After failing to launch and sell any bikes in the US market, Hero is closing shop in America.
In hopes of plunging into the American 2-wheeler market, India’s largest 2-wheeler manufacturer Hero MotoCorp contrived a US subsidiary, that went by the name of HMCL (NA) Inc. The wholly-owned subsidiary was formed with an intent to do business in the United States. However, Erik Buell Racing, Inc (EBR), the local American entity that was acquired by HMCL with a 50% stake, has filed for bankruptcy directing the Hero MotoCorp auxiliary to shut down.
Specialising in motorsport engineering and consulting, the American superbike brand Erik Buell Racing, was the first investment that was made by Hero. Although after EBR’s decision to file for insolvency, Hero’s plans to join hands with EBR for production and sale of motorcycles in the US market was crushed. It was HMCL that made the investment in EBR, but after the sacking up of the superbike brand, the existence seemed redundant. Also, HMCL has filed for dissolution with the Secretary of State in the state of Delaware.
EBR is failing to launch its flagship superbikes and Hero has decided to cancel its plan to enter the US 2-wheeler market with its economy motorcycles. Hence, it is only logical for Hero to shut down its American subsidiary. However, the company does own another US subsidiary named HMCL Americas Inc, which is vested with the management of the company’s operation of manufacturing and marketing of bikes which are produced in the manufacturing plant of South American country of Colombia. HMCL Americas Inc manages the operations in Latin American markets such as Colombia, Bolivia, Argentina, Ecuador, Honduras, Guatemala, Costa Rica, Dominican Republic and El Salvador.
Although Hero products retail in 37 countries, the company’s export from India is very marginal as opposed to domestic sales. A sale of 2.6% of the total production volume in the international market in the fiscal year 2018-19 is extremely low when compared to its rival Bajaj Auto, which managed to export 40% of its production volume (including the KTM brand). Hero MotoCorp lost much of its export market after it parted ways with Honda about a decade ago. As far as the global business is concerned, Hero will be focusing on the developing markets of Central and South America, Africa and Asia. In concern with the domestic market the 2-wheeler manufacturer is in the midst of renewing its portfolio to comply with BS6 emission norms.
Hero US Subsidiary
– Hero is shutting down its American subsidiary company
– HMCL had a 50% stake in Erik Buell Racing which filed for insolvency
– Only 2.6% of the total production volume of Hero was exported in the year 2018-19
Source – MoneyControl.com
