When you close your eyes and think of the brand Harley-Davidson, what image comes to your mind? An open road? Leather-clad riders? Terminator?” asks Bijoy Kumar Y. The former editor of BS Motoring Magazine, aficionado of all things on four and two wheels and Harley junkie is quick to answer for us. “Well, it could be all of the above. The legendary motorcycle company may insist that it is all about freedom but it is a known fact that Arnold [Schwarzenegger] in his ageing cyborg incarnation sold more Fat Boys than any Harley-Davidson salesman ever did. To begin with, it was about American iron that evolved into a capable war machine. Then came Hells Angels and the cult following. This was followed by the company reinventing itself by selling time-warped cruisers with reliable mechanicals. The end result is the iconic Harley-Davidson brand of today — as American as it gets. Period.”
For bike unenthusiasts (there is no such word, by the way), this pretty much puts in perspective the evolution of a 112-year-old cult brand that has now invaded 93 nations. When that cult invades any part of the world, success is sure to follow, we may think. But it isn’t that simple. Especially in this sovereign, socialist, secular, democratic republic called India. Be it cola or cornflakes, cars or mutual funds, India has not been an easy market for global majors to crack, but Harley has defied that trend, and how.
Red to black
Street 750 might have propelled H-D to profitability in FY15
In about five years, Harley-Davidson (H-D) has managed to grow rapidly in India, with revenue soaring over Rs.200 crore and losses declining quickly. In FY14, the latest year for which financials are available, it clocked Rs.212 crore in revenue, and losses went down from Rs.13.4 crore to Rs.3.5 crore. In FY15, its sales volume was 4,641 compared to 1,927 in FY14. That’s probably a small number pitted against the revenue of $4.4 billion and volume of 267,999 that the parent clocked in 2014, but quite promising for the mother company whose global sales have not quite been cruising as smoothly. Can its unique India strategy then make its ride any smoother?
Kick-starting with a bang
When the governments of the United States and India decided to trade Harley-Davidsons for Alphonso mangoes in 2009, they were probably presenting a huge challenge to the cult-driven company. India was the largest motorcycle market in the world — with 10.5 million bikes being sold in 2010 (up to 16 million in FY15) — but barring the few imported super bikes, the premium bike segment was practically non-existent in the country, and there lay the opportunity.
Harley glided on to Indian roads knowing this reality, and that’s probably why it chose to launch with a big bang — 10 models to begin with, rather than being stingy and bringing in just a model or two. While it invested in a completely knocked down (CKD) facility in 2011, which began with the assembly of its Sportster line followed by the Dyna line in 2012 and Softail in 2013, the more important piece was its dedicated dealership programme which started off with having the right people at the right place. “When we entered India in 2010, there was really no leisure motorcycling market to be found in the premium space. We established the segment,” says Anoop Prakash, MD, Harley-Davidson India, sitting in his corner office on the ground floor of the Time Tower in Gurgaon, where H-D is headquartered.
“Firstly, we spent a lot of time on the dealer network, making sure they were the right partners. We roped in biking enthusiasts who understood the brand and were convinced they needed to be in high-street locations. Then, we made sure the experience was accessible to anyone who wanted to come in and get a taste of the Harley freedom,” says Prakash. If you are a unenthusiast (there’s the word again) who’s wondering what that last line meant, Harley ensured people could actually take test rides (more on this later). You may say, what the heck, it’s quite normal for companies to offer test rides when they sell you cars and bikes, but motoring enthusiasts will tell you how hard it is to test ride a luxury automobile. It’s like asking a builder to let you live in a to-be-sold apartment before you actually make the purchase. The situation is not quite different, after all, since Harleys cost no less than matchbox apartments in suburbs (okay, far away suburbs) of any big city.
When Harley kicked off initially, it primarily targeted the have-money-will-spend crowd willing to fork out anything from Rs.7 lakh to Rs.35 lakh to become a part of the cult. And the engine capacity ranged from 883 to 1550cc i.e., the starting point of the smallest car in India. What’s interesting is how it went about reinforcing its brand perception in India.
It’s not all about the bike
Harley’s first marketing ace was the boot camp they kick-started in 2010. “People don’t buy the Harley because they want a powerful motorcycle — they buy because of the experience and emotional connect. It was important to give a sense of that experience,” says Pallavi Singh, marketing director, who owns an Iron 883.
The boot camps organised across Delhi, Mumbai, Hyderabad, Bengaluru and Chandigarh (which is where they also opened their first dealership) gave people the whole experience — particularly the feeling of brotherhood — of the brand, showcasing the 12 models across the five families Harley had on offer. The test ride, too, would follow a different format from the usual drill of riding the bike for a couple of kilometres and then dropping it off, along with your visiting card. Here, you ride in groups with a proper lead and another five bikes in between, so, as a rider, you get that whole feeling of riding together. “When you ride a Harley, you don’t usually ride alone, you ride with your buddies,” says Thanush Joseph, director at 70 EMG, an event management company that organises India Bike Week. “Surely, the reputation precedes the brand, but Harley did quite a bit to create awareness and propagate the biking culture when it came into India,” he adds.
If the boot camps triggered the adrenaline rush, you had to follow that up with an event where people could let their hair down and cool off. “Music and Harley go back a long way — it’s another very important part of the Harley experience, so we came up with the concept of Rock Riders,” says Singh. This time, you had custom bikes to ogle at, rock music to let your hair down and live barbeque counters food connoisseurs — it’s nirvana for those who can relate. “It just takes you back to your younger days,” says Singh. Rock Riders started in Delhi and then moved to about five cities doing smaller gigs before eventually evolving into a bigger format. Season 5 of Harley Rock Riders happened in Mumbai last year, and before that, Bengaluru hosted some 10 bands as part of the event. “At a fundamental level, we support independent rock bands and give them a platform where they can showcase their talent and bring music and motorcycle lovers together to celebrate,” she adds.
Alongside, in the year 2012, Harley also sponsored the India Bike Week, where bikers from across the country rode to Goa for a week-long festival. That year saw some 700 members of the famed Harley Owners Group (HOG) riding to Goa.
Come, join the club
Actually, the HOG itself is a very important piece of the Harley success story. The club was created in the US in 1983 to build a strong connect between the company, dealers and customers and bring together Harley owners wherever they are. With a million members across the world, the HOG, through its community activities, perpetuates the cult and maintains brand loyalty. It works beautifully: If the aspiration to join the cult draws in more customers, the visual treat during festivals compels customers to upgrade, ensuring a steady rise in demand for both entry-level and high-end bikes. The brotherhood and camaraderie among bike owners is anyway quite palpable but among Harley owners, it’s a cut above as the brand has global cult status.
In India, the 17 chapters of the HOG are led by an equal number of dealers. Every chapter has its own director and officers and plans its own activities. For example, the Delhi Chapter — called the captive chapter — has about five HOG officers. Life membership to HOG comes at a neat Rs.70,000. There is also an associate membership option for friends or family of active full members, which costs Rs.3,500 for a year or Rs.35,000 for life. The chief takeaway from this membership is the five events that Harley organises — one national rally (in addition to India Bike Week) and four zonal rallies you can participate in and discounts in terms of logistics and accommodation.
Today, you have a whole bunch of corporate honchos as HOG members. A good example is Sanjeev Mohanty, MD, Benetton (south Asia), who was the director of the group’s Delhi chapter in 2013. His most memorable ride was the National HOG Ride from Delhi to Goa in January 2014. “More than 1,000 Harley riders from across the country embarked on a four-day journey across 2,300 km,” recalls Mohanty, who has managed to get his wife — who has accompanied him on several road trips — involved in his hobby.
This community-building has paid off. Skeptics who said Harley may not take off in this country because it was way too expensive or that pothole-ridden roads with cows coming in the way of your cruise will be a stumbling block were proven wrong within the first three years itself. The roaring, shiny little power plants were soaring in sales. The hardcore buyers queued up and lapped up the entry-level Sportsters, slightly larger Dynas and the monstrous Fat Boys. By 2013, Harley had already sold some 1,270 bikes with sales of Rs.100 crore.
While the experience, word-of-mouth publicity and, of course, global imagery got Harley its first round of buyers, with its evangelists spreading the word and riding on a wave of new-found enthusiasm for the brand in the country, H-D decided to get serious.
It was probably part of the plan when Prakash rode into India, but things finally fell into place in 2013. Harley was operating in a market where 90 per cent of the motorcycles on offer had a displacement of 100cc. The smallest engine from the H-D stable, by the way, displaced 883cc when it hit the Indian road. But they saw the success of Royal Enfield (RE) — the Indian equivalent of the Harley-Davidson with lost-in-time pedigree that is now basking in 150,000-units-a-year glory thanks to some uncanny engineering and an inimitable exhaust beat. If H-D could get a fraction of these riders to upgrade to their big cruisers, it would be a winning start. Not an easy task, though, with the motorcycles starting at Rs.7 lakh.
Cheaper but still screamin’
The Street 750’s value proposition is reflected in its sales volume
It is tricky to launch a new product offensive when you are riding on history. The all-new entry-level motorcycle had to have the quintessential V-twin engine format. It couldn’t sport an engine capacity that is too small for comfort. It had to stand the Indian summer without over-heating. And most importantly, it had to be priced low. The Street was H-D’s answer to this conundrum. It was a cruiser, yet looked quite modern. It had a V-twin but was water-cooled. It had sterling performance but didn’t deter those who still liked the traditional H-D cruisers. It cost twice as much as RE’s Continental GT but was it exclusive enough? Yes. Was it expensive? Not really.
Triumph’s Bonneville series has seen a 3x rise in sales
Priced at Rs.4.1 lakh, H-D started rolling out the Street 750 in December 2013, out of its 68,200-sq ft facility in Bawal, Haryana. “To increase affordability, we made a lot of investments, the biggest being the CKD assembly plant to manufacture the Street 750,” says Prakash. Having an assembly unit in India essentially means that instead of the assembled CKD kits coming from their plants in the US, Harley has the parts come directly to India from the vendors and the bikes are assembled here.
The Classic 350 still brings in the bulk of RE’s revenue
It is that affordable pricing that has created an extremely buoyant market for Harley. In FY15, the Street 750 sold 3,029 units while the Royal Enfield Continental GT sold 2,799 units. Meanwhile, Harley continues to work systematically to add to the product appeal and create greater comfort for buyers on the fence. Just a couple of months ago, the company announced an extended warranty programme, where buyers can sleep peacefully at night after having indulged themselves. While nothing really goes wrong with a Harley (although the oft-repeated joke about Harley is that it makes you a good mechanic), the programme does get additional revenue out of fanatics.
Even as Harley does its best to cultivate more wannabes and foster its brand culture, there is a relatively small but significant and steady stream of revenue coming in with literally no additional effort. Prakash is not willing to share how much of his revenue come from accessories and add-ons, but it must be a decent number, given that the company does not sell anything cheap. If you want to make a statement about the bike, you need Screamin’ Eagle performance parts — that help announce your arrival. Those do not come free with the bike, if you please.
They start at Rs.30,000 for the Street 750 and can go up to Rs.1 lakh depending on the model. A pillion seat and back rest costs nothing short of Rs.38,000 for a Street 750. And these are just your bike’s wearables, not yours. For yourself, as a Harley owner, you can’t not have a basic Harley T-shirt on day one (costs only Rs.2,000), you have to have a Harley keychain (just Rs.1,300), you have to have a jacket — the black leather jacket (err, Rs.25,000)… the list is actually quite long. Come to think of it, you may want many of these things even if you don’t own a Harley and just fantasise about owning one someday.
Very recently, H-D also tied up with Myntra to sell its casual merchandise through an exclusive online store. It offers a whole range of casual outerwear, sportswear, denims and accessories. That gives H-D access to a larger audience — so far, its merchandise in India was sold only through its dealerships across 17 locations.
Taking over the map
Now, as Harley moves to the next phase of expansion in India, it is looking towards smaller cities. “When we started out, we were present only in the metros. In CY15, we are looking to establish our presence in tier-2 markets. We are actively looking at Lucknow, Coimbatore, Guwahati, Nagpur and Dehradun as prospective homes for our dealerships this year,” says Prakash.
Harley’s India management believes that small-but-burgeoning cities are ripe with a critical mass of buyers who lead a certain kind of lifestyle. Until now, these buyers would have to travel to dealerships in larger cities to get their machine, but now the chase has been reversed, with H-D vrooming into smaller cities to follow its fans and garner young riders. “The decision to open stores in Indore, Jaipur and Surat was driven by our existing customers who had bought Harleys and taken them back to their cities. We are now going where our customers are,” Prakash says.
This strategy seems to have inspired Triumph, though Vinal Sumbly, MD of India operations, may not admit it in so many words. “It is a difficult task establishing a premium brand in India, especially if you are not well-versed with the multi-layered market that it is. The key ingredient is a good strategy that involves showcasing your product, dealer strength and service setup,” he says. So, when Triumph decided to enter India, it did exactly the same things that Harley did. It rolled out 11 models from day one in the price range of ₹6 lakh-22 lakh. It didn’t just target the metros but opened 10 stores in a year. “Harley is a leader but it has taken a while for it to reach here. We know where the bigger markets are and we are going where our customers are. On the radar are Jaipur, Lucknow, Goa and even our neighbour, Nepal,” says Sumbly.
That’s the irony. What Harley rolled out in five years, Triumph has done in one year, and it is now becoming a close competitor. Triumph sold 1,326 motorcycles in FY15 as against 271 a year ago. So, if on the one hand, the Street 750 is grabbing market share from Continental GT, there are other bikes like Triumph that are aggressively creating their own following.
Prakash is not worried, though, and argues that more competition will actually expand the segment. “Five years ago, we were the only ones in town and we built the leisure motorcycling segment. Now, others are also coming in and investing in the segment, which is great for us,” he explains. H-D India aims to add at least four dealers to its network of 17 in CY15. Here’s a fun fact to add some perspective on India’s growing importance in the Asia-Pacific region as well as the rest of the world: H-D entered China in 2006, and has since managed to open only 18 dealerships there in the last nine years.
The Street 750 is sure to play a major role in strengthening this position. India is the only market in the region to have a manufacturing facility which doubles up as an export hub. “The Street 750 is sold in India and shipped to southern Europe. In CY15, we are going to export the Street 750 to the rest of Europe and other parts of Asia,” says Prakash.
Starting in 2010, Harley spent some time trying to implement a strategy on targeting foreign markets, surveying more than 3,000 prospective buyers in 10 countries and focusing on urban markets in Mumbai, Sao Paulo and Tokyo, among others. “We feel very strongly that Asia is a great region for the Street 750. Again, it’s a function of young, urban customers who are looking for something more affordable because they are younger, and Asia as a region is younger,” he says.
While Japan is a mature market, Harley believes it still has buyers who fit the profile for the Street 750. In addition, it continues to make headway in China despite higher duties and restrictions. Retail sales in the Asia-Pacific region in CY14 were driven by growth in emerging markets, especially India and China.
At the end of CY14, the Asia-Pacific region contributed 11.2% of Harley-Davidson’s worldwide retail sales of 267,999 motorcycles, a rise of 11.8% as compared to a year ago. This number is expected to go up further. Till 2003, H-D’s overseas revenue was just about 17%. The company has grown that by more than half over the past decade but still only does about 32% of its business outside the United States. With the Street line to work with, Harley hopes to diversify even more internationally, growing foreign-sourced revenue to around 40%. “Considering our long-term plans, we are covered with sufficient capacity and have no plans to move out of the Bawal facility,” says Prakash.
Not just that, thanks to this new range, the typical Harley owner’s age, too has seen a shift. The Street 750, which is so far the most affordable Harley ever, has brought in a newer target group. “If you look at the core customer age, it was around 38-45 years. Now, we are seeing a lot of traction from 25-year olds. It’s a lifestyle choice,” says Prakash. One such young Harley owner is 26-year-old Vivek Mishra. “What drew me to Harley is the performance and retro styling, despite being a high-tech bike. The V-twin engine is extremely versatile and the handling and control is fantastic, making the ride comfortable despite the bike’s weight,” says the corporate lawyer who bought the bike last year.
Where the wheels take you
Young or old, members of the Harley cult love a good party. Cut to February 2015 at the India Bike Week. There are a few thousand people at the rocky Vagator beach in north Goa. Usually dominated by western backpackers, this time around you can see a whole bunch of Indians — funky T-shirts and trendy jackets, sideburns and sunglasses… the ambience is akin to a college festival. As people look on, a Harley vrooms in with its signature Screamin’ Eagle sound, followed by a trail lining up to a thousand Harleys. There are only 13 models in India, but each bike has its own look. The thunderstorm lasts some 25 minutes, tearing ear drums.
Harley is no longer the prime sponsor of the festival but its line up made a statement about how far it has come — and how quickly. Some 2,000-odd Harley-owners rode to Goa for the festival earlier this year. If the visual treat of so many superbikes and the music emanating from their engines is not enough to give you a high, there are stunts and talks by biking legends, riding workshops, drag races, custom bike competitions and, of course, great deals and discounts. “It’s all about riding and everything that goes with it — music, design, art and the gasoline garage custom that bikers love,” says Joseph.
The ecosystem around riding has come a long way. About five years ago, there were 200 to 300 clubs in the country — and these would be for the Yamaha RD 350 or RE cruisers. Without membership to a club, you didn’t know where you could go. But the India Bike Week has changed that. “Earlier, the riding communities were brand specific and now the brotherhood among bikers is visibly more brand agnostic,” says Joseph.
That’s actually good news for other bike manufacturers in India as well. Rajiv Bajaj, MD, Bajaj India, acknowledged the presence of H-D as the reason behind the rising aspiration for growth in the segment. Despite not much promotion, Bajaj Auto saw the average sales of Avenger, its cruiser bike, move up from 3,500 motorcycles to 5,000 motorcycles a month in FY15.
Harley needn’t feel like its share is being gobbled by others, though, since its growth will come from customers upgrading their bikes. Says Kumar, “It’s a great strategy by Harley — you make the bike affordable to draw in bikers who may not be able to afford the brand, and then they get sucked into it. Once you are part of that community, you can’t resist upgrading.” Prakash reasons, “A lot of customers who started with Street 750 or Sportster are upgrading to higher models because they are riding longer distances and they want more out of their motorcycle.”
That’s indeed true as Joseph points out, with the various clubs across cities, breakfast rides and community gatherings becoming common, people definitely ride regularly even when Harley is not their main commuter vehicle. Now, riders get on to the bike and do things they may have dreamed of but never thought would become a near-term reality. “Several bikers these days put in about 20,000 to 30,000 km a year,” says Joseph. Whether it’s cross-country rides or those through the Himalayas, people are just hitting the road. Case in point is Gurgaon-based Mishra, who explains that his mid-range Harley purchase (the Iron 883 costs around Rs.7 lakh) was backed by his love for travelling. “I wanted a bike that would be suited for urban riding as well as hilly terrain. Most superbikes can’t go over rough ground or uphill very well. They are made for the track, not for the dirt. I frequently take my cruiser to the hills,” he says.
Then there’s Benetton’s Mohanty, proud owner of two mean machines — who splits his time between his H-D Road King and Triumph Tiger Explorer XC the way he does between work and travel. His way of unwinding on weekends is to escape to places such as Manali, Pushkar and Narkanda. Mohanty has participated in several road trips and often encountered awestruck pedestrians with funny questions. “Kitna mileage deti hai? (How much mileage does it give?) is a question that I’ve been asked innumerable times. People ask if they can take a ride and dhaba owners often give us free food,” he says.
Patrolling the Street
Perhaps the most interesting lot to be bitten by the Harley bug is the Gujarat police department, which indulged itself by buying six customised Street 750s sometime last month. Pranav Nanda, dealer principal, Nine Bridges Harley-Davidson, was quoted as saying, “We are proud to add these H-D Street 750 motorcycles to the Gujarat Police arsenal. The Street 750 not only addresses the police department’s need for performance motorcycles in challenging situations but also provides great confidence and maneuverability in urban conditions.” In fact, Harley had started off as police bike in the US and that segment may bring in some numbers, but not much.
While the competitive landscape will change in the coming years, the real challenge for Harley is to protect and perpetuate its cult following. Kumar articulates: “Every now and then, Harley tries to reinvent itself — whether it be the flat tracker based XR series of sport bikes or the abnormally modern V-Rod with future-cruiser design developed with assistance from none other than Porsche. Not all these mutations have been successful, but constant development of traditional cruisers and a loyal fan base ensured not only sales numbers but also a religion of sorts, where worshippers do not think twice about inking their skin with the famous crest. What better testament to brand loyalty than a tattoo-worthy logo, right? Now, protecting that pride when there are too many converts is the real test.”
Sure, India is a secular nation, but protecting the Harley religion is not about creating converts as much as it is about exclusivity. When you close your eyes and think of Harley, you should still be able to envision Terminator, not Harry (Harinarayan) you met in your neighbourhood the other day.