Harley-Davidson Inc is now on the lookout for a partner in the Asian Market with a manufacturing and distribution footprint to make lightweight motorcycles for use in India and other Asian markets. The news, which was announced by a top company executive at the brand to Reuters, was in context to last week's news that the brand’s plan to add a few 250-500cc motorcycles to their portfolio. The new strategy from the brand should help the brand deal with an ageing customer base and declining sales in the US. Industry sales in India are projected to grow 25 per cent a year in Asia's third-largest economy in the 250cc to 500cc segment through 2021. "We realize that we as a company have been very focused on large heavyweight motorcycles and our expertise in the 250-500cc space needs to grow," Marc McAllister, vice president of product portfolio at Harley-Davidson, told Reuters in a telephone interview on Friday. "We are looking for a strategic alliance that can help us grow through understanding the product, understanding the consumer, understanding the assembly," he said.
As a result, this could mean that Harley-Davidson will not make the new motorcycles themselves in India but instead manufacture through a strategic alliance like the Bajaj-Triumph Alliance or the alliance with TVS. Through this new alliance, Harley expects to gain access to a market that sells over 2 crore motorcycles each year and continues to grow at an exponential rate. Harley is hoping a foray into the lightweight segment, along with other new product launches, will expand its operating margins and hope to add up to $250 million in operating profit in 2022. Although, Analysts are sceptical of the profit targets as India is a highly cost-competitive market and lightweight bikes are historically lower-margin products. Although Harley has declined to talk about potential partners, we do have a few theories about possible alliances in India.
On the face, it would seem that the most obvious choice among the Indian motorcycle manufacturers, for this tie-up is Hero MotoCorp. For one they meet both of Harley-Davidson’s core requirements considering that they already have one of the largest dealer networks as well as one of the largest manufacturing footprints in the country. Secondly, Hero has been on the lookout for a partner and has been unable to amount to a concrete alliance. However, it has been confirmed that the Indian two-wheeler major does not have plans to tie up with Harley-Davidson. Whether this has to do with yesterday’s announcement of Ducati going back up on sale, only time will tell.
Inputs from Reuters