Hero Motocorp Talks With Bankers on Possible Ducati Purchase

[gjsnyc]

By Siddharth Philip
     March 2 (Bloomberg) -- Hero MotoCorp Ltd., India’s biggest
motorcycle maker, is in talks with bankers about buying Ducati
Motor Holding SpA as it seeks technology to enhance its bikes
and expand its business globally.
     “Lots of people have been coming to us with Ducati: Not
one banker but many bankers,” Pawan Kant Munjal, the managing
director of Hero MotoCorp, said today in an interview in New
Delhi. “We’re talking to a lot of people. Not just Ducati,
whoever comes to us, we talk to them.”
     Hero, which in December 2010 decided to exit a 26-year
partnership with Honda Motor Co., is looking to gain technology
through partnerships and acquisitions after that licensing
relationship ends in 2014. The company has cash reserves of
about $1 billion, Munjal said.
     Investindustrial SpA, the Milan-based private-equity firm
that owns Ducati, may hold an initial public offering of the
luxury-motorcycle maker in Hong Kong this year or sell it to a
rival, two people familiar with the plans said last month,
declining to be identified because the plans are private. A
spokesman for Investindustrial wasn’t immediately available to
comment today.
     Motorcycle makers Hero and Bajaj Auto Ltd. are looking to
expand their markets amid increased competition in the world’s
second-biggest motorcycle market as the Indian units of Honda,
Yamaha Motor Co. and Suzuki Motor Co. expand capacity in the
country. Only China buys more motorcycles.

                    Looking Overseas

     Motorcycle sales in India grew 15 percent in 2011 to
9.95 million units, according to data from the Society of Indian
Automobile Manufacturers. The industry body expects deliveries
of two-wheelers, including motorcycles and scooters, in the year
beginning April 1 will increase 11 percent to 14 percent, it
said Jan. 10.
     Hero is looking to begin sales in Africa and Latin America
this year as it tries to mimic the strategy of its nearest
domestic rival, Bajaj Auto. Bajaj sells more than 35 percent of
its products overseas and expects to exceed its export target of
1.5 million units in the year ending March 31.
     Hero aims to export 1 million units annually in five or six
years, Munjal said.
     “We’ve been seen as a utility-bike maker, fuel-efficient
bikes, and somebody who’s at the lower level of the market,
who’s more small-town and rural-market focused,” said Munjal.
“So our ambition is to become one of the biggest global two-
wheeler players and to do that, you cannot only be in one small
segment.”
     Ducati, whose bikes are owned by actors such as Brad Pitt
and Tom Cruise, was delisted in 2008 from the Milan stock
exchange.
     Honda is expanding its operations in India after separating
from Hero, and will spend as much as 10 billion rupees
($202 million) on its third factory near Bangalore in southern
India that will be ready in 2013, the company said in August.
When complete, Honda will have a capacity to build 4 million
two-wheelers in India annually.

[Vishwacorp]

This is interesting. Hero Motorcorp just announced a "strategic partnership" with Erik Buell Racing a few days ago.

[HotIce]

For the love of God, I hope not.

[ducatigirl100]

Chinese or india  ....    I just hope that they will still have the "made in Italy" on them 

[lethe]

Hmmm, India...I sense the return of an elephant emblem on the bike 

[ab]

I hope the company survives.  But I hope it does not happen this way. 

[elgallo73]

Although relatively new to Ducati ownership, this may not be so "tragic" as many feel...  Those of us who have "been around" can remember when "Made in Japan" was subject to the same ridicule that "Made in China" now elicits.  Consider how much Japan has shaped the automotive industry.  They nearly buried the "Big 3" in the late 70's/early 80's with fuel efficient and RELIABLE cars that were SUPERIOR to the crap that Detroit was producing which Americans purchased given the fear of the "unknown" until the oil crisis changed their minds.  Detroit finally responded with cars that Americans WANTED to buy, it would appear that healthy competition is a GOOD thing.  Furthermore, American cars being produced overseas and foreign cars being produced in America is the "norm" now.  Not to mention the partnerships which allowed sharing of technology such as the Ford/Mazda arrangement.

There could be some rather positive outcomes associated with this, ranging from potentially lower prices to higher quality.  I particularly enjoyed the news that Eric Buell is somehow engaged.  It is unfortunate that Harley Davidson could not see an "American Sportbike" competing with their brand.  I'm a big fan of diversity and while I can see myself on a Buell, I've never been attracted to the typical offering from the "Hog" lineup.

You can fight the wave (and lose) or roll with it and enjoy the ride...

[Vishwacorp]

I don't necessarily see this as a bad thing either. Hero has a ton of money and sells a lot of bikes. They could be Ducati's sugar daddy. But I'll reserve final judgement until we know for sure exactly what happens with Ducati. And slightly related, here's EBR's 1190RS in "Team Hero" colors as it'll be racing in AMA Pro Racing.



For those of you who read hell for leather magazine, I'm sure you've been reading the articles regarding EBR & Hero.