Harley gunning for growing market in India

Milwaukee Journal Sentinel | November 29, 2009 | Sunday Business
MUMBAI — Metallica’s rendition of “Turn the Page” blared from 6-foot-high speakers. Then the riders revved their engines: one, two, three, and soon more than a dozen thundering motorcycles were ready for the convoy.

Any motorcycle rally would be unusual in India, where bikes are basic transport used to whip around crowded, chaotic, potholed streets. Even more striking was that this group of leather- and denim-clad bikers was riding Harley-Davidsons, the American icon that’s working to make inroads in India.

The presence of the Harleys in Mumbai shows the different economic fortunes of the United States and India. While the recession in the U.S. has led to a slump in domestic sales for the Milwaukee-based company, India has weathered the global financial storm better, and its growing middle and upper classes are hungry for American goods and status symbols.

It won’t be easy for Harley to break into the world’s second-largest motorcycle market. Barriers include a tariff and tax markup of roughly 100%. Plus, India has a conservative consumer psyche, and motorcycles are seldom used for leisure riding.

But Harley executives are optimistic that affluent Indians will line up for a Hog.

“They have the economic trajectory, the right infrastructure development happening and the right consumer demand for global brands and global experiences,” said Anoop Prakash, managing director of Harley-Davidson’s Indian subsidiary. “We are here at a time when we think India is poised to start chapter two of motorcycling, which we of course call the leisure motorcycle market.”

On a sunny Sunday morning, the riders rumbled through a subdued Mumbai, India’s financial and entertainment capital.

During the two-hour ride, they weaved around swarms of small cars and smaller motorcycles, past the crude shanties and beggars that represent India’s destitute. Everywhere, people gawked. Children shouted and danced. Riders flashed peace signs.

And when they finally hit the open seaside lanes, they gunned it, leaving that distinctive roar of a Harley engine in their wake.

“In Mumbai, going about at least 50, 60 miles an hour, feeling that wind in your face with the ocean on your wing, people smiling and waving, there’s nothing like it,” Prakash said afterward. “That’s why Hog is global.”


Harley plans to open five branded, independently owned dealerships in major Indian cities by mid-2010. The company is making final decisions about its import lineup and has been holding marketing events around the country.

Until three years ago, this wasn’t feasible; India prohibited the import of large motorcycles – those with engine displacements of more than 800 cubic centimeters – and the smallest of Harley’s imports is the 883cc Sportster. When the U.S. dropped its opposition to Indian mango imports, India did the same for heavyweight bikes.

The major remaining hurdle is a 60% import tariff for bikes over 800cc compounded by other taxes and fees of about 30%. That means Harley’s entry-level bike – the Sportster – is expected to cost about 700,000 rupees, or about $15,000, Prakash said. That’s roughly double its U.S. price tag in a country where per capita income is about $1,000 a year, according to the World Bank.

“It’s the big American motorcycle, but 800cc or more? I could never afford this,” said Himanshu Rajpot, sitting on his black and red 135cc Yamaha RXZ recently at Khan Market, a middle-class shopping center in New Delhi, India’s capital.

“To save that would take me years,” said Rajpot, who makes about $5,000 a year as an insurance broker for a bank.


India’s “consuming class” is expected to swell from 370 million two years ago to more than 600 million by 2012, according to the Indian Council for Research on International Economic Relations. Given those numbers, international retailers continue to swarm the country with everything from clothing (United Colors of Benetton has numerous stores in Delhi) to motorcycles (Italian bike-maker Ducati expects to sell 100 units next year).

“The middle classes in India, the ones who have buying power, they’re only going to grow,” said Matthew Joseph, a senior consultant with the research council. “A significant portion of this group is interested in and can afford global premium brands.”

The country’s tariff on heavy motorcycles, geared to protect Indian manufacturers and encourage foreign investment in local production, isn’t likely to come down anytime soon, Joseph said. If Harley is successful in the short run, Prakash predicted the company would import parts, which face lower duties, and assemble locally as it does in Brazil.

Even that step probably won’t bring Harley prices in line with the average Indian motorcycle, a small-engine bike – usually 150cc or less – that often costs around $1,000. The typical motorcyclist is interested in basic transportation: commuting to work and running errands.

Small bikes sell so well because Indian consumers remain practical, said economist Biswajit Nag of the Indian Institute of Foreign Trade. The country has a high savings rate, and economic decisions are often subject to family debates, even for independent adults.


Akshay Malik, a 27-year-old Delhi lawyer, would seem like the Harley customer of the future. Earning $60,000 a year, he said he could afford one and feels the allure: “Harley is Harley. What more do you need to say?”

But Malik drives a gleaming, white Honda Civic – a respectable car in India’s small vehicle market. As for a motorcycle, “My parents would never allow it. They would say it is a waste.”

That attitude partly explains the boom of companies selling small cars, from Honda to Indian manufacturers like Maruti Suzuki, Nag said. And don’t forget the hype about the Tata Nano, a $2,500 car.

Simply put, much of the middle class sees the four-wheeler, not the two-wheeler, as the next step in luxury and status.

“Why have a bike of $20,000? With that money, everyone can buy a car,” said Anshul Jaim, who earns about $12,000 a year as a bank officer in Delhi and owns a 150cc Bajaj Pulsar motorcycle.

“Harley-Davidson will be for the rich people who don’t bother about money,” he added. “Then it’s for style.”

Style was clearly important at a posh launch party in Mumbai this month. Harleys ranging from the Sportster to the 1,250cc Night Rod Special gleamed under spotlights. Hired models sat atop the bikes, adding to the aesthetics.

Newspaper paparazzi jockeyed for shots of the city’s young elite, as well as businessmen and celebrities in attendance. They make up the affluent class likely to be among Harley’s first customers.

“The luxury market here works like any luxury market anywhere in the world. The rich can afford and will buy,” said Devraj Sanyal, a media CEO who splits time between Mumbai and New York. “The poor will only dream.”

Sanyal, who estimated his annual salary at nearly $200,000, posed for a picture atop the Sportster. If their wives say yes, he and his best friend both want Harleys. They dream of taking their young daughters on road trips.

That leisure culture is Harley’s goal in India, said Sanjay Tripathi, Harley’s marketing director and cruising evangelist. He tells stories of his own rides through India’s famed deserts of Rajasthan past sand dunes, camels and ancient palaces.

“The sand is hitting your face, the camels, their bells going ‘tong, tong, tong,’ the sun is going down, it’s intoxicating,” Tripathi said. “We want to bring that Harley cruising culture to all of India.”

Said Prakash, “We’re a lifestyle choice. Nobody needs a Harley-Davidson. They want a Harley-Davidson.”

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