Why Harley-Davidson Is Struggling In India

Summary

Harley-Davidson faces significant challenges in India's massive motorcycle market, where affordability and local competition dominate. Despite its strong brand presence, the company struggles with declining sales, as its premium pricing makes it inaccessible to most consumers. Local brands like Royal Enfield, offering affordable and fuel-efficient bikes, have captured a large market share. Harley is attempting to reverse its fortunes by focusing on middleweight bikes and expanding internationally, but its strategy of targeting cost-sensitive markets could lower profit margins. The brand's future in India and Asia hinges on adapting to local tastes and offering more affordable options.

Takeaways

• 😀 India is the largest motorcycle market globally, with 13% of the population owning a two-wheeler.
• 😀 Harley-Davidson's market share in India is small, with sales declining by 21.6% in 2019 and 7% the year before.
• 😀 India surpassed China as the world's largest motorcycle market in 2017, with 13.6 million motorcycles sold in 2019.
• 😀 The biggest challenge for Harley-Davidson in India is its high pricing, with the cheapest model costing around $8,000, which is unaffordable for most consumers.
• 😀 Indian consumers prefer affordable motorcycles, and local brands like Royal Enfield dominate the market, offering motorcycles at significantly lower prices.
• 😀 Royal Enfield, India’s largest heavyweight motorcycle brand, sells bikes for prices starting at $2,600, much more affordable than Harley-Davidson models.
• 😀 Harley-Davidson’s attempts to tap into the Indian market have been hindered by a lack of local production, limited dealership networks, and high maintenance costs.
• 😀 Global expansion is key to Harley-Davidson’s strategy to counter declining sales in the U.S., with a focus on growing markets in Asia, including India.
• 😀 Harley-Davidson is working on releasing more affordable middleweight motorcycles to compete with local brands and increase its market share in India.
• 😀 The company’s strategy includes local manufacturing in countries like India to lower production costs and avoid trade risks, particularly with the U.S.-China trade war.

Q & A

What is the size of the motorcycle market in India compared to the US?

India is the largest motorcycle market in the world, with about 170 million motorcycles on its roads, which is significantly higher than the US, where only about 8% of households own a motorcycle or scooter.

How has Harley-Davidson performed in the Indian market?

Harley-Davidson has struggled in India, with sales declining by 21.6% in the 2019 fiscal year. The company only sold 2,676 motorcycles out of the 13.6 million total motorcycles sold in India in 2019.

Why is Harley-Davidson struggling in India?

Harley-Davidson’s motorcycles are too expensive for the majority of Indian buyers. The cheapest model sells for around $8,000, which is eight times higher than the median price of a typical mass-market motorcycle in India.

Which brands dominate the Indian motorcycle market?

Japanese brands, particularly Honda and Yamaha, dominate the Indian motorcycle market. These brands offer more affordable and fuel-efficient bikes, catering to the mass market.

How does Royal Enfield compete with Harley-Davidson in India?

Royal Enfield, an India-based brand, competes by offering motorcycles at much lower prices, starting around $2,600 for mid-sized bikes. The brand has a large following and is deeply embedded in Indian culture, including military usage, which helps it outperform Harley-Davidson in India.

What are the price differences between Harley-Davidson and its competitors in India?

Harley-Davidson motorcycles in India are much more expensive, with the cheapest model priced at around $8,000. In contrast, Royal Enfield's bikes like the Classic 350 and Interceptor 650 are priced significantly lower, at about $2,600 and $4,300, respectively.

What is Harley-Davidson’s strategy to expand internationally?

Harley-Davidson aims to grow its international presence, especially in Asia, by manufacturing motorcycles locally in countries like India, reducing shipping costs, and lowering production expenses. It also plans to introduce more affordable middleweight motorcycles to cater to price-sensitive markets.

How does Harley-Davidson plan to attract younger riders?

Harley-Davidson is focusing on attracting younger riders by introducing new products such as electric motorcycles and experimenting with electric bicycles. The company is also exploring ways to offer smaller, more affordable bikes.

What are the risks of Harley-Davidson’s strategy to offer cheaper bikes?

Offering cheaper bikes could increase Harley-Davidson's sales volume, but it could also reduce its profit margins. Additionally, the company faces strong competition from entrenched local brands in various international markets, making it difficult to gain significant market share.

What is Harley-Davidson’s sales goal for international markets by 2027?

Harley-Davidson aims for half of its business to come from international markets by 2027, up from a little more than a third in 2018. This strategy is intended to help the company weather the decline of the US market.