Rajiv Bajaj just went ahead and termed iconic American motorcycle maker Harley-Davidson's future 250 – 500 cc bike completely insignificant. In a recent statement to CNBCTV18, Rajiv Bajaj said that Harley-Davidson motorcycles are known to be big and loud and a 250 cc bike is a pipsqueak. He added that he isn't worried about the new direct competition from the American motorcycle maker. This statement came in the background of the announcements from Harley-Davidson to launch a range of new models including a 250 cc to 500 cc bike by 2022. Rajiv Bajaj went on to say that based on learnings from his own failures whenever a brand crosses its 'Laxman Rekha' (referring to brand strengths) it is on thin ice. Bajaj, in his statement also mentioned the partnership between Triumph and his company to develop smaller displacement motorcycles of around 500 cc.
Analysing Rajiv Bajaj's statement gives rise to two possible reasons for it. First, some could say that he is concerned about the competition from a global giant partnering with an Indian company as it could affect the business for Bajaj-KTM, Husqvarna or Bajaj-Triumph. Second, one could say that he does have a valid point and that Harley-Davidson's big announcement might not turn out to be that big after all in the long-run.
Can Harley-Davidson with an Indian partner be a force to reckon with?
What turns out to be correct among these two options is something that time will tell but I do have more than one reason to favour Bajaj's theory. When Bajaj talked about the brand perception of Harley-Davidson, he was right as people know the company globally for making big and loud cruisers. When the American company introduced the new Street 750, the response was good from emerging markets such as India, as people with smaller budgets too could now fulfil their dream of owning the iconic American motorcycle. The top-down approach, however, doesn't work the same in all cases, just like any business strategy has different implications for different companies.
The Street 750, having gone under the axe for cost-cutting had multiple quality and build issues at the time of its launch. While most of these were rectified over a period of time, the point is that going down the 'cheap' route isn't easy for a brand with no knowledge of doing it. Building a 250-500 cc bike will require far more cost-cutting, which might end up diluting the overall value proposition of the end product. An Indian partner, hence, will play a crucial role in this partnership and the sales outcome of the products. The Indian company's identity though hasn't been disclosed yet so there's no way I can talk about what could or might not work.
What I do feel strongly about is that going down to the 250 cc segment will pit Harley-Davidson against mass-market companies that have been ruling this segment for decades and understand the customer better than global companies. The impact this understanding makes is clear from the fact that despite all major global carmakers having tried their hands in India, Maruti Suzuki has proven to be almost unshakeable. Also, having an Indian partner doesn't necessarily mean this knowledge would be acquired. If that was the case, Mahindra would have had a different fate with its two-wheeler business in a market the company was literally born in. In addition, with a 250 – 500 cc Harley-Davidson will land in a turf dominated by Royal Enfield and the charm and craze of a 'Bullet' in India needs no introduction.
India, being one of the youngest and most aspirational countries in the world presents unique challenges to global brands and their proven strategies from the US, Europe and elsewhere in Asia. If a 250 cc Harley-Davidson was to be on sale and successful, in time, there would be many of them on the roads. The exclusivity that Harley-Davidson owners enjoy right now would diminish in such a scenario and so would the prestige factor of owning it, irrespective of the cost of a specific motorcycle. People pay a premium for Mercedes-Benz cars because few can own it and hence, the strong aspirational value of the brand.
Luxury carmakers too have tried their hands on a similar approach, although not as deep down as Harley-Davidson's dive straight into the 250cc segment. They too have faced a challenge turning their less expensive products into volume drivers. And that is precisely the reason why Harley-Davidson is doing all this! Amid declining global sales, markets such as India seem to be a natural place to increases volume but whether this plan works is something that'll be interesting to see. Even for a brand as strong as Harley-Davidson, this plan has too many variables and cogs, of which even the smallest one going wrong could spell failure for the entire machinery.
Watch our video review of Triumph Bonneville Bobber
Apple, one of the biggest and most valuable brands on the planet too tried its hands at appealing to the masses with the iPhone 5C but the plan didn't work out. Simply because people weren't happy with a cheaper phone from a premium brand that gave them far fewer features than other cheaper phones. Also, buyers of the expensive iPhones wouldn't want to pay a premium to own it in the long-run if almost everyone on the street had one.
It's a very thin line to balance on that's why I believe Rajiv Bajaj wasn't wrong with his 'Lakshman Rekha' theory. Hence, it'll be interesting to see if Harley-Davidson has bitten more than it can chew as far as the Indian market is concerned.
|List of Indian two-wheeler manufacturers that partnered with global brands|
|TVS - BMW|
|Bajaj - KTM|
|Bajaj - Husqvarna|
|Bajaj - Triumph|