Why Did Harley-Davidson Fail In India?

It may be hard to imagine Harley-Davidson failing, but when a company has been in business for more than 120 years, it’s bound to experience some ups and downs. That’s the way business works, especially for a company with as huge a global appeal as HD. This was the case in India, where the company discovered the hard way that not everywhere is suitable for large pig operations.

HD opened its first dealership in Hyderabad in July 2010 and has opened a 70,000 sq ft building in Bawal, Haryana, which it calls a “complete knock-down” assembly plant to assemble only kits received from plants in Wisconsin, Pennsylvania and Missouri. This reduces import duties and lowers the overall cost of the bike while expanding its market share. At the time, it was the company’s second attempt to launch a business outside the United States, the first being in Brazil. why not? For a country with a population of over a billion, two-wheeled vehicles are by far the most popular mode of transportation, creating a perfect target-rich environment.

Harley-Davidson left India in September 2020, having sold just 27,000 units in ten years of operation. In comparison, Royal Enfield (Harley’s main rival in the region) sells double this number every month. In fiscal 2019, HD sold about 2,676 motorcycles, while only 100 units were sold between April and June 2020. There were multiple factors that contributed to the legendary bike maker’s overall demise in India, but they all converged on one simple and ironic fact: these bikes were too fat for India.

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In the fiscal year before Harley production was discontinued (2019), over 17 million two-wheelers were sold in India, 90% of which were powered by engines below 150 cc. Only 25,000 bikes with engines over 500cc are sold a year. But the smallest bike offered by Harley in India comes with a 750 cc engine.

What’s more, historic bike maker Royal Enfield has a long history in India, dating back to 1949, which is a major issue for the iconic American company. Royal Enfield has a habit of producing motorcycles that are cheaper, more fuel-efficient, lighter, easier and less expensive to maintain. All of this is confirmed by the fact that it continues to outsell Harley every month (by a massive, exponential increase). Royal Enfield isn’t the only bike maker Harley has to worry about, though. Triumph, Jawa and Norton all make bikes that compete directly with Harley. Additionally, Jawa and Norton have also partnered with other Indian companies (Mahindra & Mahindra and TVS Motor Company) to manufacture bikes in the country to make them more affordable and practical.

Speaking of which, do you still remember the “full disassembly” assembly plant built by Harley? This becomes a problem as it is not a full manufacturing facility capable of producing much needed replacement parts in India. By all accounts, getting these takes months because they have to be imported. Since the motorcycles are not manufactured in India, Harley has to bear twice the tax burden of other manufacturers in India.

India is the seventh largest country in the world (area 1,147,956 square miles) and has the largest road network in the world, second only to the United States. Although the government has made strides in expansion since 2014, 40% of the building is still dirt and gravel – not ideal conditions for a sturdy touring bike.

Harley was in the throes of a financial recession when the coronavirus pandemic hit. In 2019, the company shipped just 213,939 motorcycles to dealers — that may sound like a lot, but it was the lowest total in nine years — and corresponded with its worst net profit ($423 million) in those nine years. Then, 2020 got off to a dismal start, with the pandemic sweeping the world and the company posting losses for the first time in 37 consecutive quarters. Meanwhile, sales hit a six-year low due to production cuts and dealer closures that have taken effect. At the time, it was widely believed that the impact of the pandemic would stall demand for two-wheelers in India for up to three years. The COVID-19 pandemic was the final straw for Harley, which closed its Bavar factory as part of a global restructuring plan called “Rewire.”

Harley has only opened 35 dealerships during its time in the country, each selling less than 70 bikes per year. Ultimately, Harleys simply weren’t for Indians, who had never really been in the market for big, expensive, luxury motorcycles meant to be driven on uncrowded paved roads.

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Read the original article on SlashGear.