Why is American motorcycle manufacturer Harley-Davidson, known for its heavy-touring motorcycles planning to introduce lighter 250cc-500cc bikes in India? The answer is simple.
The Milwaukee-based company is trying to boost its overseas sales by wooing young buyers in the largest two-wheeler market in the world by entering this popular motorcycle segment.
Harley-Davidson is planning to roll out its first lightweight motorcycle in India through an alliance with an Asian manufacturer in two years. The bikes will be produced at its plant in Haryana. The decision comes at a time when its sales are dropping on its home turf. According to its 2018 second quarter report, Harley Davidson’s domestic sales fell 6.4% from the same period in 2017.
The company is also bearing the brunt of stiff regulatory tariffs by the European Union (EU). It is planning to shift most of its production overseas to avoid the tariffs imposed by the EU in response to US President Donald Trump’s decision to increase import duties of steel and aluminium from the EU.
Therefore, Harley-Davidson is looking to tap into larger Asian markets such as India and China.
Its new “More Roads to Harley-Davidson” growth plan includes new product launches and strengthening riders’ access to dealer networks. The company expects its growth plan to create more value, stabilise and strengthen the existing business, improve its return on investment capital, increase revenue and earnings, and allow the company to return more cash to shareholders, said the company in a statement.
“Alongside our existing loyal riders, we will lead the next revolution of two-wheeled freedom to inspire future riders who have yet to even think about the thrill of riding. We expect this plan will result in an engaged, expanded Harley-Davidson community with a more diverse rider base, along with industry-leading margins and cash flow,” said Matt Levatich, president and chief executive officer, Harley-Davidson.
The company expects its plan to generate more than $1 billion of incremental annual revenue in 2022 as compared to 2017.
However, pricing will be key for Harley’s plans for the 250cc-500cc segment. Eicher Motors’ Royal Enfield, whose prices range starts from Rs 1.16 is the preferred choice for people. Foreign bike majors operating in India already offer products at competitive prices. For instance, Kawasaki’s Ninja 300 ABS sells at Rs 2.98 lakh, while BMW’s G 310 sells at Rs 2.99 lakh. The industry expects Harley’s offerings could be in the same range too.
Analysts say the development could be a reason for worry for the homegrown Royal Enfield. “If I were a Royal Enfield, I would be worried. Harley-Davidson is going to go for lesser capacity engines in Asian markets. They see the kind of demand which is there for their higher-end ones and it makes sense for them to come to a hypothesis that if I am able to cater at a lower price point, I’ll have a bigger market to cater to,” said Sridhar V, partner and senior auto analyst, Grant Thornton India.
“At the same time, I don’t think they want to make a cheap vehicle and then brand it Harley-Davidson. Now people have an option in that category.”