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Why Harley Davidson Quit India

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More than two Crore scooters and motorcycles are sold each year in India, a staggering figure by global standards. India’s two-wheeler market, the world’s largest (followed by China, which is the second-largest), is expected to continue growing at a moderate pace, reaching 2.5 crore per year by 2025. Still, none of this was enough to prevent Harley-Davidson from shutting down operations in India.

The American company, which mainly produces high-capacity cruisers, recently announced its exit from India, citing consistently low levels of demand for its motorcycles, which made it impossible for Harley to continue manufacturing and assembly activities at Bawal, Haryana. The Harley dealer network in India, which has not been informed in advance of the company’s impending exit, is contemplating heavy losses. With 35 Harley dealers in the country, each set up with an estimated investment of around Rs. 3 to 4 crore, there will be a lot of people who are going to be very, very angry with Harley. It is estimated that 2,000 people (including people working in the Harley factory and Harley dealers) will lose their jobs, while customers have also been left behind, without clear communication from the company on what Harley intends to do regarding after-sales, spare parts and maintenance requirements. This is an unholy mess.

So what is wrong? HarleyDavidson, which was pretty enthusiastic about the Indian market when it first came here in 2011, has sold less than 30,000 motorcycles in India over the past decade. The main reason is probably that the Harley product portfolio was simply not well suited to Indian requirements. What the American company does best are large cruisers and high capacity, long distance tourists that are expensive to buy and operate. Entry-level Harleys, like the Street 750 and Street Rod, are priced at 4.7-6.0 lakh, but offer significantly lower levels of refinement and performance than similarly priced bikes from manufacturers. Japanese and European. For larger Harleys, prices start at around Rs 11 lakh and extend to the stratosphere Rs 55 lakh. While Harley assembled its smaller and cheaper bikes at its factory in Bawal, the bigger bikes were all imports from the CBU, which were hit by the extremely high import duty rates for which India is known. . But even for its entry-level models, Harley was never able to build up a supplier base in India, and indigenization levels were quite low across all models. Imported components again meant import duties and higher prices across the board, which hurt the company’s business in India. Yes, India is still a ‘big volume, low margin’ market for motorcycles, and the top selling bikes here are the small capacity, cheap and fuel efficient commuter bikes. Only a handful of companies like Hero MotoCorp, Bajaj and Honda are able to produce and sell such bikes in huge numbers, at very high levels of profitability.

At the top level, there is a large market for machines from 250 to 900 cm3; it is a segment that has a large number of players, including Royal Enfield, Jawa, KTM, Triumph, Ducati, Yamaha, Kawasaki, Suzuki, Honda, Bajaj, TVS and BMW. All of these manufacturers offer a wide range of bare and fully faired bikes, including cruisers, touring bikes, sports bikes and dual purpose bikes, with prices ranging from Rs 2 to 10 lakh. This is the segment that would have been the perfect fit for Harley, where they should have been able to kill. However, their limited product line in this price segment was one of the reasons that prompted them. Another factor that probably mattered was that sportbikes (the type of machines KTM, Ducati, Triumph and Japan Inc. do best) are much more popular than old cruisers in the ‘lifestyle’ segment. in India. Harley, on the other hand, mostly only makes cruisers, which young Indian buyers don’t too often like.

While Japanese bicycle makers, who have been working in India for decades, are now convinced to do it alone, some European bicycle manufacturers still feel the need to work with an Indian partner in order to be successful in this very difficult and demanding situation. market. KTM is with Bajaj, Triumph also has an agreement with Bajaj for the development of medium capacity motorcycles and BMW has an agreement with TVS. The first indications are that Harley-Davidson could go this route as well, instead of completely abandoning the Indian market. There is talk that Harley could make some sort of deal with Hero MotoCorp, whereby the latter will become the sole importer of Harley motorcycles in India. Taking it a step further, Hero may even undertake to assemble and / or manufacture some of Harley’s most basic models locally, on a contract basis. If the Harley-Hero deal works, it remains to be seen whether American motorcycles will be sold through the Hero dealer network, or whether existing Harley dealers might still have a chance to recoup some of their investment and continue to operate under. the Hero Diet. Either way, Harley will be able to significantly reduce its operating costs, while still providing a chance for Indian buyers to realize their ambitions of parking a Harley cruiser in their garage, although likely at prices that will be. higher than before. Ultimately, this is a sad state of affairs for Harley, and a sad thing for Harley fans, owners, enthusiasts and dealers in India. Whether Hero (who doesn’t really have a good track record with Harley’s former affiliate Buell, whom he cruelly threw to the curb a few years ago) steps in to partially save the day, and how does the Harley saga takes place in there. case remains to be seen.

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