Aprilia, which bills itself as Europe’s second largest producer of motorcycles and scooters, says the strategic partnership it entered into with India’s Hero Motors will cover eight years, be renewable, and account for annual sales of about $70 million. The move is seen as a way for both firms to develop new technology and address key global markets for scooters.
Based on a trademark and licensing agreement, the deal has Aprilia transferring technological know-how, which would include design, engineering, testing, manufacturing and quality standards. Hero Motors also will have the exclusivity right to the Aprilia brand name in India, paying a royalty per vehicle to Aprilia in return for the brand use and technical expertise.
Finally, the agreement calls for Aprilia to buy back vehicles for the European Market and other growing markets like South East Asia, Latin America and Africa at competitive prices, due to the low costs of manufacturing in India.
The plan is to introduce only three scooter models in the first phase — 2004-2005. However, the joint venture into the motoscooter market is only the first step of a wider program of cooperation, according to Aprilia, which said it may enter other “niche, but nevertheless emerging two wheeler segments” both in India and abroad.
“Technology, passion and enthusiasm are the three distinctive characteristics of Aprilia and we do believe that Hero Motors is a strategic partner which also shares the same values,” said Ivano Beggio, chairman and founder of Aprilia. “This common platform will help us in achieving our main objective, which is to give the necessary cost competitiveness to our products, in order to compete and to be successful on the global market.”
In effect, the agreement will enable Aprilia to get machines produced at Hero’s low costs and Hero will benefit from Aprilia’s best practices in quality and technology. The collaboration also could help Hero Motors’ to become a producer of world class two wheelers.