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Why Harley-Davidson Closed Shop in India

From Ground-Zero to a Marketing Failure

Text and photos by Ujjwal Dey, Bureau Chief, Bikernet News Desk, India
10/30/2020


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Is there a market for big bikes in India? All the big names have dealerships here in India – Triumph, Indian, BMW, Yamaha, Kawasaki, Honda and now some Italian brands too. India is the world’s largest market for two-wheelers overtaking China. Motorcycles and scooters can be seen everywhere in every city, suburbs and villages. It is the most popular choice of transport for the common man. Why would one of the world’s most popular brands decide to shut shop in India after spending a decade building dealerships and relationships?

Harley-Davidson came to India before Indian and Triumph set foot here. In a way their sales figures induced other motorcycle brands to sell their larger models in India. Before Harley-Davidson the Japanese giants Honda, Yamaha, Kawasaki and Suzuki did not consider bringing their superbikes to Indian dealerships. They were content with their small commuter bikes and scooters selling in large numbers. So how does the trailblazer brand decide they don’t like what they have accomplished?

The answers are complex and the answers may be closer to home in US of A than in India.



DOMESTIC VS INTERNATIONAL
Harley-Davidson has the biggest market share in USA, but it has been in steady decline for over a decade. They are losing market share to brands such as Indian, Triumph and the sport bikes from Japan. Harley-Davidson was the first choice for Americans when they thought of buying a motorcycle, but not anymore. They are getting expensive and not as stress-free as say a Honda GoldWing.

When the international sales of Harley-Davidson increased due to the brand’s iconic association with America and Freedom – the company knew they could boost sales globally. Europe, Middle-East, Asia and Australia were good export markets for Harley-Davidson which sold their bikes based on the cult following the brand developed with extra thanks to Hollywood’s iconic movies that showcased the macho image of a biker on a big V-twin.



This boosted exports for Harley-Davidson even though the sales in USA were slowing down. Then the tariff war with Europe and Asia appeared and Harley-Davidson realised they would have to cut jobs locally and setup factories overseas. The tariff war was essential to boost manufacturing sector in USA, which would be crucial for the economy in the long-term. But in the short-term it impacted Harley-Davidson financially. Their bikes were suddenly more expensive in key market of Europe.

Other motorcycle brands have no problem setting up factories all over the world. Japanese brands build locally and enjoy increased sales at low prices for customers and export to neighboring nations. But the whole point of buying a Harley-Davidson was that it was Made in USA. I have two Zippo lighters and the only reason I bought them was that they are only made in USA, till today. So, while people all over the world want a piece of Americana – Harley-Davidson found it difficult to deliver. What’s the point of owning a Harley-Davidson made in Thailand? Where is the heritage and the history?

In a global economy, brands such as Harley-Davidson face a unique obstacle. They want to hold on to their brand value while competitors entice customers with lower prices, fuel-efficiency with similar range of models to choose from.



BRAND POSITIONING
Harley-Davidson used to be the bike that the common folk rode. They went to work by this bike and went to festivals and weekend getaways on this bike. The custom motorcycle market was obsessed with Harley-Davidsons. The custom builder community helped enhance the core market of the brand and made it uniquely all-American.

Yet, advertising by Harley-Davidson did not feature this core fan-base. They instead gifted Harley-Davidson motorcycles to celebrities to entice the young people who had not considered buying motorcycles. The biker lifestyle does not live in Hollywood. But the marketing team focusses only on celebrities instead of developing the vast core fan-base who appreciate the brand and its history.



Making an expensive electric Harley-Davidson LiveWire that can’t tour does not help boost sales. The Wall Street banker is not the core market. The market resides in practical hardworking man who tinkers in his garage to ride cross-country for experience of true freedom.

To capture the minds of the new generation, Harley-Davidson needs to think about the daily needs of the biker and not the guy who drives a Porsche to work everyday. Harley-Davidson shouldn’t focus on being a luxury product like an Italian car. Their success was always about being accessible to the common man.



COMPETITORS
Indian and Triumph have steadily grown in India, while competing against sports bikes from BMW, Yamaha and Kawasaki. They all have far fewer dealerships than Harley-Davidson in India. The market for touring bikes is captured by the British icon Royal Enfield which is now an India based company.

Royal Enfield set its sights on exporting to Europe and USA and has steadily increased dealerships globally to cater to a new audience. Enfield motorcycles range from 350cc to its new twin engine 650cc. They recently discontinued their 500cc which was also popular for many decades. These are smaller manoeuvrable bikes that are comfortable riding in busy city streets as well as open highways. They recently launched Build-Train-Race program for women riders in USA.



Indian motorcycles by Polaris consistently delivered on performance and quality. They keep sweeping the podium in flat-track racing. For many Americans to buy American often now means riding an Indian rather than a Harley-Davidson.

MotoGP is popular in India where the sports channels show Grand Prix but not the American Flat-Track Racing. People know the names of European riders and champions but don’t hear of American racing legends. This was an easy boost to the Japanese superbikes to sell their big bikes to speed-obsessed fans.



Bike events and custom-culture are not common in India. Most people ride stock bikes and don’t intend to spend on custom parts when they already spent a lot of money to buy the original bike. Biker clubs that exist are exclusively for Enfields. A Harley-Davidson Sportster costs ten-times more than a Royal Enfield Interceptor 650 in India. Can you imagine a bunch of rich guys going cross-country on a Harley-Davidson when they could fly there first-class and stay in a five-star hotel instead of camping by the road. The price was a major deterrent for true bikers to graduate to a Harley-Davidson. Meanwhile Royal Enfield upped its game to bring new models with retro styling that appealed to the growing biker lifestyle community.


Harley-Davidson never launched its Street 500 in India. It could have cut into the Enfield market share and riders would have transitioned to the bigger engines eventually. Street 750 was selling well and introducing Street 500 would have seen the sales figures for India market shoot up easily.



MARKET IN INDIA
While India remains the world’s largest market for two-wheelers the bulk of the sales is for small capacity commuter bikes. These are 100c to 150cc engine bikes that consume very less fuel and have low maintenance costs. People use them everyday to go to offices or college or to get groceries.

It was a bold decision by Harley-Davidson to develop the market to sell 1200cc engine motorcycles in India while the vast number of compact cars on city roads have 1000cc engines. Harley-Davidson sales figures grew very well. From selling a bike a day to over a dozen bikes a day may not seem big to the American fan. But it was big sales considering that you can buy a Honda sedan or a Toyota SUV for the same price as a Harley-Davidson Sportster or a Fat Boy respectively.



In the past ten years, with tie-ups with banks, Harley-Davidsons were affordable to more and more people. Royal Enfields were a common sight. To be seen on a Harley-Davidson would be more enticing to the biker. With Completely Knocked Down Units (CKD) assembled in their plant in Haryana, India, Harley-Davidson brought down the prices for buyers successfully. India is the only country after Brazil where Harley-Davidson has a CKD unit for assembling kits supplied from the US.

Clearly, Harley-Davidson had long-term plans for India and the market was developing nicely. The year 2020 brought good news with the Government of India announcing that Indian military canteens could sell Harley-Davidson motorcycles to military personnel. Military Canteens in India sell imported and local goods without the burden of custom duty and heavy taxes that the common customer in India has to pay. The military in India is well-known for its use of Enfield motorcycles and this new offer to military personnel would see a new avenue of sales for Harley-Davidson motorcycles. The armed forces employ a large population second only to China.



Harley-Davidson management kept comparing apples to oranges. They couldn’t understand why people would buy the commuter bikes instead of a Street 750 or the Iron 883. The management should realise that there is no comparison between a buyer of a Harley-Davidson or a Triumph and the buyer of a Hero Splendor or Bajaj Pulsar. Hero - if you didn’t know is an India based company which is the largest two-wheeler manufacturer in the world and also market leader in India, where it has a market share of about 46% in the two-wheeler category. They export their affordable bikes to African, Asian and South East Asian markets.

After Harley-Davidson announced its withdrawal from India in September they announced a partnership with Hero. It is not surprising because Hero has not just dealerships in every city as well as rural areas but also a vast servicing network to provide after-sales service to its customers. Their market penetration is unmatched in motorcycles and the only other brand in India to have such a penetration is the Maruti-Suzuki cars which was originally launched in partnership with Government of India. So, Hero as a private company capturing the market is a success story unheard of.

Harley-Davidson may want to learn the ropes from Hero, but its again apples paired with oranges. Hero does not sell big bikes and has no intention to. They have no experience in the market for big bikes. The customers of Hero simply want to go from point A to point B at the lowest consumption of fuel. The best-selling Hero Splendor costs INR 60,000 compared to a Street 750 which costs INR 600,000. So, to depend on a local company that has a market vision the opposite of a big twin manufacturer is going to be a long weary road.

One Harley-Davidson dealership salesman told me they sold more accessories than bikes in India. It was easy money. Most people who walk into the dealership may not buy the big twin but they sure do buy a tee-shirt. The mugs, helmets, jackets, shoes were popular with the visitors. This was enough to make Royal Enfield launch a whole new website with a premium range of accessories. After-all people wearing a brand name on the street is free advertising.



INFRASTRUCTURE
India has one of the world’s largest road networks. The paved roads are increasingly connecting rural and urban India at a rapid pace. The Government used the COVID19 shutdown to rapidly complete infrastructure projects. India has the world’s second largest road network, spanning a total of 5.89 million kilometres (kms) after the United States which has 6,645,709 kilometres. This road network of India transports 64.5% of all goods in the country and 90% of India's total passenger traffic uses road network to commute.

Yet, there are limited options for a motorcycle tourer. The Expressways in India have banned motorcycles. For example, the financial hub of Mumbai is connected with the neighboring industrial city of Pune with an expressway where two-wheelers are not allowed. This is done so that cars and buses can use maximum speed and avoid accidents with bikers who are known to cut lanes and not follow safe riding techniques. The long JJ flyover in Mumbai has banned two-wheelers since youngsters used to race and crash and die there regularly. The image of the motorcyclist is that of a badly-behaved infant on cocaine.



So, if expressways and even flyovers won’t allow motorcycles and scooters then how does a big twin owner enjoy the open road with the power of a 1600cc engine between his legs? The Government cannot or will not make exceptions for higher capacity bikes on these roads.

Most Harley-Davidson motorcycles would need refuelling often and on national highways and state highways distant from major cities have petrol pumps farther apart. Adulteration of petrol is common in India, especially outside the metro cities. Imagine your INR 2,000,000 Harley-Davidson Fat Boy engine consuming adulterated petrol and causing permanent damage to your prized vehicle.

Worse still is the breakdown on a trip. India does not have national nor state helplines for breakdowns. If your Harley-Davidson stalls on the highway the local mechanic has no knowledge how to fix it. Even a tyre puncture would be difficult to deal with. Meanwhile all the other two-wheelers on the highway such as Hero, Bajaj, TVS, Enfield, etc would be easily repaired. The small capacity commuter bikes from Yamaha, Suzuki, Honda have no problems with breakdowns and get easy servicing on highways.

Pushing a 260 kg Harley-Davidson to nearest petrol pump or tow-truck service is not an option. Meanwhile it is a common sight to see a miser 100cc bike owner push his commuter bike in the city because he didn’t fill up petrol when the meter reading showed he was in reserve fuel use.



BIKER COMMUNITY
There are biker clubs in all major cities of India. Majority of the successful ones ride only Enfields. The biker lifestyle is associated with being outdoors on a simple machine enjoying the simple pleasures of life. Older Enfields used to be simple. The newer ones are not so easy to self-service.

Harley-Davidson did have a HOG biker group in India. They used to arrange trips for its customers. I used to see them riding an American flag. They wanted to live the American Dream. The American culture is the biggest and best export from USA. It spells freedom for many all over the world. But their “luxury” HOG lifestyle just disassociated them from the vast majority of bikers in India.



To make a motorcycle accessible to all while staying true to its legacy is the road ahead for Harley-Davidson in USA as well as India and everywhere else where freedom matters.

HOG India had success with Harley Rock Riders which combined music fest and motorcycle trip as well as Harley-Davidson Legend on Tour where the HOG groups went on guided tours from city to city.

Developing a community should be more important to Harley-Davidson than comparing sales figures with commuter bikes. The big twin engine appeals to a unique set of individuals and investing time to enhance their experience of a Harley-Davidson will ensure that more people join the tribe and spread the goodwill of two-wheeled passion. It’s a lifestyle change that Harley-Davidson used to bring to its new owners. In India though it’s just a showpiece trophy bike for the rich urban who rides a German luxury car to his desk job everyday and vacations overseas on pristine beaches with no intention of ever going on a cross country ride on his big twin.

Price is clearly not the only deciding factor for sales of Harley-Davidson in India. Developing the biker lifestyle we know in USA is not going to be easy overseas. The good news for now is that Harley-Davidson still wants to remain associated in India through Hero. How the new CEO plans to boost sales with this partnership is yet to be seen.

Hero started as Hero-Honda which was a successful partnership with Honda until the latter decided to compete in India alone. Triumph has partnered with Bajaj of India to launch mid-size bikes to cut into Enfield market share. BMW partnered with TVS of India to manufacture their G310R in India. The H-D brand should not lose focus of developing the big twin market. They are currently seduced by large sales figures of small capacity bikes. Instead of trying to carve a piece of that pie, they could be owning the whole big bike pie.



CONCLUSION
Harley-Davidson may be cutting costs to impress stockholders in USA with better profit margins. They won’t be entirely absent in India. If they manage to improve their image and sales in USA, it will easily translate to increased demand overseas.

The global market feeds on American trends and American culture. By nurturing their core market at home, Harley-Davidson can take on the foreign brands and capture new markets in Europe and Asia. Wall Street does not reflect the success of a brand. Royal Enfield learned this lesson last year when its stock prices changed even though the company was growing and sales and exports were increasing. Tesla cars by genius Elon Musk faced short-selling crises from Wall Street last year. The Tesla short-sellers are down $25 billion this year. Believe in your quality product and reliable service – not on the stock market prices.

2020 and the damned Chinese virus has affected every human and organization on the planet. This too shall pass. My advice to Harley-Davidson is to quote Shakespeare’s timeless wisdom –

“This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.
Farewell, my blessing season this in thee!”


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