Erik Buell Racing, founded by the irrepressible Erik Buell, is selling a 49.2 percent stake to Hero Motorcorp for $25 million. The massive cash infusion (arriving in two waves, the first of which is $15 million) should keep Erik Buell Racing in the motorcycling headlines—and on AMA and other racing podia—for a long time to come, as well as help Hero Motocorp become a globally recognized brand.
What’s interesting is why Hero Motocorp (which started as Hero Honda, a joint venture between a bicycle manufacturer and Honda Motors in 1984) bought the stake in EBR. As we reported last year, Hero engaged with Buell, supporting his race team in exchange for design and engineering work, but the Indian decided it needed a more solid relationship. This latest investment is Hero’s first in an overseas company: “This is the first time that Hero MotoCorp is buying a stake in a company outside India…the first step in globalization of the HMC brand,” CEO Pawan Munjal told reporters. Of course, Hero benefits from the positive association with the successful efforts of Buell racers like Geoff May, as well as EBR’s decades (dating all the way back to Erik Buell’s pre-Harley days) of building his own brand in the U.S., and understanding of the U.S. Market. Not to mention closer ties with Erik Buell himself, considered by many industry observers to be the most creative engineer in motorcycling.
Last February, I thought it unlikely that Hero would sell products to North American consumers, but Munjal contradicted that saying he believed that “smaller engines can be sold in America,” according to a Daily News of India story. Strong interest in models like the KTM 390 Duke and other high-performance, small-displacement machines make me agree, and knowing Buell, I’ll bet he’s got some zingy little Singles in his bag of tricks, motorcycles that could be relatively cheap to develop, high in profit—and very fun to ride.
New factory-owned subsidiaries in North America, Europe and Africa hint at HMC’s goal of global domination, with plans to export 350,000 vehicles from India this fiscal year, according to a Wall Street Journal article. Additionally, HMC will open manufacturing plants in Columbia, Kenya and Nigeria. And EBR itself will grow from a somewhat boutique operation currently into a real manufacturer, with a goal of building 20,000 units a year by 2017.
That Erik Buell, champion of the American-built sportbike, will be helping an Indian company become a force in the U.S. market illustrates just how quickly the world now turns.