Challenges Faced by Harley Davidson in India

Challenges Faced by Harley Davidson in India | What are the Backdrops?

India has the world’s most populous motorbike market. A 2 wheeler is owned by around 13% of Indians. Approximately 8% of US families possess a motorbike or scooter as an approximate approximation. Motorcycles, scooters, and mopeds account for almost 170 million vehicles on Indian roadways.

According to American motorbike manufacturer Harley-Davidson that’s enough motorcycles for more than half of the United States’ population. Harley-Davidson wants to be a part of the fun. The ailing company is betting that expanding into new regions would help it withstand falling sales in its home market of the United States and widespread concerns about its future.

However, Harley-Davidson only has a minor share of the Indian market, with sales falling 21.6 percent in the 2019 fiscal year and approximately 7% the previous year. Motorcycles, excluding scooters and mopeds, were sold in India in total. In 2019, Harley-Davidson only sold 2676 motorcycles for $13.6 million. That begs the obvious question: What is wrong with Harley-Davidson in the world’s largest motorcycle market?

The Indian Market

On Indian highways, two-wheeled vehicles have long been prevalent. But it wasn’t until the 1980s that the motorcycle business began to take off when Honda, a Japanese firm, partnered with Hero, an Indian company, to enter the nation. Japanese companies like Honda and Yamaha continue to dominate the industry in terms of volume. Harley-Davidson first arrived in the nation approximately ten years ago, but it has had difficulty increasing manufacturing. In a congested environment, expand the company’s dealer and service network and engage with consumers.

In 2017, India surpassed China as the world’s largest motorbike market, although Harley-Davidson does not manufacture motorcycles. Indians have the financial means to purchase. In reality, 95 percent of Indian motorbike customers are unable to afford the bikes. They are either excessively expensive to buy or to maintain, and they have poor gasoline mileage. They’re also up against some of their rivals. In India, the lowest Harley-Davidson costs around 500 seventy-seven thousand rupees, or little more than $8000. That’s almost eight times the average price of a mass-market motorbike.

However, Harley-Davidson is a well-known brand in India, and many Indians believe its motorbikes to be a dream come true. Not every consumer chooses a bike purely on the basis of price or practicality. There is a segment of the market that would gladly upgrade to a Harley-Davidson if they could afford it, but the majority opt for a less expensive bike made by a competitor, the most well-known of which is India’s Royal Enfield, which is the world’s largest seller of heavyweight motorcycles, including in India. Despite the fact that its largest motorbikes are still smaller than a normal Harley, the brand has a significant following, with around 3.5 million motorcycles in circulation.

Harley Davidson Vs Royal Enfield

On the road, the business runs regular weekend riding programmes and has riding clubs all throughout India that Harley-Davidson inspires. Royal Enfield bikes may not be as well-known as Harley-Davidsons, but they have a lengthy history and have been used by the Indian military. They’re also a lot less expensive. A Royal Enfield classic 350 mid-sized bike costs around $2600, while the bigger Interceptor 650, which was recently released, costs less than $4300.

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The company’s volume has benefited from the decreased prices. In the 2018 fiscal year, Royal Enfield increased by around 23%. In the financial year 2019, it increased by another half-percentage point, selling around 800,000 bikes. BMW of Germany, for example, is a motorbike manufacturer. Are manufacturers paying attention and designing smaller, more inexpensive bikes that cater to local preferences?

Overseas Revenue

In recent years, Harley-Davidson has begun producing some of its bikes outside of the United States to take advantage of reduced labour costs, lower shipping costs, and better cross-border trading connections. Apart from India, Asia is home to a number of the world’s most important motorbike markets. Harley-Davidson has factories in China, Indonesia, Vietnam, and Thailand.

This overseas drive is part of a wider plan to resurrect the company’s fortunes. While the company’s global net income increased by 1.86 percent in 2018, it fell by almost 25% in 2017, nearly 8% in 2016, and nearly 11% in 2015. In the United States, Harley-Davidson has a strong brand and a large market share. Because the domestic market is contracting, the company is investing heavily in new goods. Motorcycles that are powered by electricity are one example.

It’s also increasing up attempts to recruit new youthful riders, and dabbling with technologies like electric bicycles and entering overseas markets may open up huge doors for the firm. I applaud them for attempting to attract new riders by doing new things. The question is whether they’ll be successful, and as you know, I’m doubtful that they’ll be successful on their Harley-Davidson once half of its sales come from overseas units by 2027, up from a little more than a third in 2018.

That would help it offset the risks of trade wars with the European Union, which many believe are imminent. Selling cheaper bikes all around the world might increase sales, but it could also lower the amount of money Harley-Davidson makes on each vehicle. The company’s profit margins are now among the best in the industry. The question will be what impact this has on profits, as a smaller bike will cost less. In some of these areas, you also have a number of long-standing rivals who have been in business for years, if not decades.

Conclusion

So Harley-Davidson isn’t going to go in and say, “Hey, we’re just going to take 10% of the market.” Clearly, it will be far more difficult, and I believe it will be significantly more costly. While some may believe Harley-Davidson declined to comment for this story, the firm has stated that two new middle-weight motorcycles would be released in 2020. In 2018, Harley-Davidson sent 100 thirty 2868 bikes to consumers in the United States, but only 2600 motorcycles out of the 21 million two-wheelers sold in India in the same year, so the chance to develop its company and stay alive is enormous, and Harley-Davidson has to win.

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