New Delhi: Harley-Davidson Inc., the largest US motorcycle maker, on Thursday said it will expand in India’s small cities and towns by adding new showrooms and bringing more bikes to the country.
As it grows in India, the biggest challenge to the motorcycle maker will be to deal with the second-hand market it will create as a result of bringing in new models aggressively, an expert said.
On Thursday, Harley introduced an assembled-in-India version of its Fat Bob bike, priced at Rs.12.8 lakh (ex-showroom Delhi), its 14th model in India. Fat Bob will be assembled at Bawal in Haryana. India is only the second country outside the US, after Brazil, where Harley-Davidson has an assembly facility.
Anoop Prakash, managing director of Harley-Davidson India, said Fat Bob’s 1,600cc engine suits India’s rough roads and that the motorcycle maker will see further expansion in the country next year.
“We want to continue to focus on our strategy, which is to deliver the world-class Harley Davidson experience and expand our accessibility to that experience,” Prakash said at the launch of the Fat Bob motorcycle at the firm’s New Delhi store. For this, Harley will invest more in assembly facilities in India, continue financing partnerships with banks, and ensure a presence beyond the metros to “customers who want that personal freedom experience in their own town”, Prakash said. “By December we will have 10 showrooms around the country (and) three more next year; we are targeting right now Pune, Jaipur and Indore.”
Harley started retailing operations in the country two years ago and by end of the year expects to have 2,000 Harley Davidsons on Indian roads.
“We are seeing a 30% growth across India, China and Brazil,” Prakash said, adding that growth in India alone in 2012 was 40% over 2011. The final numbers will be released next month.
Prakash sees a combination of demand in metros and tier-II cities as the driving force for the bikemaker in India. To reach out to a larger audience, the company will organize bigger Harley Owners Group (H.O.G) rallies in 2013 and add new mediums besides music concerts to draw in potential buyers of its bikes.
“We just launched a Facebook page and there were 100,000 followers in less than a month, which is a big surprise to us,” he said. “We hope to have many more rallies next year—greater scale and size rallies.”
H.O.G is a factory-sponsored owners’ club which organizes rallies. The rallies include potential future customers of the bike.
Deepesh Rathore, managing director, IHS Automotive India, a consulting firm that specializes in automobiles, said the pricing for the Fat Bob, which is sold at a much steeper price here than in the US (about Rs.8.5 lakh), was justified because of the brand lineage.
Besides, the Indian price comes with 110% import duties, the firm said.
“India is not a bread-and-butter market for them. It’s a virgin territory where they don’t have threat from Japanese players, like in the US,” said Rathore. “So they are here to build their brand and they will not compromise on pricing.”
Harley Davidson opened a complete knockdown kit (CKD) assembly facility in India in January 2011 that puts together motorcycles from US-supplied kits. The firm is “highly focused to ramp-up the production of our CKD operations in India as it allows us to improve our market responsiveness and production flexibility while reducing the tariff burden, which we expect will drive growth over time by making our motorcycles more accessible to India’s customers,” Prakash said.
Rathore said the challenge for Harley in India will be to get customers to hold on to the bikes and, at the same time, upgrade customers from lower biking segments to its motorcycles. “Their brand is established. They have 11 dealers, which is decent. They need to move to tier-II cities but at the same time larger cities like Delhi-NCR (national capital region) need more showrooms,” he said. “Besides, bigger challenge will be to retain its own customers as initially people bought its bikes lured by the brand but Harley are also available in pre-owned market. That means some of the customers are quickly selling them off. That remains to be a larger issue to be addressed.”