“We used to go and look at Harley-Davidson bike pictures in magazines in our days. Those were amazing heavy-duty bikes, the dream bike for all of us,” said my father when asked about HD brand. According to some research, Harley-Davidson still holds a commendable popularity among Indian customers. For many a Harley-Davidson bike is still “aspirational.”
India is one of the fastest growing markets, had seen a growing interest among high-end luxury brands in the past decade. The market showed a promising growth rate of 10-15% in the pre-covid times. As a result, many ultra-premium brands, including Harley-Davidson, took serious interest in the premium category market of India.
The American cult bikemaker entered the market with a twelve bike variety portfolio in 2010, setting up a fully operational plant in Bawal, Haryana in 2011. With an exclusive network of 30 dealers and the HOG (Harley Owners Group) program in place, it was expected that HD will have a handsome long term market share in the Indian premium bikemaker category.
A decade and 25,000 sold units later, Harley-Davidson announced the shutdown of operations at Bawal, Haryana after significant reduction of employees in 2020. Later striking a partnership with Hero MotoCorp, it is planning a revamped comeback with “The Rewire” and “The Hardwire” programs, aimed at building desirability of the product among customers.
“We used to go and look at Harley-Davidson bike pictures in magazines in our days. Those were amazing heavy-duty bikes, the dream bike for all of us,” said my father when asked about HD brand. According to some researches, Harley-Davidson still holds a commendable popularity among Indian customers. For many the Harley-Davidson bike is still “aspirational.”
So what went wrong for Harley-Davidson, the “God’s” bikemaker?
1. Underestimating the subtleties of Indian market
India is a seemingly simple but complicated market. The customers are highly diversified with strong cultural impact, which are not easy to identify with a foreign eye.
Most entrants prefer entering the Indian market via joint ventures and partnerships. This gives them time to understand the subtleties of the market and also achieve operational efficiency in the initial teething stage of the company.
Some popular examples include:
- Ford and Mahindra&Mahindra
- Triumph and Bajaj Auto
- BMW and TVS
- Tata-Starbucks
- PNB MetLife
- Tata-Cummins
- Hindustan Aeronautics Ltd etc.
2. Bumps and bruises – the Imperfections of a Harley-Davidson bike
People in India expect a hassle-free experience when investing in premium products, but owning a Harley-Davidson was not a piece of cake for the Indian customers. They found the product unsuitable for Indian road terrain and traffic. The suspension and chassis felt uncomfortable, and the brakes and clutch plates were often damaged.
3. No value for the value-conscious
I have long since learned that Indians are value-conscious customers. Despite being a little price sensitive, a good value offered is often welcomed by the customers even for a premium price.
The value offered by Harley-Davidson was clearly less than the price put upon the bikes. The “aspirational” value of the brand, the product quality and the after sales services together could not fill the gap between the total value and the price, which are seen as too high by many customers.
The incomplete product portfolio and specially the delay in introducing lower displacement bikes, also discouraged the initially interested customers from investing in the bike.
4. Poor after-sale services
Harley-Davidson customers were seen complaining about long waiting time, unavailability of service professionals, high cost of service and frequent malfunctions on the social media. Lack of spare parts availability and service centers also added to customers’ troubles.
This was unexpected from an ultra-premium bike maker and hence encouraged negative reviews and word-of-mouth.
5. Royal Enfield, a major Harley-Davidson competitor
Royal Enfield monthly sells double of what Harley-Davidson has sold in a decade in India. This is mostly because of it being a premium yet affordable bikemaker, catering to a larger mass of customers. While the sales volume is subjective to the customer segment served, the numbers still look bleak for Harley-Davidson.
Another factor is the associated “Indian-ness” of Royal Enfield. The brand has done an excellent job in being one of the top-of-the-mind brands in the cruiser bike segment through multiple touch points and years of consistent branding efforts. The bike is seen in movies, in travel blogs of influencers, in social media of customers, etc. constantly reminding potential customers of its presence.
6. Untapped Potential of tier-2 cities
The exclusive network of 30 dealers was not enough to enter and cater to tier-2 markets. Premium and ultra-premium bike segment are seen to be attracting customers from tier-2 and tier-3 cities of India as well. This is an untapped market in which Harley-Davidson could have invested.
7 . Duty charges and tax burden on Harley-Davidson
An import duty of 100% was levied on Harley-Davidson bikes initially, which was reduced to 50% later upon special request by Donald Trump. Even after opening a plant in Bawal, Haryana, the bikemaker had to import parts so as to assemble in India. All this made it difficult for the bikemaker to reduce prices and cater to a larger audience.
8. Declining interest in cruiser bikes, not just Harley-Davidson
Interest in cruiser bikes has been steadily declining not only in India but globally. Increase in millennial customers and their different interests is also a factor adding to this decline in India.
Another factor is less focus on innovation in the marketing-led model of Harley-Davidson. Automakers often invest their time and efforts in R&D efforts, but the same is not true for Harley-Davidson. The business primarily focuses on branding. Though it does a great job on it, it’s not enough for the future market.
9. Covid-19 – the big blow for Harley-Davidson Bikes
Though the sales of Harley-Davidson were declining in the last ten years, Covid pandemic was a big and final blow on the company. After struggling for months, Harley-Davidson finally announced shutdown of its operations in Bawal and significantly reduced the employees from its Gurgaon office.
Like many automakers in the past few years (Eg. UM motorcycles, MAN trucks, etc.), Harley-Davidson’s venture in India seemed over. The last straw seems to be its joint venture with Hero MotoCorp.
What next?
The JV of Harley-Davidson and Hero MotoCorp certainly has a huge potential. The positive brand perception of Harley-Davidson, which takes years to build, can be leveraged by both the players.
What with the operational efficiency, dealer network, market understanding of Hero and the brand equity of Harley-Davidson, it won’t be a surprise if it emerges as a leader in the ultra-premium bike maker segment in India.
Hoping for a big comeback from the bikemaker.
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