Thu. Mar 28th, 2024

Global Rewire: Harley-Davidson Shuts Down Exit Rumors, Confirms Scaling Down of Operations in Indian Market

ByKritika Krishnakumar

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Harley Davidson

Harley-Davidson enthusiasts in India experienced a shocking news when the company’s management announced plans of shifting the assembly plant from India to Thailand.

All the media houses went haywire and reported the shutting down of Harley Davidson bikes in India. However today, the company’s management in an official comment reported by the Economic Times brushed off the rumours. But they seemed pretty clear on scaling down the operations for cost cutting and loss compensation.

Harley Davidson Bike Customised with indian Flag Colors.
Harley Davidson Bike Customised with indian Flag Colors.

Though India has millions of Harley-Davidson fans, the sales of this biker brand has not picked up in the past few years.

How Harley-Davidson rode into the hearts of Indians?

Harley-Davidson was a hit in America because of its powerful endorsement by the iconic pop culture stars like James Dean and Steve McQueen living the American dream and powering off on their bikes down an open road towards exciting new horizons.

In India in 2009, there was a high brand awareness of Harley-Davidson, but awareness doesn’t always translate to relevance. There were broad misconceptions about Harley-Davidson customers, originating from the favored culture stereotypes of Arnold Schwarzenegger and Hells Angels on one hand, or older white men with beards, bellies and tattoos on the other.

It was a challenge for this brand to survive in India considering the vast difference geographically and economically but the founders knew that the largest customer market can be found only here.
In India there are not really many open roads and spaces for people to ride on a daily basis so the biker brand had to change perceptions by actively demonstrating the relevance of the Harley-D lifestyle in comparison to Indian Lifestyle.

Harley Davidson Bike riders

They drew upon previous experiences in developing its strategy for India. For example, Harley-Davidson has a subsidiary in China, but when they launched there they had a sales office, and worked directly with dealers for import and distribution. While this allowed them to reach customers, distributors tend to operate with a short-term view of the business. A subsidiary structure provided the advantage of positive control of the brand and customer experience, which in the long-term proved to be a good return on investment.

In August 2009, Harley-Davidson India commenced its operations and became a wholly owned subsidiary of Harley-Davidson Incorporation.

When they launched in India, rather than spending too much energy on advertising, they invested in creating real-life events that could provide on-the-ground demonstrations of their lifestyle and culture. This key strategy helped local people see the relevance of Harley-Davidson to their own lives. Although Harley was a ‘foreign brand’ when they opened their first assembly plant, they constantly reminded Indian customers that:

‘We are here to stay and invest in the market – not just to import and sell’.

And hence winning the trust of Indian bike lovers with their pre-established fame.

Over the years Harley bikes became a dream of many youngsters and also a prestige for bike lovers to purchase and possess. Thankfully, with more and more premium brands like Harley-Davidson entering the market the previously poor customer services in India improved and became rather a priority.

Smooth Riding through the Years:

Harley currently makes the lightweight bikes at two plants—one in Kansas City in the US and another in Gurgaon in Haryana, on the outskirts of New Delhi.

harley Davidson Showroom Bengaluru India
Harley Davidson Showroom Bengaluru India

In 2014, Harley sold 2,406 bikes of ₹ 5 lakh each in India which accounted to it’s 41% of its domestic sales. Harley introduced its cheapest bikes, targeted at young bikers with an eye fixed on the worldwide market, after interrogating customers in various Asian countries.

In the price-sensitive Indian market, the launch of the road 750, at a tag that’s but a 3rd of Harley’s Fat Boy, made eminent sense because it offers an easier ride on the country’s pitted and traffic-snarled roads.

To be sure, the brand has made slow headway in India, where motorcycles sales grew 4.34% to 9.1 million units during 2015. Leisure biking is still a new concept in the country, where the market is dominated by city commuter bikes.

Harley-Davidson Sales in the year 2019-2020:

Harley-Davidson has many fans in India. Despite this, the company does not see growth in sales. If we talk about the financial year 2019, the sales figures of Harley-Davidson bikes in India were much less than 2500 units. Looking at these figures, there are reports of this plant being closed.

HARDLEY DAVIDSON LOGO
HARDLEY-DAVIDSON LOGO

The brand has witnessed a mixed response in terms of July 2019 sales though the numbers for best-selling motorcycle Street 750 has gradually declined. The motorcycle has been able to score a total of 79 units in July 2019, witnessing a decline in sales by 48% when compared to the 151 units sold in July 2018.

The Harley-Davidson model- 1200CX Roadster witnessed a drastic decline in sales unit by 83%, being able to record only 3 units in July 2019.

What is the reason for Harley-Davidson’s near Exit from India?

India is the largest motor-cycle market in the world. About 13% of Indians own a two-wheeler of some brand. There are almost 170 million two-wheelers on Indian roads. That is enough bikes for half the USA population and American motorcycle maker Harley-Davidson has been a part of this for long. They are only a small slice of Indian market with sales declining in the recent fiscal years.

Harley Davidson Bike Manufacturing unit
Harley Davidson Bike Manufacturing unit.

1)Expensive Cost of Bikes- The most affordable Harley Davidson Street 750 has received the minimum price hike and it now gets dearer by Rs 8,000. The Harley Davidson 1200 Custom has witnessed the maximum hike and it is now costlier by Rs 86,000.

2) High Maintenance cost- The standard service interval for a Harley-Davidson is 5,000 miles. The average cost, (varies by dealer and location) is around 29,971.72 Indian Rupee. Repair costs would be extra. So, if you ride around 2,500 miles per year or less, then your annual maintenance would average around Rs. 14985.86.

3) Cheaper Competitor-Royal Enfield- Royal Enfield has a competitive advantage over Harley-Davidson in pricing. American motorcycles are more expensive (the cheapest is twice the price of a top-end Royal Enfield) and popular brands of other motorcycles sell in staggering numbers in populous India.

4) Indian Roads and Geography- One thing to bear in mind is that due to the road conditions (bumps, speed breakers, potholes) in India, a heavy load bike like Harley is given a thought or two by most bike enthusiasts.

5) Increasing Tax rates and strict regimes- The company has increased the prices of some models in India. The price hike is a result of the Government of India’s decision to hike the custom duty on Completely Knocked Down products from 10 to 15 percent.

Harley's efforts to attract more Indian customers.
Harley’s efforts to attract more Indian customers. (advertisement)

6) ‘Make in India’ initiative- Royal Enfield, owned by India’s bus & commercial vehicles maker Eicher Motors, is the world’s oldest continuously manufactured brand of motorcycles. Hence Indians are preferring it over foreign brands. However, it is to be noted that Royal Enfield was launched in England and adapted in India during the British rule.

7) No local Market Collaboration- When one company fails to raise it sales alone, merger with related firms can amplify the sales and popularity in the market. Take the example of – Hero & Honda – Hero Honda, Ashok Layland & Nissan, Maruti – Suzuki, Tata motors- Marcopolo. However, Harley Davidson remained a sole organisation.

The larger question :Why is Harley-Davidson struggling not just in India but in another Countries too?

Experts say, “Because they are still building ‘grandpa bikes’.” Whenever you hear a Harley rumble up to a stoplight what do you see 95% of the time? Men of your grandpa’s age wearing leather jackets usually with those silly tassels, and leather chaps. This image does not appeal to the younger generations of riders (those who are less than 55 years old).

Pope Francis signs a custom harley motorcycle
Pope Francis signs a custom harley motorcycle.

Harley-Davidson thinks that bumping up their iconic V-Twin a few cubic inches every year is enough to keep their core customers coming back. The trouble is, they not a very adaptable breed (literally & figuratively speaking). Harley-D has let this situation go on far too long.

Now they are desperately trying to roll out motorcycles that might appeal to younger riders, but their bikes are still too heavy, too slow, and lack the latest suspension technologies. Lastly, they are still far more expensive than competitors’ bikes. Harley-Davidson’s days seem to be numbered.

How will the shifting of production hub to Thailand affect Indian Harley-Davidson fans and potential buyers?

If the Harley-Davidson assembly plant in India is closed and then it will be seen a huge jump in prices from Thailand. Because import duty will also have to be paid on import, which will increase prices.

If Harley-Davidson decides to exit the Indian market, it will be the second US automaker to shut operations in India in the last few years. In 2017, carmaker General Motors wound up its operations in the country and sold its Indian production plant located in Gujarat.

girl-riding-a-harley-davidson-matusciac-alexandru

US President Donald Trump has also taken a jab at India’s unfair trade barriers that are imposed on imports from the USA.

It has been learned that the company is also in talks with some automobile manufacturers about the use of a leased assembly plant located at Bawal in Haryana, so that there is no loss. However, the company has not yet announced publicly.

Harley-Davidson is offering benefits and discounts of up to ₹2.4 lakh.

Harley-Davidson is offering benefits and discounts of up to ₹2.4 lakh on Softail and Sportster range of bikes. The company has also slashed Street 750 Anniversary edition’s price by ₹72,000.

If you are planning to buy a Harley-Davidson bike, then now might be a good time for that. Because of poor sales, American motorcycle maker is offering a raft of benefits on almost its entire portfolio in India. With this, Harley-Davidson is hoping to rake in more sales here and keep the operations profitable. The America company posted its first quarterly loss in June which has compelled the brand to devise a new strategy to strengthen its financial position.

HD MOTORCYCLES

Harley-Davidson has already slashed Street 750’s price by a great margin and the bike now starts from ₹4.69 lakh only. But along with this, the iconic American brand has also reduced the Street 750 Anniversary edition’s price to ₹4.75 lakh. Launched last year to celebrate the company’s 10 years in India, Street 750 Anniversary edition used to retail at ₹5.47 lakh. All prices are ex-showroom.

However, we suggest that you connect with the nearest Harley-Davidson dealership to know about benefits and discounts on these motorcycles.

Times when Harley-Davidson Indian made talks in the Market:

Chief Justice of India on his Harley-Davidson bike
Chief Justice of India Sharad Arvind Bobde on his Harley-Davidson bike

1-The judge of India, Sharad Arvind Bobde, has raced to the top trends on social media with images of him trying a Harley Davidson superbike. The Chief Justice, 64, is claimed to be keen on bikes and has talked about owning a bullet within the past. In photos that went viral on Twitter on Sunday, he is seen on a Harley Davidson CVO 2020.
The photo was taken in the Chief Justice’s hometown Nagpur, where he is currently.

 

Indian actress Priyanka Chopra with her custom made Harley Bike
Indian actress Priyanka Chopra with her custom made Harley Bike

2- Famous Indian actress Priyanka Chopra decided to buy a motorcycle for herself after shooting for the movie ‘Don ‘. Priyanka owns a Harley Davidson Sportster 1200 during a hot pink paint shade. It’s said that the actress could have already changed the hot pink colour to metallic grey, which is in sync with how this actress loves to regularly give herself a makeover.

 

 

MS-Dhoni-Harley-Davidson
MS-Dhoni-Harley-Davidson

3-  Indian cricketer MS Dhoni is a huge bike nut. He owns a wide range of motorcycles, which includes some powerful bikes, such as the Kawasaki Ninja H2. Mahi also owns a Harley Davidson Fat Boy that you see in the above image. The Harley Davidson Fat Boy costs Rs. 18.11 lakh in India.

The list further goes on listing most of the A-listed Bollywood actors who keep a passion for bikes. This just further proves the point how only a selected few can afford this bike as for maximum Indian population does not consider such high priced premium Bike as their priority.

In recent related news, Harley-Davidson India has also cancelled the launch of its new model Bronx for the year 2021.

 

By Kritika Krishnakumar

Kritika is a News Reporter and Creative Content Writer at The Indian Wire. An ambitious Student with curious nature towards learning. Also, an inspiring Teacher in the field of Accountancy, Economics, Mathematics and Commerce.

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