Hero MotoCorp in talks for possible Ducati acquisition

March 6, 2012 – (Motor Sports Newswire) – Hero is seeking for technology to enhance bikes

India’s biggest motorcycle maker by sales, MotoCorp, is in talks with bankers for a potential acquisition of iconic Italian motorcycle maker Ducati Holding.

Hero MotoCorp, which is looking at technology partners after 26 year relation with Honda, intends to expand market under increased domestic competition. The company is seeking for technology to enhance bikes.

Ducati would add products such as the $28,000 Superbike 1199 Panigale S Tricolore to a company that’s amassed a $1 billion war chest selling bikes for as little as Rs 38,053 ($768). Hero may be seeking to replicate the success of Tata Motors Ltd, maker of the world’s cheapest car, which is seeing profits surge after its purchase of Jaguar Land Rover Plc.

“It is an excellent fit. Ducati is a big brand and has a lot of technology, while Hero is looking to be a serious global player,” said Deepesh Rathore, managing director of IHS Automotive in India. “Hero might get it cheap. Thanks to the European slowdown, Ducati’s numbers haven’t been great.”

Last month, Hero entered into a partnership with Erik Buell Racing, where Hero would sponsor two EBR teams in the AMA Pro Racing National Guard Superbike Championship in return for technology and design support for future models.

Expanding Outside India

With competition intensifying in India, the two top-notch bike manufacturers of the region – Hero and Bajaj Auto Ltd – are looking to expand overseas.

Honda is increasing its operations in India after separating from Hero, and will spend as much as Rs 1,000 crore 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.

Motorcycle sales in India grew 15% in 2011 to 9.95 million units, according to data from the Society of Indian Automobile Manufacturers. The industry body said January 10 it expects deliveries of two-wheelers, including motorcycles and scooters, in the year beginning April 1 will increase 11% to 14%.

SOURCE: Bloomberg UTV