He has a reason to be happy. After at least two years of spadeworkHarley-Davidson was granted permission to start operations in India by the Foreign Investment Promotion Board as early as in April 2007it was setting foot into the second largest motorcycle market in the world. Of course, sales are dominated by small, inexpensive bikes used as basic transportation, but Indias rapidly growing economy, rising middle class and significant investment in construction of new highways have opened the door to leisure motorcycle riding.
So the bigger draw is the rapidly evolving superbike segmentbikes that have engine displacement of around 1,000 cc, are priced between Rs 9 lakh and Rs 12 lakh in India. According to industry estimates, around 200 superbikes were sold in Indian in calender 2008, the first year since the launch of the big machines by Yamaha, Ducati and Suzuki in India. The market this year is expected to log around 500 in sales. Says Kapil Arora, partner, automotive practice, Ernst & Young, Harley-Davidsons entry is an exciting and positive development for the Indian two-wheeler market. It reinforces Indias importance as a fast growing automotive market that all OEMs want to tap into.
While it has managed to create a buzz, the journey for Harley-Davidson in India may not be as easy as an upcountry cruise. At home in the US, it faces competition from bikes that are decidedly anti-Harleylight sports bikes, a segment that Suzuki, Honda, Yamaha and Kawasaki ride with great panache. These brands are already in India and are leading the show with bleeding edge products and a fast expanding dealership network.
To give credit where its due, Harley-Davidson has skimped when it comes to new product development. The Harley V-Rod, a low-slung, high-powered machine is meant for hard-charging youths. Harley has a number to tackle Japanese sport bikes, Buell Firebolt, targeted at the youth, besides the starter motorbike Buell Blast.
But there is also the issue of price. High customs duty of 105% on these bikes, which adds to the final pricethe price tag in the end could be as high as Rs 7 to 15 lakh a piecewill put Harleys out of bounds for many aspirants. Says Arora of Ernst & Young, While there is long-term market potential, it would take at least three-five years to evolve. Given the high price tag associated with the bike owing to the steep import tariffs, unit sales will be modest in the immediate short term.
Lets not forget after-sales service, that can really make or break a brand. Opening many dealerships and training a retinue of service personnel may not make sense when volumesre low.
Evidently, the Harley-Davidson team will be busy sorting all this in its first year, unless it has found a few answers already. As it revs up, the brand unlikely to send shivers down the spines of competition. As VG Ramakrishnan, director, automotive and transportation, Frost & Sullivan, South Asia and Middle East, rightly points out, This is for people who have the moolah and want to be part of the cult group. I dont think Hero Honda or Bajaj would be bothered about Harley-Davidsons entryit is a different league all together. Its completely different in terms of engine segment, the cc segment and the type of customers they target.
HS Goindi, president, marketing, TVS Motor Company, echoes the sentiment when he says, Harleys entry is good news. With this, a whole new segment of motoring enthusiasts will venture into this market and hence it would mature.
Anoop Prakash, Managing Director, Harley-Davidson India
What is the potential market size for Harley-Davidson in India
As the second-largest motorcycle market in the world, there are currently about 100 million motorcycles on the Indian roads today. We see our initial entry into India as relatively modest in size within the grand scheme of Indias motorcycle industry, as well as relatively modest within the grand scheme of Harley-Davidsons worldwide business.
Over the coming months, we are focused on four priorities: develop a strong local team of professionals who share Harley-David sons passion and embody our brand; build upon the already strong admiration for Harley-Davidson in India by importing our motorcycles, accessories and apparel; develop a strong local dealer network committed to delivering exceptional quality and outstanding customer experiences; and enhance our understanding of the market, and deepen our insight into the best ways for Harley-Davidson to connect with India in the years ahead.
Given this background, how areyou looking to approach the Indian market
Harley-Davidsons unique brand and distinctive motorcycles appeal to a wide variety of enthusiasts on different levels. Above all, Harley-Davidson motorcycles are an experience.
While our products and the Harley-Davidson experience have a strong appeal globally, each market is different and we approach each market in ways that reflect the specific needs of riders locally. The team at Harley-Davidson Indiaand the dealers we will be establishingwill be extremely focused on how best to connect with riders on an emotional level.
What will be your early focus areas in this market
We expect sales to start out gradually, and we anticipate that as Indias economy continues to develop and its middle class continues to grow, there will be increasing opportunities to introduce our motorcycles to riders more broadly. We also plan to explore strategies to allow enthusiasts various routes to ownership, primarily through financing opportunities. Our current approach is to import our motorcycles, accessories and riding gear into India.
How do you plan to develop your dealershipa key for a brand like Harley-Davidson
Our success in India will, in many ways, be shaped by the degree to which our dealer network connects with riders and builds upon our core brand values in ways that are relevant to that market. We are looking for dealers who are highly committed, passionate, and dedicated to providing outstanding customer experiences. Harley-Davidson has the best dealer network in the world, and our expectations from our dealers are very high.
Why India matters
Ranked No 1 in cruising and touring motorcycle brands, the story of Harley-Davidson is the stuff of fables. In 1903, two rookie bikers, William S Harley (21) and Arthur Davidson (20) set up a bootstrap operation at their 10-feet by 15-feet shed and rolled out the first Harley-Davidson bike. Today, Harleys leave others in the dust for leadership in the most lucrative segment of the market, the big cruiser bike with sales in over 70 countries.
Arthurs brother, Walter, joined them in 1907 and business began to grow so well that Walters brother William also quit his well-paying job with the railroad to come on board. The hand-painted signboard on the old shed that read The Harley-Davidson Motorcycle Company, may be no more, but the original bar and the shield logo that was used for the first time in 1910 survives, as does the brand reputation for designing the worlds best mean machines. Today, Harley-Davidson Inc is the parent company for the group of companies doing business as Harley-Davidson Motor Company, Buell Motorcycle Company, MV Agusta and Harley-Davidson Financial Services.
Across the world, the Harley Owners Group (HOG) is over a million strong members club. On July 12, 2008, in Milwaukee, Wisconsin, home of Harley-Davidson, the company opened a Harley-Davidson Museum.
It has 43 models in the portfolio, of which 12-15 will be brought to India as completely assembled lines. The baby boomers who comprise much of the HOG are now getting olderand this poses a problem. The company has admitted, the average age of a Harley owner is now 46, up from 37 in 1990. A strong footprint in India is designed to change that demographic.