to $20.6 in morning trade.

Zeitz, a former CEO hailed for turning around German footwear brand Puma’s near-bankrupt business, is known to have led a push for sustainability at Harley and was a force behind Harley’s LiveWire, the company’s first electric bike.

The company said Zeitz, who joined the Harley board in 2007, will continue to serve as the board chairman.

Harley has failed for years to increase sales in the United States, its top market, which accounts for more than half of its motorcycles sold. As its tattooed, baby-boomer consumer base ages, the Milwaukee-based company is finding it challenging to attract new customers.

To make matters worse, the pandemic has further dented demand as Americans stay at home to curb the spread of COVID-19.

In April, Harley slashed here its dividend and halted share buybacks to boost its cash reserves to weather the impact from the health crisis.

Zeitz was asked to take over after CEO Matthew Levatich stepped down in February following Harley’s worst sales performance in at least 16 years.

In his first call with investors as acting CEO, Zeitz lined up plans to cut costs and “de-emphasize” some of its unprofitable international regions.

The shift in strategy for the company that symbolized the counterculture movement of the 1960s comes as it struggles to woo the next generation of younger riders with its electric and more nimbler bikes in the United States.

Royal Enfield withdraws from Japan until new importer takes charge

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by Abhinand Venugopal from https://www.rushlane.com

Royal Enfield’s Japan operations were carried out by the importer, Wingfoot

Chennai-based motorcycle manufacturer Royal Enfield operates in more than 50 countries across the globe. The automaker has a huge fan following in many parts of the world, especially for its single-cylinder ‘Classic 350’ model.

In India, the company has updated most of its products to BS6 specifications while readying to launch the next-gen ‘UCE 350’ models, starting with the Royal Enfield Meteor 350 (which replaces the Thunderbird range).

Wingfoot Co. Ltd., Royal Enfield’s official importer in Japan has announced a business termination with the British-origin motorcycle manufacturer. The official statement stated that it has “finished all business related to the import and export of Indian-made Royal Enfield motorcycles” after ending the contract with Eicher Motors — the parent company of Royal Enfield.

In other words, Royal Enfield has temporarily withdrawn from the Japanese market until a new importer takes charge. Royal Enfield Japan’s official website will be taken down by the end of this month while its social media handles will be deleted on May 15. In a matter of days, Eicher Motors might announce a new partner to commence operations in Japan.

Royal Enfield has not been a strong player in Japan since the country has its own compelling alternatives from the likes of Yamaha, Honda, Suzuki and Kawasaki. Even in India, Japanese two-wheeler brands often come at the top of monthly sales charts while Royal Enfield mostly remains at the bottom of the top 10. However, it is no secret that India is a volume-sale market and six-digit numbers need not always tell the story of a brand’s success or struggles.

As mentioned before, Royal Enfield has already made a smooth transition to BS6 emission norms. In the process, the company has discontinued the higher ‘500’ models on account of poor sales. As a tribute to the decade-old model line, Royal Enfield had introduced the limited-run BS4-compliant Classic 500 Tribute Black. The next-gen ‘350’ models are currently in the works. Various reports state that they will be a huge improvement over the current ‘UCE 350’ range since Royal Enfield has employed a completely new platform.

The Indian automotive market is currently going through a rough phase due to the COVID-19 lockdown protocols. Owing to this, Royal Enfield faced a sales decline of 44% in March and is expected to witness an even more drastic fall this month. Experts predict that the entire scenario of buying a new vehicle would change once the Indian government withdraws its lockdown policy — know more details.