This comes as Polaris prepares to launch its 'Indian' and 'Victory' bike brands in India starting next year to compete with premium marquees like Harley-Davidson and Triumph.
All terrain vehicle-maker Polaris and Eicher are not unknown to each other. Last year, the two had invested R250 crore in a joint venture company (both partners have equal stake) for co-developing light passenger vehicles.
This JV aims to use an old and empty Royal Enfield facility near Jaipur, Rajasthan, where production is expected to start in 2015. This same facility could also be used by Polaris to assemble the 'Indian' bike range if the second partnership between the two is also agreed upon.
"While nothing has been finalised yet, discussions are happening on various matters, including extending the tie-up with Eicher to include bikes as well. Polaris is searching for a local partner, which it feels is necessary to be a significant player in India in the large two-wheeler segment. For this, Eicher is the first logical choice. It is eyeing Eicher's Rajasthan plant, which has been lying unused for many years now, a source close to the development told FE.
When contacted, an Eicher Motors spokesperson confirmed that the old Royal Enfield plant in Jaipur will be used for the passenger vehicles business, but added that a tie-up in the two-wheeler front is speculative and hypothetical".
The two wheeler tie-up is expected to give Polaris a local manufacturing base with much less investment than setting up its own plant, helping it target higher volumes through reduced prices initial prices for fully-built imported models will be above R20 lakh, which will only be cut after local assembling starts.
Polaris may also get access to Royal Enfield's supplier network, helping it cut costs further and develop an India-specific model like Harley.
At Polaris, all options are being discussed including making India-specific bikes and creating a local brand for India, since it's the world's largest bike market and a lot of global players are already keen to enter. But for this tie-up to work, both partners need to see benefit, the source further said.
Additionally, Polaris could also develop a lower-priced bike jointly with Royal Enfield to compete with Harley's starting prices of around R7 lakh, while Royal Enfield in turn will gain access to bigger engines that it needs for its Bullet range as it moves more upmarket into the premium territory.
Currently, the biggest engine used by Royal Enfield is a
500cc power plant, while Indian Chief range uses a massive 1,700cc engine.
"While Royal Enfield may gain in technology, the worry is that we may not want to help a competitor. Royal Enfield wants to enter the more premium segments in a few years where it may be challenged by Polaris' Indian or Victory brands, an Eicher official said on condition of anonymity.
Of late, India's 13.8 million two-wheeler market (of which 10 million is bikes) has evinced interest from most large global players. In the mass segments, Honda, Yamaha and Suzuki are all expanding production capacities in a bid to capture market share from domestic players like market leaders Hero MotoCorp, Bajaj Auto and TVS.