Born to be wild

Goa was in for a spectacular sight and sound on Feb. 2: Nearly 600 Harley-Davidson bikes drove through this beach destination, the distinctive throbbing of 800 cc engines drowning out the crash of waves. Members of the Harley Owners Group (H.O.G.), Harley-Davidson’s official riding club, were kicking off the Indian leg of the $5.6 billion (Rs 30,430.4 crore) American company’s 110th anniversary celebration. They didn’t have the rebel look associated with heavy motorcycles, but some did make an attempt to conform—with tattoos, leather jackets, and metal accessories. Think yuppies playing Dennis Hopper and Peter Fonda.

Anoop Prakash, managing director, Harley-Davidson India, and Karen Davidson, director-merchandising at Harley-Davidson, who was carrying the coveted black leather ‘Freedom Jacket’, were there as well, leading the rally. Davidson is the great-granddaughter of co-founder Arthur Davidson.

The Harley rider who covers the greatest distance or does something strikingly daring in a country gets to wear the jacket. In India, Mumbai-based businessman Ankush Bhan claimed it. He rode all alone to Khardung La Pass (17,582 feet above sea level) in Ladakh, Jammu and Kashmir, on his 1690 cc Fat Boy. But when he came to the Goa bash, he had his wife at his side.

This jacket has travelled across the world—to countries such as Austria, New Zealand and China—and will reach the grand celebration to be held from August 29 to September 1 in Milwaukee, Harley’s global headquarters. After its year-long journey, it will be displayed in the Harley-Davidson Museum, Milwaukee.

For this cult brand, the anniversary celebrations, held at a destination where the well-heeled take their vacations, helped showcase Harley mania and camaraderie in a country where there isn’t a leisure biking culture. It is 39-year-old Prakash’s job to create the aura around leisure biking and heavy motorcycles.

A Stanford University and Harvard Business School alumnus, Prakash has worked with the U.S. Marine Corps, been Deputy Chief of Staff at the U.S. Department of Housing and Development, campaigned for Louisiana governor Bobby Jindal, and raised funds for George W. Bush. For Harley-Davidson, it was more important that their man in India knew how to deal with bureaucrats than know how to ride a Harley. (Prakash learnt to ride one in April 2009, when he took over in India.)

He says: “India is the last frontier for heavy motorcycles. We have to get it right—the brand, the experience, as well as the culture. My brief was simple: Stay true to the brand and be bold.”

He’s been at it from day one. The setting up of Harley-Davidson’s 100% subsidiary in India was commemorated with a Founder’s Day Ride in October 2009 in Delhi, in which 50-odd Harley owners participated. That was the first of H.O.G.’s rides and rallies, which build Harley’s aspirational value and use up almost 80% of its marketing spends. Harley won’t reveal figures, but says that even its print ads are mostly about events.

Facebook and television are also used to promote the events.“For Harley-Davidson, there is high visibility when we go on our rides. And for us, they are a great experience,” says Zubin Major, a pilot with Jet Airways and the director of Tusker Harley-Davidson (H.O.G.’s Bangalore chapter).

It’s all about fuelling envy. “The non-HD [Harley-Davidson] guy sees these H.O.G.’s rides and chapters. He says, ‘One day when I have money I want to buy it’,” says Ken Ostermann, general manager, international marketing operations, Harley-Davidson.

And that, the company believes, is the most effective way to promote the brand. Major says, “No company I know spends so much on existing customers. They only spend on prospective customers.”

The strategy seems to be working: Harley has been selling an average of two bikes per day and H.O.G. has grown in India to over 2,000 members, including 12 women. Its rivals, such as Ducati, Honda, and BMW, have collectively sold 850 superbikes in India so far.

According to 2009 figures from market research firm TechSci Research, there were only 200 superbikes in India, including 50 Harleys. Within five months of its launch, Harley sold 200 bikes, indicating a pent-up demand and the popularity of the brand. The company plans to open one dealership every four months, taking their number to 16 by the end of 2014.

Meanwhile, there are also the Harley-Davidson Freedom Film Festivals, featuring motorcycle movies such as Wild Hogs, The Wild One, Easy Rider, and The Motorcycle Diaries and held across different cities. The annual rock concert, Harley Rock Rider, features bands such as Wolf, Soulmate, Kryptos, and Albatross, and is held in a different city every year.

Besides community engagement, such events help create a congregation of customers looking for upgrades, even hip merchandise. At the Goa rally, John McEnaney, national service manager, Harley-Davidson India, circulated among H.O.G. members, checking their bikes for problems, recommending changes, and offering tips on maintenance.

When customers drop in at a service station, McEnaney often lands up, too, to conduct training modules for dealers. The customers, meanwhile, bond over beer and cigars, and plan their next ride.

As for Harley merchandise, this is something that’s close to Davidson’s heart. She has ensured airy jackets for tropical climes, and more colour for women. Her division contributes around 5% of the company’s revenue and she expects this to increase with new markets opening up.

“As business in India expands, the inputs and feedback from the channels will help us improve and create something better,” Davidson says. Currently, Harley merchandise is available through its dealers, but Davidson is exploring alternatives, such as high-end retail stores. Prakash is hoping to drive sales by introducing loyalty cards soon.

Harley-Davidson was entering a market through a 100% subsidiary for the first time, and Prakash was given a 10-year business plan and a clean slate. He felt confident because of strong support from the top. “We had a new approach to [launching in] India, and it seems to be working well,” says Matthew Levatich, Harley-Davidson’s president and chief operating officer, who visits India every quarter to appraise the market.

The company had put India on its list of new markets back in 1995, but the problem was India didn’t allow import of bikes with engine capacities higher than 500 cc—heavy motorcycles were considered to be more polluting than the 100 cc and 120 cc bikes that one usually sees here.

Harley bikes are 800 cc and above, and diehard Harley enthusiasts would import after paying a hefty penalty. By the mid-2000s, Yamaha, Honda, and Suzuki bikes of up to 500 cc capacity, started appearing through distributors but the companies made little effort to grow the market—it wasn’t a core business.

In 2007, when a U.S. trade delegation visited India, Harley pushed for an entry into India. The result: India agreed to allow the import of bikes of more than 500 cc in exchange for U.S. imports of Indian mangoes.

Until their entry into India, Harley had always exported from its Milwaukee plant and operated through distributors, which were later converted to subsidiaries, if required. But here, Harley’s biggest challenge was the 110% import duties on completely built units (CBUs). An assembly plant was set up in Bawal, Rajasthan, in mid-2010 to bring down bike costs. (Brazil followed the model soon after.) Nine of the 13 models sold in India are assembled at Bawal, where seven to 10 units are rolled out per day. This has lowered the import duty on these models by about 30%.

A Fat Boy is available now at Rs 14.9 lakh as against the previous CBU price of Rs 19.4 lakh. There are rumours of a stripped-down Harley, priced at Rs 3.5 lakh—the range currently starts at Rs 5.5 lakh. Levatich says this is possible provided it doesn’t affect the brand negatively or offend its core customers.

It would still make Harley’s cheapest model as affordable as a small car, say a fully-loaded Maruti Suzuki Alto 800. But it could make its hallmark ‘potato-potato’ sound a little more familiar on Indian roads.