Harley-Davidson plans to ride on smaller bikes to pump up volumes

Harley-Davidson, whi­ch has half the market share in the 750 cc and above segment, is looking at launching smaller bikes over the next decade to enter segments that drive volumes in one of the largest two-wheeler markets in the world.

In keeping with the firm’s global targets, Harley-David­son’s recent quarterly reports indicate they will launch 100 new ‘high-impact’ bikes. 

Sajeev Rajasekharan, managing director of Harley-Davidson India, didn’t specify which of the 100 new products would make it to India, but said “the next decade will see a focus on newer segments that include street and adventure bikes”. Those are vehicles used for casual and sportier riding by younger consumers, as opposed to long rides that their bigger bikes have historically been used for.

The move is also a result of the firm’s plans to grow international business from about 40 per cent to 50 per cent by 2027. Harley, which reported $4.5 billion in revenue in the previous fiscal year, has developed its smallest motorcycle for China — a 338-cc cruiser that will be sold there later this year. Incidentally, new international retail sales have been the highest in the Asean (Association of Southeast Asian Nations) market with 6.2 per cent growth over the previous year, as opposed to 2.3 per cent contraction in the EMEA (Europe, Middle East and Africa) region.

In the past decade, Harley-Davidson India clocked sales of 25,000 bikes. While this may be market leading in India, it is tiny compared to the 218,000 bikes sold in 2019 overall.

That could change if duties are slashed and the brand brings in smaller bikes, electric two-wheelers and e-bicycles, all of which it plans to do in home markets. Gross margins in America are 25 per cent, but in India the duty structure of around 50 per cent for larger bikes and 15 per cent for smaller ones means lower profits.

US President Donald Trump has in the past commented on the high duties that imported motorcycles attract (100 per cent), which was lowered to 50 per cent. 

Experts say Trump and Prime Minister Narendra Modi will likely discuss revisions to the duty structure when they meet later this month.

Rajasekharan says infrastructure is one of the big challenges for Harley owners, but there’s a glimmer of hope. “Most of our bikes are built for cruising and long distance riding and for that you need great highways and roads. So, if that takes off we are very hopeful,” he said. “The government has indicated that they plan to build 90,000 km of highways and roads and have executed 40,000 km. Another 50,000 km would change the game.”

The firm sells 14 motorcycles across four product families (Street, Sportster, Softail, Touring) in India, apart from a range of genuine parts, accessories and general merchandise. These are available at 33 authorised dealerships. 

At the company’s assembly unit at Bawal, Haryana, Harley-Davidson build its 750cc motorcycles and assembles other CKD models up to 1,750cc engines. The Street 750, the bestselling model in the 750cc and above category, is the first large capacity motorcycle in India to be Bharat Stage-VI emission norms compliant and starts at about Rs 5.5 lakh.

Rahul Mishra, principal automotive and industrials practice at Kearney, says there is clearly an appetite among buyers to move to bigger engine motorcycles the same way carbuyers migrate from mid-level brands to German luxury brands such as BMW, Mercedes-Benz and Audi.

“The challenge as we see it is the availability of parts, and a supply chain that could evolve once volumes increase. But there is always a strong export hub angle that can be leveraged,” he said. Harley-Davidson officials confirmed that some export manufacturing was ongoing, but declined to provide specifics. At present, India-made bikes have significant levels of localisation, and sourcing is underway for accessories, apparel and other parts that Harley-Davidson uses.