Bajaj-Triumph, Hero-Harley entry shifts premium bike race into top gear

The premium motorcycle enthusiast is in for some good news with fresh entrants revving up in the 350cc-500 cc segment. The entry of Hero MotoCorp (Hero)-Harley-Davidson (Harley) and Bajaj Auto-Triumph Motorcycles (Triumph) with competitive pricing is likely to not only increase competition, but also fuel higher demand thanks to affordability.

Earlier this week, in collaboration with Hero, American giant Harley launched its most affordable motorcycle in India – the X440 –with a clear focus on domestic sales. On Wednesday, Bajaj and Triumph announced the India price of their Speed 400 bike that they had launched in London in June. Bajaj-Triumph Scrambler 400 X will follow in October.

Both these bikes have been positioned competitively – X440 starts at Rs 2.29 lakh (ex-showroom) while the Speed 400 starts at Rs 2.33 lakh. Royal Enfield Classic 350 starts at Rs 1.93 lakh, while Royal Enfield Scram 411 starts at Rs 2.03 lakh. Bajaj Dominar is priced at Rs 1.8 lakh or so.

The move is likely to shake up the market leader Royal Enfield, which enjoys close to 70 per cent share of the 350-500cc bikes. In FY23 it had sold 37,108 units of its 500cc bikes including the Bullet 500 and Classic 500. The total industry volume for the 350cc-500 cc segment according to the Society of Indian Automobile Manufacturers (SIAM) in FY23 was 53,525 units.

Royal Enfield is also the undisputed leader in the 250cc-350cc segment, virtually owning the market at a whopping 94 per cent share. It sold 6,78,110 units in the segment last financial year, beating its rivals Honda Motorcycle & Scooter India (33,275 units) and TVS Motor (4,339 units) by a fair margin. In the 500-800cc segment too, Royal Enfield sold 19,622 units out of 20,991 units in FY23.

This market dominance is likely to be shaken – as is already evident in the way the share prices have skidded during the week -- Eicher Motors stock has slipped by 10.4 per cent since Monday, while Hero MotoCorp stock has gained 9 per cent during the same period. 

A Mumbai-based analyst noted that the segment will expand; more launches can be expected in this category, which he feels will grow at 1.5-2 times the underlying market growth over the long term.

Ashwin Patil of LKP Securities said that Royal Enfield will undoubtedly face a challenge with new entrants such as Hero-Harley and Bajaj-Triumph. “With this we can see this segment viewing higher competition followed by price cuts, fueling higher demand,” he predicted.

On the sidelines of the launch, Jochen Zeitz, president and chief executive officer, Harley-Davidson, said that they are trying to get a good chunk of the premium segment with the X440. This is evident in Harley’s distribution strategy – the X440 will be available at the existing Harley network of 25 dealerships, including service centres and select Hero outlets.

Pawan Munjal, executive chairman, Hero MotoCorp has already indicated that Hero is working on its own bike based on the same 440cc engine at its Neemrana unit, which will be launched between January and March, 2024.

Asked about other strong players in the segment (Bajaj and Royal Enfield), Munjal told reporters that, “I do not know of any other established player who has a history longer than 120 years than that of Harley-Davidson. So, I would say that Harley-Davidson is the most established brand and player in motorcycling. Yes, it is the first time that Harley-Davidson is coming into the segment of 440cc bikes in India. But with the joint collaboration and co-creation of this particular bike by the engineers in Milwaukee (headquarters of Harley-Davidson), CIT (Hero's Centre of Innovation and Technology) in Jaipur and Hero's tech centre in Germany, you can see for yourself that a fantastic product (X440) has come up.”

While this clearly elevates the premiumisation strategy for Hero, it also opens doors for hundreds of thousands of Harley admirers who always wanted to own a Harley but could not afford it. The starting price of bikes that Harley assembles and sells in India is Rs 17 lakh.

“Now, it is going to be affordable for them. So, we do expect fairly large numbers to come in for this particular product,” Munjal said. Hero is clear that it wants to go where the customer is. As Hero CEO Niranjan Gupta said: “We will have a select list of Hero dealerships as well, because the idea is to reach the customer where the customer is. And we do know because of the rising aspirations of India, the customer does not necessarily reside only in the top 20 metros.”

The 250cc-plus segment sold around 800,000 units last financial year. In comparison, the less than 110cc segment sold 52,35,788 units and the 110-125cc segment sold 26,86,561 units. The mass market is definitely bigger, but growth has been slow over the last few years. For example, the less than 110cc commuter bike segment grew only 5.4 per cent in FY23, vis-à-vis the 250-350cc segment, which is growing by 40 per cent. The 350-500cc has grown by 11 per cent or so; but the entry of new models is likely to accelerate growth here.