Harley eyes Royal Enfield turf in India, plans bikes in 250-500cc segment

A year after its British counterpart Triumph inked a partnership with Indian motorcycle major Bajaj to make affordable motorcycles locally, America’s iconic motorcycle maker Harley appears to be weighing a similar option. Harley-Davidson plans to develop a 250-500cc motorcycle through a strategic alliance in Asia that will be used to primarily fuel its growth in India, the world’s biggest two-wheeler market. It is not yet clear if its alliance partner will be an Indian company.

In an investor communication, Harley-Davidson said, "We intend to enter into a strategic alliance in Asia to launch a 250-500cc motorcycle within two years in India, and into other emerging markets in Asia over time." 

A company spokesperson said consumer spending on discretionary, premium products is reaching critical mass in China, India and Southeast Asia. “India’s 250-500cc motorcycle segment is expected to grow at 25 per cent every year through 2021. We intend to enter into a strategic alliance in Asia to expedite market entry and increase brand access and volume, bridge to our larger motorcycles, leverage a world-class partner’s manufacturing scale and retail footprint and enable an accessible price point for premium small displacement market entry,” the spokesperson added. 

The move will also "enable accessible price point for premium small displacement market entry", Harley-Davidson added.

The Indian sales of Harley have been sluggish. In FY18, the brand’s sales in India fell seven per cent to 3,413 units. This was the second consecutive year of decline. The numbers had declined over 21 per cent in FY17 to 3,690 units. In the April-June period of FY19, number is down over 21 per cent to 707 units. Its best year in India in terms of volume was FY16, when it sold 4,708 units and had seen a marginal growth. Between FY16 and FY18, the volume declined by over 27 per cent. Harley only sells bikes in the 500cc plus segment in India. 

The 250-500cc segment in India brings an annual volume of 833,112 (based on FY18 numbers). However, 96 per cent of this volume comes from just one player, Royal Enfield. Rival Bajaj attempted to mark a presence in the segment with the Dominar (launched in December 2016) but the product accounts for just two per cent of the segment. "Competitors have entered into various alliances and partnerships to accelerate the pace of market entry (in India)," said Harley-Davidson, which sells 16 models in India ranging from Street 750 with starting price of Rs 525,000 to CVO LIMITED tagged at Rs 4.99 million.