Failure of Harley Davidson in Indian market

BY:- SAARTHAK BHARGAVA

• Introduction
• No full-scale manufacturing
• Financial troubles, declining sales and Covid-19
• No clear demand outlook
• The dying cruiser segment
• Too late to fight Royal Enfield?
• Smaller scale of reach
•  Poor service back-up
• Incomplete portfolio
• No local partner
• Fierce competition
 INTRODUCTION
• Harley-Davidson, Inc., H-D, or Harley, is an American motorcycle manufacturer founded in 1903 in 
Milwaukee, Wisconsin. Along with Indian, it was one of two major American motorcycle manufacturers to
survive the Great Depression.[3] The company has survived numerous ownership arrangements, subsidiary
arrangements, periods of poor economic health and product quality, and intense global competition [4] to become
one of the world's largest motorcycle manufacturers and an iconic brand widely known for its loyal following.
There are owner clubs and events worldwide, as well as a company-sponsored, brand-focused museum.
• Harley-Davidson is noted for a style of customization that gave rise to the chopper motorcycle style.[5] The
company traditionally marketed heavyweight, air-cooled cruiser motorcycles with engine displacements greater
than 700 cc, but it has broadened its offerings to include more contemporary VRSC (2002) and middle-weight 
Street (2015) platforms.
• Harley-Davidson manufactures its motorcycles at factories in York, Pennsylvania; Milwaukee, Wisconsin; 
Manaus, Brazil; India; and Pluak Daeng, Thailand.[6] The company markets its products worldwide, and also
licenses and markets merchandise under the Harley-Davidson brand, among them apparel, home décor and
ornaments, accessories, toys, scale models of its motorcycles, and video games based on its motorcycle line
and the community.
NO FULL-SCALE MANUFACTURING

• India had good reason to cheer back in 2011, when it played

host to the first Harley-Davidson plant outside the US. Set up
in Bawal, Haryana, the idea was to make the bikes as affordable
as possible for the value-conscious Indian customer. However,
the bikes bear a tax burden of 56 percent (GST 28 percent +
Customs duty 25 percent and Cess 3 percent) as they are not
manufactured but merely assembled from parts imported into
India. Such an assembly operation is no match for the 28
percent GST, which is the only tax levied on two-wheelers
manufactured in India
 FINANCIAL TROUBLES, DECLINING SALES AND
COVID-19

• Last year, Harley-Davidson shipped 213,939 motorcycles to its

dealerships, which was the lowest in nine years. At $423 million,
its 2019 net income was also the worst in nine years.
• The June quarter saw Harley post its first quarterly loss in 37
quarters. Retail sales in its home market, the US, which is also its
biggest market, saw sales skid to a six-year low due to production
cutbacks, the Covid-19 impact and dealership closures. The
company now wants to refocus on the US and European markets.
 NO CLEAR DEMAND OUTLOOK

• The Covid-19 disruption has pushed back India’s two-wheeler demand by 2-3
years. Society of Indian Automobile Manufacturers (SIAM) data show that
two-wheeler sales were slightly more than half at 4.13 million units during the
April-August period compared to 8.03 million units sold in the same period
last year.
• During the same five months this year, sales of high-end bikes (above 800cc)
saw a sharper fall to 445 units, a slump of 53 percent from 938 units. During
the whole of FY20, such bikes suffered a fall of 12 percent to 2,605 units
from 2,945 units in FY19. With India’s GDP contracting by nearly 25 percent
in Q1FY21, demand for premium bikes could stay depressed for a while.
 THE DYING CRUISER SEGMENT

• The cruiser bike segment is a dying breed not just in India but
overseas too. With the exception of Indian Motorcycle and,
more recently, BMW, no other brand competes with Harley in
the premium cruiser bike segment in India.
• Buyers instead fancy touring, adventure, sports bikes or race
replicas made by Honda, Kawasaki, Yamaha, Suzuki, Ducati,
Benelli, Aprilia and others. These brands have stayed away from
cruisers for India.
 TOO LATE TO FIGHT ROYAL ENFIELD?

• In early 2019, Royal enfield launched two bikes with the biggest

engines offered by it yet. The Interceptor and Continental GT
came with 650cc engines. These non-cruiser bikes were
launched at Rs 2.5 lakh. Harley-Davidson’s entry bike in India
was the Street 750, with a price tag of Rs 4.7 lakh.
 SMALLER SCALE OF REACH
• Just 35 Harley-Davidson dealerships catered to the entire length and
breadth of India. In comparison, luxury car heavyweight Mercedes-
Benz has nearly 100 operational dealerships in India. With more than
half of its sales emerging from the less than 800cc category, there
was a pressing need for Harley Davidson to expand beyond the metros
and into Tier 2 and Tier 3 cities.
• Harley’s average sales per dealer in a year were less than 70 units, 
making it one of the lowest in the two-wheeler space. A dealer selling
Mercedes-Benz cars sells nearly 150 units during the same period.
 POOR SERVICE BACK-UP
• While there are cases of owners clocking 250,000 km on their
Harleys without much of a hiccup before seeking an engine change,
social media sites are teeming with angry reactions from customers
dissatisfied with the service back-up offered by the bike maker.
• A faulty fuel pump forced the company to issue a recall of nearly
3,700 bikes in India in 2015. Customers have also complained about
engine overheating, worn out brake pads and clutch plates burning
out too soon. Moreover, several owners have faced a prolonged wait
for the parts, which have to be imported.
 INCOMPLETE PORTFOLIO
• The smallest and most affordable Harley motorcycle in India is the 750cc
Street 750 that costs Rs 4.7 lakh. The entire range that consists of more than
a dozen bikes tops out with the 1923cc CVO Limited that costs upwards of half
a crore. This kind of pricing even with attractive finance options, puts a Harley
out of the reach of most Indians. What did not help matters was the company's
delay in bringing out smaller displacement and more affordable bikes for
emerging markets like India. Neither did it have options like off-roaders, which
Triumph and KTM have, or out an out sports bikes like BMW. Though under a
Harley logo it would have been an anathema to purists, straddled only with
cruisers and tourers, Harley was boxed with a niche and small segment of the
market.
  NO LOCAL PARTNER
• When, in 2007, Pune-based Bajaj Auto invested for the first time in
Austria’s KTM, Harley-Davidson was busy clearing the decks for an India
launch the same year. However, the actual launch happened two years later.
• Since then Bajaj Auto has turned KTM into a leader in the premium (200cc
and above) bike segment in India. Bajaj has also partnered with Britain’s
Triumph Motorcycle. BMW has teamed up with TVS Motor Company. Other
global brands like Hyosung and Benelli also tied up with local partners.
Harley, instead, joined hands with Qianjiang, a Chinese subsidiary of Geely
Motors.
 FIERCE COMPETITION
• In India, Harley Davidson found a fierce challenger in the Royal Enfield and by all means
it came up short against the local rival. In fact, the growth of Enfield in the last 10 years
suggests that entry of Harley only helped it. As its owner Siddhartha Lal says the noise
and curiosity around Harley Davidson when it first entered India gave cruiser biking a
new impetus in the country. Customers checked out a Harley and drooled over them but
ended up buying the more affordable, lighter and easy to maintain Enfield. What hurt the
American company more was that the Indian brand didn't sit idle instead. Without the
baggage of needing to make only cruisers, Enfield brought out newer models like the
Himalayan off-roader. More recently, it charted into Harley territory directly with the
twin cylinder 650cc Interceptor twins. Enfield was ripe for the taking too and its massive
market share meant even a small dent would have been enough for Harley to sustain
itself. But it never even gave it a half decent shot. Dismissive at all times, Harley still
doesn't have an answer to good old Enfield.