Erik Buell Racing Goes Bankrupt - Hero Still Coming to the US

The news of Erik Buell Racing’s demise (again) came at a surprise, but when I thought back on an interview we conducted earlier this year, things started to make sense... Actually, it began to confuse us even more. It seems as though there’s a piece of the puzzle missing with this news story.

In case you didn’t already know, Erik Buell Racing filed for bankruptcy on Monday, April 13th, 2015. EBR opened up shop in 2009 after Harley-Davidson dismantled Buell. Erik was determined to keep making bikes, with his heart set on producing a badass American sportbike—the only of its kind. So he created EBR in the same building as Buell and simply kept going after H-D left.

MUST READ: Erik Buell Racing (EBR) Returns to WSBK, for 2015 Season | RideApart

EBR kicked out their first street production bike, the 1190RS, [correction, the RS was the first street production model] for the 2014 model year and the naked version, the 1190SX, followed shortly after. The sportbike was lacking in sales, but the naked seemed to give dealers new hope... if only slightly.

Hero Motor Corp, the Indian company that’s known as the world’s largest motorcycle manufacturer, became involved with EBR back in 2011, investing in the company a couple years later. The two had big plans on the consumer market while simultaneously starting the Hero/EBR World Superbike team. Luckily, the team will continue to race this season despite the EBR bankruptcy.

MUST READ: Q&A With EBR 1190RX Designer Ryan Hahn | RideApart

Why It May Be Hero’s Fault

In 2011, EBR started contract engineering and consulting work for Hero Motor Corp, developing small-cc sportbikes. This arrangment turned out to be a lucrative arrangement for EBR. The first bike introduced was the HX250R, which was postponed after its unveiling. Recent reports say the bike will go on sale this summer.

Two years later, in July 2013, Hero Motor Corp purchased a 49.2 percent stake in the company for $25 million. In October of the same year, it was announced that EBR would be carrying Hero Motorcycles in the US, beginning summer 2014. Most motorcycle publications made this announcement, but as of early 2015, we noticed there were no updates.

Earlier this year we reached out to EBR to fact check a story about Hero’s marketing efforts in the US. We thought this new short-lived ad campaign was Hero hinting that it would target North American sales very soon.

We also reached out to several EBR dealerships, none of which had any word of selling Hero motorcycles. The official word from EBR was there weren’t any Hero motorcycles being distributed in the US by EBR just yet. They had big news coming with the Hero/EBR relationship, but nothing they would comfortably say on record. They hinted at it being important for the company, but released no major details over the phone. This is the important part to pay attention to: Is Hero Motor Corp to blame for the lack of EBR funding?

According to the most recent accounts, EBR is in a 20 million dollars hole, which doesn’t help determine where the funding is actually lacking as Hero invested 25 million for 49 percent. This meant that EBR was worth 50 million at the time of investment two years ago. It would probably be safe to say that there were some growing pains and the company is worth a little less now meaning Hero could have 20 million worth in the company at half of its value. So, it's possible Hero, all of EBR's other combined investments, or simply bad management (and costs totaling over their investments) are to blame, but Erik only hints at where the money is missing:

"The turn we recently took, after we thought we were moving forward, was unexpected," Erik Buell said in a statement according to Cycle World. "We thought we had secured funding, but in the end, we were not able to get the funding in place. Therefore we need to do the best we can under the circumstances for all parties in interest."