First of all, apologies for how long it has taken us to get this episode of the Two Enthusiasts Podcast out to you. There are a few reasons why this particular show took so long to get out on the feed, but the biggest reason is that I have been slowly working through a massive backlog of stories. So, apologies for that.
That being said, Quentin and I are very stoked to bring you our third attempt at tackling the Buell/EBR story on the podcast. As such, Episode 19 covers Buell’s divestiture from Harley-Davidson, Erik Buell Racing’s launch from those ashes, and EBR’s very convoluted and complicated receivership process.
We also talk at great length about Quentin’s experience with the racing side of Buell and EBR, as well as my familiarity with EBR’s business operations and products. Whether your a fan of Erik Buell or not, we think you will find the show very interesting.
As always, you can listen to the show via the embedded SoundCloud player, after the jump, or you can find the show on iTunes (please leave a review) or this RSS feed. Be sure to follow us on Facebook and Twitter as well. Enjoy the show!
Hero MotoCorp Ltd (HMCL) has filed paperwork with the Bombay Stock Exchange stating that its wholly-owned subsidiary, HMCL Americas, has entered into a settlement agreement with Erik Buell Racing, which sees the American arm of the Indian brand acquire “certain consulting project” from EBR for $2.8 million.
The filing with the Bombay Stock Exchange reads: “”As part of the settlement agreement, HMCL Americas Inc has agreed to acquire the ownership of certain tangible and intangible assets of EBR Entities, free and clear of all encumbrances, for a consideration of USD 2.8 million.”
Social media and some assorted motorcycle news websites (first here, and now here) are feverishly reporting that Erik Buell Racing has been out-right acquired by Hero MotoCorp, during the company’s receivership auction, thus confirming the wet-dream conspiracy theories of Buellistas around the world.
The report was first started by the stalwart news source Motorcycle.in.th, and was then elevated quickly into the realm of semi-truthfulness by a bevy of other news outlets.
Sources close to Buell and Erik Buell Racing have since come forward and discrediting the report, calling the story a complete fabrication. Meanwhile, Hero MotoCorp stock has risen 0.50% on the news.
With the journalistic bar now set so low, Asphalt & Rubber feels comfortable reporting that there is indeed a new owner for Erik Buell Racing, but it is not Hero MotoCorp, but instead the Flying Spaghetti Monster — deity to the Church of the Flying Spaghetti Monster.
Word out of India is that the Hero HX250R, the quarter-liter sport bike that Erik Buell Racing helped design, will not be arriving later this year, as was originally intended. Rumors instead suggest that the HX250R will debut in 2016.
The delay is said to be directly linked to Erik Buell Racing going into receivership earlier this year, and it’s a fair bet that the delay is due to something in the design of the HX250R.
However, we would also bet good money that Hero realized there was no point in releasing a North American bound model without a North American distributor with which to sell it.
The bar isn’t set particularly high when it comes to the motorcycle media’s coverage of complex business issues, nor would you really expect it to be. The majority of my colleagues are more likely to have amateur or racing licenses, rather than MBAs or law degrees. Fortunately for A&R, I’m not an accomplished motorcycle racer.
It therefore didn’t surprise me last week that the headlines regard Erik Buell Racing ranged in their proclamations from the more accurate “ceased operations” to “gone bankrupt” – with the even more presumptive publications proclaiming the ultimate demise of the American brand.
This comes from a lack of understanding about how the receivership process works, which my European colleagues should have a stronger grasp of, as the concept is more prevalent across the pond.
As such, I would like to explain the issue further, and how it applies to the situation facing Erik Buell Racing. To entice you on what will surely be a boring subject to many, this doesn’t spell the end of Erik Buell Racing…not even close.
With the news that Erik Buell Racing has ceased operations and will be headed into receivership, doubt has been cast on the company’s racing efforts in the World Superbike Championship. Allaying some fears, Team Manager and Rider Larry Pegram spoke to the WorldSBK.com website, saying that the team would indeed race in Assen, as planned.
“For Team Hero EBR, nothing has really changed,” Pegram said while speaking to WorldSBK.com. “We are going to be racing this weekend and we plan to continue for the season. All indications are that we are going to be able to do that. There is obviously some restructuring and financial stuff going on in the USA, but we are over here in Assen and getting ready for a good weekend.”
The Hero MotoCorp news keeps coming. Last week we reported on the Hero HXR 250R 250cc lightweight sport bike and the impressively practical Hero RNT diesel scooter.
This time, it’s a 620cc streetfighter concept called the Hero Hastur 620. With a parallel twin putting out around 80hp, and claimed weight of only 352.7 pounds wet, the Hastur definitely has a few of key ingredients needed for success.
With a shot across the bow of former-partner Honda, Hero recently unveiled its flagship HXR 250R small-displacement sports bike this week.
Aimed at young enthusiasts in developing markets and newer riders in general, the claimed power of 31 hp, coupled with the svelte 306 lbs curb weight, make it both more powerful and lighter than the current Honda CBR250R and putting in more in line with the CBR300R.
We are told that the Erik Buell Racing (EBR) had a hand in helping design and develop the bike but it is unclear what specifically EBR contributed towards the design.
Coming from left field but hitting it squarely in the “awesome” section, Hero recently unveiled a 150cc diesel engine powered motorcycle called the “RNT”. The oil burner, with its square lines, flat surfaces and 1980’s Sci-fi aesthetics looks fantastically practical and more like a scooter than a motorcycle.
The RNT concept weighs about 300 lbs, has a top speed of 44mph, and a tank capacity of 1.5 gallons. At that weight, the Hero RNT 150 is quite pudgy compared to your typical 150cc scooter but the potential benefits of the increased efficiency and range of the Diesel might make up for that.
To top it all off, the concept features two wheel drive. It’ll be interesting to see if and how Hero goes forward with this concept.
A plethora of Indian Financial publications are reporting that Hero MotoCorp has bought a 49.2% stake in Erik Buell Racing for $25 million. Hero MotoCorp is India’s largest two-wheel manufacturer, and for a year now has partnered with Erik Buell Racing for technical development, as well as sponsoring the American company’s AMA Pro Road Racing team for the past two seasons.
Today’s news confirms numerous rumors we have heard about the Hero investing in EBR. Acquiring only 49.2% of Erik Buell Racing, Hero has only a minority stake in EBR, and while we cannot confirm the information, we would imagine that the odd 49.2% ownership was done to keep Erik Buell as the majority shareholder in his company.
Hero may be losing ground to Honda in its smallest displacement categories in its home market of India, but the Indian brand is poised for good growth abroad. Already linked to a number of projects with Erik Buell Racing, Hero MotoCorp is said to be also eyeing the African and Latin American markets for its next international business moves.
Hoping to enter a few markets in Africa and Latin America by the end of the company’s fiscal year, Hero MotoCorp is cagey on specifics regarding its overall international plan. However, in September of this year, Hero’s CEO Pawan Munjal stated that the company would start assembly plants in Kenya and Nigeria, tipping those two countries as the starting points for the Indian company’s African market invasion.
As for Latin America, Colombian market is favored to be the first vector, with Munjal also tipping that Hero MotoCorp would establish an assembly operation in the South America country, and then presumably work its way farther north. The position also easily positions the Indian company for expansion south into lucrative markets like Brazil, Argentina, and Peru.