Case Study | Harley’s exit from India: What’s the future like?

A Harley Davidson motorcycle

Even the iconic Marvel superhero, Captain America, sported a 1942 Harley Davidson. It is almost impossible to imagine the American war hero with anything other than this trendsetting superbike.

The brand has been associated with ideas of strength, freedom, and machismo. If only this trendsetting status was enough to fuel the engines in India.

The US-based company exited India, the world’s largest two-wheeler market, after selling only about 2,676 two-wheelers across the nation in FY19 and just 100 from April to June 2020.

Its models in India varied from Rs. 5.3 lakhs to Rs. 50.3 lakhs and they sold a little above 27,000 units within ten years while its closest rival, Royal Enfield, sells the same number in a month.

Don’t misunderstand here Harley Davidson’s struggles are not related to India only; it has been straining globally to build its audience beyond baby boomers. Hence, the firm, as part of its “The Rewire” strategy is focusing on its 50 most profitable markets (consisting of China, Europe, and the US), led to the India exit.

In 2018, even though the customs duty on imported luxury motorcycles was cut from 60% to 50% for an engine capacity less than 800cc, it was raised from 10% to 15% for semi knocked-down (SKD) kits.

Along with that, when bikes are sold to the end consumer, it grabs a GST rate of 28% and an extra 3% cess. A large portion of Harley Davidson’s sales were from the SKDs which are assembled in India; it sold 17 models of that sort in India.

This prompt to draw the curtains on the Indian business and walk into a strategic handshake with Hero MotoCorp will offer the latter the distributor rights to import and sell Harley Davidson motorcycles in the country.

Sajeev Rajashekharan, managing director, Asia Emerging markets & India, Harley Davidson, said that they were working closely with Hero to ensure a smooth shift for their riders.

Auto experts drop the blame on the brand’s failure to push up volumes and cost-effectiveness by successfully tying up with the local companies. For instance, Triumph and KTM joined hands with Bajaj Auto and BMW Motorrad with TVS Motor Co.

Harley Davidson is not the first American motorcycle brand to wrap up in India. The failure of Miami-based UM Motorcycles in 2019 led to a massive loss of more than Rs. 150 crores.

The American hiccup is not only limited to bikes. General Motors shuttered in May 2017 after more than two decades, and Ford shut shop its joint venture with Mahindra & Mahindra.

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