Har­ley-David­son loses rum­ble in In­dia


Har­ley-David­son Inc. is rid­ing out of In­dia. That’s as much of a prob­lem for the Amer­i­can mo­tor­cy­cle icon as for one of the largest two-wheeler mar­kets look­ing to make its mark glob­ally.

Har­ley said in a reg­u­la­tory fil­ing Thurs­day that it was dis­con­tin­u­ing sales and man­u­fac­tur­ing op­er­a­tions in the world’s sec­ond most pop­u­lous coun­try as part of its com­pany-wide re­struc­tur­ing, or the “Rewire” plan, a five-year strat­egy to re­set its busi­ness, fo­cus on high-pri­or­ity mar­kets and tighten up by stream­lin­ing mod­els.

That the Mil­wau­kee, Wis­con­sin-based com­pany is pulling out of a thriv­ing mar­ket for mo­tor­bikes speaks to a trou­bled in­ter­na­tional strat­egy in need of over­haul. It comes as Prime Min­is­ter Naren­dra Modi is push­ing his “Make in In­dia” pro­gram, with the au­tos sec­tor (in­clud­ing two-wheel­ers) as a key part and po­ten­tially $23 bil­lion in pro­duc­tion in­cen­tives on the way. Nonethe­less, Toy­ota Mo­tor Corp. said last week it won’t ex­pand fur­ther there.

In­dia hasn’t been an easy mar­ket for Har­ley, where it’s had an assem­bly plant for a decade and sells a few thou­sand bikes. The com­pany op­er­ates a “com­plete knock-down” assem­bly plant, where com­po­nents and parts are im­ported from the U.S. and as­sem­bled into mo­tor­cy­cles for the lo­cal mar­ket. It also pro­duces the Har­ley-David­son Street se­ries for sale out­side North Amer­ica. Find­ing the price sweet spot and gain­ing trac­tion in In­dia, even with mod­els made for the mar­ket with smaller en­gines, has been dif­fi­cult. Dis­counts some­times help; at other times, they turn off buy­ers. Bike man­u­fac­tur­ers have strug­gled with the ex­is­ten­tial ap­proach — more for less, or vice versa? In­dian con­sumers are aspi­ra­tional and not that easy to please: A cheaper model of a high-end brand won’t cut it. Taxes on larger pow­er­trains are puni­tive. Har­ley’s bikes can cost as much as 1.1 mil­lion ru­pees (about $15,000). That’s steep for a mar­ket where the av­er­age bike with de­cent mileage starts at 50,000 ru­pees, and its near­est com­peti­tor prices closer to 150,000 ru­pees.

Har­ley was never go­ing for the mass mar­ket, of course. It’s long since moved be­yond the Wild One to the Week­end One, sell­ing the em­bla­zoned-leather-jacket life­style of the Amer­i­can biker on the open road to those who can pay a top price for it. Still, in In­dia, there has been op­por­tu­nity. Vol­umes of premium-seg­ment mo­tor­cy­cles have been grow­ing for the last six years. Top-end mod­els have drawn first-time buy­ers from higher-in­come lev­els, and are po­ten­tially an up­grade choice for the 70-some mil­lion rid­ers of smaller bikes, ac­cord­ing to an­a­lysts from Gold­man Sachs Group Inc. Its main ri­val in the seg­ment is Eicher Mo­tors Ltd.-owned Royal En­field — priced well be­low a Har­ley, with a sim­i­lar brand ap­peal.

The Har­ley cult hasn’t grown big enough to con­vert into sub­stan­tial sales. The top 10 brands in In­dia have 70% of the mar­ket, ac­cord­ing to Mac­quarie Group Ltd. an­a­lysts. Most of the best-sell­ing mod­els have been around for at least 17 years, on av­er­age. The ma­jor­ity of new launches fail when it comes to gain­ing share. As the an­a­lysts put it, the best way to get a toe­hold has been when new seg­ments emerge. Har­ley hasn’t rolled into one. It priced it­self too high, then tried to make cheaper ver­sions that didn’t ap­peal to fans.

The com­pany is ham­strung to some ex­tent by the parts it im­ports and then as­sem­bles at its Bawal plant. Tar­iffs have been a point of con­tention with U.S. pres­i­dents from Ge­orge W. Bush to Don­ald Trump. But Har­ley strug­gled even af­ter they were cut. The com­pany has also suf­fered in the wider global trade fric­tions, with net rev­enues af­fected by tar­iffs im­posed by China and the Euro­pean Union, and by the U.S. on items im­ported from China. Part of the prob­lem for mo­tor­cy­cles has been the tran­si­tion to the lat­est emis­sion norms (a good thing). Keep­ing up, though, has meant an in­crease in im­ported con­tent for parts, ac­cord­ing to Gold­man Sachs an­a­lysts. Du­ties and taxes haven’t been low­ered to keep pace, while own­er­ship costs and road taxes have in­creased. All to­gether, state levies make up to ap­prox­i­mately 50% of a ve­hi­cle’s on-road price, the high­est among com­pa­ra­ble coun­tries, the an­a­lysts say.

Modi’s am­bi­tious plans could have been helped by a sym­bolic ges­ture to hold on to Har­ley. In­dia’s in­abil­ity to keep a premium man­u­fac­turer with an out­size brand points to mis­aligned in­cen­tives and dim prospects for be­com­ing a top-end hub.

Both In­dia and Har­ley are walk­ing away from what could have been a big op­por­tu­nity.

A worker uses a socket wrench to re­pair a Har­ley-David­son mo­tor­cy­cle in­side the ser­vice area at a deal­er­ship in Oakland, Cal­i­for­nia on July 16, 2020.

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