Hero MotoCorp Buys 49 Percent of Erik Buell Racing

Hero MotoCorp buys 49.2 percent of Erik Buell Racing

Hero MotoCorp buys 49.2 percent of Erik Buell Racing

Hero MotoCorp, already involved in a technical alliance and sponsorship of EBR racing teams, just bought a 49.2 percent stake in Erik Buell Racing for $25 million. The remaining majority portion of the company is still held by Erik Buell.

Ravi Sud, chief financial officer of Hero MotoCorp, said Erik Buell would be utilized as an extended research and development center and that the investment would be used by the U.S. partner to expand its manufacturing and sales operations.

He said Hero MotoCorp is aiming to export about 350,000 vehicles this financial year through March 2014, compared with 161,043 vehicles exported in the previous year.

Mr. Sud said Erik Buell sold just 65 motorcycles in 2012, but the aim is to sell about 20,000 motorcycles in 2017.

Erik Buell now has the backing to expand, though the goal of selling 20,000 motorcycles in 2017 cited above sounds like a very big step. Perhaps there are more models coming in the future that would make the goal more attainable. On the other hand, with extended reach in global markets due to the alliance with Hero, they are almost sure to increase sales from that alone.

Now, as long as Erik doesn't let Hero buy that extra 2 percent of ownership, things should be OK and they will be able to remain "fiercely independent," as their company likes to say, because we already know how that other story goes.

Link: Wall Street Journal
Link: Erik Buell Racing

Comments

  1. Bigshankhank says

    I am stoked for this. Now Erik needs to buy the rights to Aermacchi to market small singles and do what HD couldn’t do back in the day. Its not even a matter of why or why didn’t an American investor step up to the plate, but rather this is something that makes the US MC market better via diversity. The more time I spend on my small displacement bikes, the more time I want to spend on them, and it seems from the past few years that more and more options are becoming available.

    • GenWaylaid says

      Much as I would love to see more small-to-mid displacement singles in the U.S. market, remember that Erik Buell has been there, done that, and didn’t enjoy it (Buell Blast).

      The impression I get is that Erik’s overriding motivation is winning races. If a bike can’t win races, Erik doesn’t want to sell it. For a small manufacturer, that kind of focus seems like a smart business strategy.

      If you want to see light, fun, practical everyday motorcycles coming from the new Buell…I guess you’d have to start and popularize a race series tailored to that specification.

      • rohorn says

        One could do both: Win races AND sell small bikes. There has been lots of growth in 250/300/500 production racing with the 250 & 300 Ninja, and Honda 500. While people race them, nobody would claim that they were designed for racing.

        Is there a market for a cheap and barely street legal Moto3 inspired club racer? I sure hope so. Bikes like the CBR250 and previously mentioned Ninjas sell well enough to people who will never see a racetrack – I would think that a bike that makes them look slow and heavy would be the best thing to hit the market since the RD350.

        But that’s me speaking as an enthusiast, not a motorcycle business whiz.

        • Scott says

          LOVE the RD350, and I while I suspect we might see a variety of bikes from Hero, I think anything that we get from EBR will be much closer in spirit to the RD350. I think Erik Buell has made it clear in various interviews that he’s interested in performance, and I think the Blast was always compromised by Harley’s goals for it.

  2. says

    To me, I’m saddened that HD didn’t maintain Mr. Buell. As with Indian, in days gone by, bean counters weighed in greater than those with passion for motorcycles as an expression of creativity. Of course, hindsight and wishful thinking are only worth so much…

  3. Scott says

    Great news!

    I’ve seen some comments on other boards that this is somehow a bad thing because Hero is based in India, but that’s just crazy. EBR needed to do something like this to get off the ground and I’d much rather have a company that understands the kind of costs and efforts required to get something like this off the ground than some bankers who will be asking where their return is next month. Now that Hero has a stake, the chances of EBR failing before they make a serious run have dropped dramatically.

  4. SausageCreature says

    I’d love to support Erik Buell’s efforts…he just hasn’t built anything (yet) that I want to buy. Hopefully that will change.

  5. B50 Jim says

    The market for small-displacement motorcycles is HUGE among developing populations — millions of units a year. Hero is well-placed to exploit those markets, and that will give it the resources to assist Erik Buell in building the bikes he knows he can build. They might not be what everyone wants to ride, but he should attract a goodly number of buyers. The challenge will be generating more interest in the American market. Unlike developing markets, the American rider overwhelmingly rides for recreation, and with so much competition from other sectors like internet gaming, motorcycles can be a hard sell in an already-crowded field.

  6. blackbird says

    $25 million sounds like a lot of money to an individual but may not be enough to make Buell a profitable manufacturer. It’s a tough road ahead.

    • Scott says

      True, but this is a huge step in the right direction. Imagine a year from now things are going well but sales aren’t quite fast enough to cover expenses and loans that were taken to pay for tooling, equipment, parts etc. to get things going. Without a backer like Hero, Erik would have to go to a bank and convince them to loan more money on top of what they already borrowed so they can keep going long enough to start turning a profit. The bank may not be understanding and see it as just throwing good money after bad. But Hero will understand the up-front costs and the time needed for an operation like that to start turning a profit, so they can write a check for a couple million to keep them going long enough to turn the corner.

    • todd says

      The money isn’t to make EBR a manufacturer, it’s to fund it as a development company. Who in their right mind, in this day and age, would try to build a vertical manufacturing concern in the US straight away except maybe Solyndra…).

      Hero already is a manufacturer and they have pretty low costs. EBR will design bikes, Hero will manufacturer or source the parts, and EBR will assemble and “sell” branded bikes in the US and abroad. At some point it might make sense to start manufacturing the stuff here but not yet, not this early in the game.

      Good News.

      -todd

  7. Medicated Steve says

    Scooters of India were responsible for most of the Lambretta Scooters out there. They were fine machines. India has been making small displacement vehicles forever. I don’t think I’ll ever buy another Buell as I am jaded because my xb9sx, that I maintained meticulously, was riddled with problems since day one. I feel like Europe and Asia love our products more than we do at this point so from that angle this is a really good thing. Buell will have to, like other have said, make a reliable small displacement bike, maybe even a moped.

  8. Jim says

    Eric is what, 60-ish? Besides building the business, he needs to consider an exit strategy that takes care of himself and his family. The Hero investment assists in both.

  9. Thom says

    I think Erik Buell has learned something from the debacle with Harley Davidson, and this can be nothing but a good thing for him. If he hasn’t made anything yet that you want to buy…. Well, that’s likely to continue. Seriously, even if you don’t like sportbikes, though, you’ve gotta respect the 1190RR. And I DO like sportbikes. So I’m all kinds of happy to hear Erik has some backing to keep doing what he wants. And I WILL own an Erik Buell product.

  10. FREEMAN says

    I am a big fan of Buell’s motorcycles. However, the only one I’ve ever bothered to actually buy he crapped all over in a publicity stunt. I’m disappointed that he would rather mock his own design rather than improve it.

    • says

      Someday, the whole story might make it into a motorcycle book for the ages (I hope so)…

      One possibility is that the Blast-in-a-box drama was an expression of Buell’s frustration with HD’s lack of vision for the Buell brand.

      Wouldn’t you be frustrated with a company directive to make a bike like that when you know there is so much more potential to get out of a single platform?

        • Scott says

          I think Erik would have always preferred high-revving modern engines to the air-cooled, low performance engines he ended up using by necessity and because of Harley directives (and refusal to provide the money for new engine development). Toward the end, as Buell was working more with Rotax and illustrating to the Harley higher-ups that Buell could go that direction, I think Harley started to realize Buell needed to go that way.

          We know now that they had a Superbike and dirt-bike in the works and they were probably planning on higher performance street bikes based on that dirt-bike.

          Harley marketing was probably more responsible than Erik for the stunt, and I think he had a great appreciation for his customers and wouldn’t have done anything to intentionally offend them. But I also think he was probably pleased with the behind-the-scenes move toward real performance bikes.

          • FREEMAN says

            My Blast is the only vehicle I have ever bought brand new from the dealer. I had to wait until the new batch arrived in the dealership the next summer to get it. The salesmen in the Harley dealership even said that it was their number 1 selling bike. I understand his intention may not have been to offend me, as the customer, with that stunt but it sure came off that way. It’s like he was mocking all his customers for buying his design.

  11. says

    I would agree with Freeman. I thought my Blast was a lot of fun for the buck. I was waiting for an off road or at least a dual purpose mount, or as some might have wished, a cafe racer. Paul would have put up an article on a good street tracker,EH?

  12. Nicolas says

    Every news about Buell leads to the same old comment, about the huge mistake HD made with the Buell product line and blah blah and so on. Well, right or wrong, it’s not gonna change anything, you won’t rewrite history, it is what it is, let’s move on. And as Todd said above, Buell is not gonna re-born from its ashes like the phoenix or something. There won’t be any new one or two cylinder tracker/bobber/roadster/you name your own with a Buell sign on it anytime soon, Hero is financing Buell to get some engineering/consulting support.
    It’s great that EBR gets some financing and can keep on living/building cool bikes. Way to go !

    • todd says

      Don’t get me wrong, I think the biggest value EBR has is its “Buell” name. There WILL be new “Buells”, it’s just that they will be manufactured by Hero corp – developed by EBR.

      -todd

      • bud says

        Erik Buell has a factory in East Troy, Wisconsin, where he will be building his bikes. Hero Corp will not be building Buells. They will sell their own products in this country.

        • Scott says

          Yeah, I think we’ll be getting the best of both worlds. Want a small, inexpensive Indian bike designed by EBR? You can get that from Hero.

          Want a powerful, responsive world-class sport-bike designed and made in the USA? You can get that from EBR.

          I think that Hero recognizes that the real value of EBR is that they will be the first ever American Superbikes, and I think Hero is too smart to reduce the value of the stake they just bought by making them in India. If Hero wants to make bikes in India, they don’t need EBR’s help to do that.

        • todd says

          I think by “factory” you mean “assembly plant.” Actual manufacturing will happen off-site, as it should. Regardless, they will be great bikes, to be sure.

          -todd

  13. jar says

    20K units in 2017 is a pipe dream.

    Seems a stretch to think BMC ever did 20k units in a year – across all offerings combined.

    Anyone have access to Motorcycle Industry Council figures, by category? Would be interested to know what % of the current market (sportbike or on highway – by displacement) ….20k units would represent – my guess this is more than a “big step” – guessing this number is 10-15% of the target market (proally more)

    Numbers like that don’t come from “niche” vehicles…..

    • todd says

      2012 total motorcycles sold in the US were 452,386, of which 318,105 were “On Highway”, excluding sales of “dual purpose” bikes and “scooters.” Currently sales are down 14.7% from last year. So that looks like they want around 5%.

      I don’t think they were talking only US sales. Honda alone sold 4 million motorcycles in the last few months globally…

      -todd

      • jar says

        Not the number I was looking for – those are the big general figures speaking to the entire on highway market. MIC provides further breakdown by more specific market segment, such as the 750cc-and-over sportbike market (as defined by the MIC) – if you’re a subscriber (someone here surely is).

        Regardless, my question is how many of 318k “on-highway” vehicles represent targets for the EBR product? And of that figure, what does 20k represent? Based on your figure, I’d guess cruiser types outsell sports/standards at about 4 to 1 in the US….but let’s say 3 to 1….that means 106,000 potential EBR customers. At 20k, a guy is talking 20% or there about….

        Overseas sales will be a challenge with no dealer network to access, so can’t be much of a consideration for sales figures in the time frame we are discussing….

        I’m calling B.S. on 20k goal – looks good on paper, but is unrealistic….typical of Buell

        • todd says

          Most of what I’ve seen (in California at least), cruisers make up about a third of the bikes out on the road. I know that doesn’t equate to sales volumes because every bike on the road is a “used” bike and maybe cruisers aren’t ridden as much as sports or standards. Using that number you can come up with 211,788 bikes, of which MAYBE half is 750cc and over…. um, pretty much comes up with the same percentage of the market you did.

          It does sound optimistic doesn’t it.

          -todd

  14. Kevin says

    Hopefully he remembers what happened at HD. He was warned against selling to HD the first time, and he went against it and it was bad news. As long as he keeps the majority control he should be good.
    I hope Hero bikes don’t start coming to America branded as “Buells”. That will RUIN his brand’s image. What would be neat is a KTM 690 Duke competitor. A light single, but not slow like the Japanese 250/300s. Maybe with Hero’s help he can even make a more affordable model.

  15. Coxster says

    I don’t know exactly where they’re heading, but my dream is to see some 500s and 600s with the EBR name on them made in india, and of course to have Keith Wandell of H-D get passed by one every day on his way to the office : )

  16. says

    As a Ulysses owner, I’m excited to see someone finally throw down some backing for EBR. Hopefully we’ll see the new prototypes this year, especially the AX (rumor has it a Rotax powered Ulysses styled bike). Some smaller displacement bikes would be great too!

  17. Tin Man says

    Alot of folks like to rag on H.D. over the Buell thing, but without HD, Buell would of never made it as far as they did, and MV Augusta would not be around either. There is a good chance that Cagvia and Ducati would not exist either. Much like GM and Ford, HD has a habit of wasting money when times are good by trying to bail out losing Marques only to give up about a year too soon and never reaping the benifits of their investment. Good luck to Buell in the future, but without a “popular”priced bike to sell they are doomed, the India connection might just work.

  18. Bicho says

    Laguna seca…….production version of the MOTUS bike…………….can we see it,please

  19. Len says

    Paul… what’s going on… need some help writing articles….. or just taking a long vacation….?

  20. Michael says

    Yeah, I was wondering the same thing… I check in every morning, hoping to find the next article. I hope everything is ok on your end.

  21. says

    It’s been a while back but Paul said he’s taken up a social cause in his locality that’s dear to him. Be patient. Anything good is worth waiting for. Like a new improved BUELL BLAST. HE HE

  22. Oberon says

    Getting kind of tired of seeing this article at the top of the page. New content, please…?

  23. Sfan says

    Yeah, I will admit to being a bit concerned and hope all is well, that this is a well-deserved break. In the past however it hasn’t been like Paul to be quiet for so long without a quick note to readers.

  24. Sfan says

    I just pinged Paul and can confirm all is well and, yes, his time is tied up at least for now in another initiative.

  25. says

    Surely no offence taken. I just am unaware of the process. Sounds like submarine stuff. That and my wife says I’m sort of a smart ass to boot.

  26. says

    Pinging is quite technical by wiki terms. Seems what you learn is that a site exists but not the activities or condition of the site’s operator. Glad the Paulinator Ponged the Slider none the less.