Powering Down

Harley-Davidson wants to boost its sales volume in India by launching mid-segment bikes

Milwaukee, Wisconsin-based Harley-Davidson might well have been the pictorial representation of what the US wants to portray itself as — free-spirited yet powerful. But it is fighting its own wars. The neo-modern American youth is showing no interest in owning the beasts and the trade war has raised tariff rates all over the world. Over the years, the company has enjoyed the luxury of having US Presidents on its side, letting the home-grown company counter its Japanese rivals. However, Donald Trump has strongly voiced that he will make life easier for its peers even as the brand looks at setting up production facilities outside the country.

Among Asian markets, Harley-Davidson is especially looking at increasing its share of the high-end two-wheeler market in India. It has been steadily losing market share and sales have fallen from a high of 4,708 units in FY16 to 3,413 units in FY18. Harley’s Street Rod and Street 750 (pictured above) are currently the lowest powered bikes it sells in India but now in its quest for more volume, it wants to go lower than 750cc. To rev up demand, it plans to launch motorcycles of 250-500 cc. And to avoid high tariffs — which stands at 100% in India — the company wants to tie-up with an Indian partner to manufacture its bikes. Existing foreign competitors such as BMW and Triumph have already partnered with TVS Motor and Bajaj Auto respectively; hence Harley could be restricted in terms of the options available.

Notwithstanding the eventual Indian partner, Harley in its attempt to re-establish its supremacy is also open to repositioning itself internationally. The company, known for its heavy touring motorcycles, is on course to launch Pan America 1250, Harley-Davidson Streetfighter 975, Harley-Davidson Custom 1250, and even an electric motorcycle called LiveWire. This makeover comes at a time when the company’s core customers are aging and millennials are not keen on buying heavyweight bikes, because of their high price points. Following the objectives laid down in its “More Roads to Harley” growth plan, Harley wants to add these new models to their range and slash costs to generate $5.9 billion-6.4 billion in 2022 revenue and $250 million in operating profit.

India might be enticing to Harley as the world’s largest two-wheeler market, but it is dominated by a few key players. Of the 20.1 million two-wheelers sold in FY18, Hero MotoCorp accounted for 7.38 million motorcycles sold with a 36.56% market share, followed by Honda, TVS Motor and Bajaj Auto, who hold 28.6%, 14.24% and 9.77% of the market. Harley is not guaranteed success in the mid-segment either as it would be up against Royal Enfield, which recently reported its highest annual sales at 820,492 units. Harley might be moving in the right direction to recover its 6.4% decline in US sales but the bet on lightweight and middleweight could be a fairly long trip.