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According to Siam data, Harley-Davidson, Triumph Motorcycles and India Kawasaki Motors saw a combined sales decline by 21.7% to just 5,689 units in FY20 from highest 7,266 units reported in FY16. Bloomberg
According to Siam data, Harley-Davidson, Triumph Motorcycles and India Kawasaki Motors saw a combined sales decline by 21.7% to just 5,689 units in FY20 from highest 7,266 units reported in FY16. Bloomberg

Superbike firms hit a rough patch

  • Poor sales crimp ability to improve local manufacturing and bring down prices

Harley-Davidson’s exit from India has shone the light on global motorcycle makers sputtering in the country amid steep prices, high taxes and the lack of suitable models, forcing them to bow out or tie-up with local manufacturers.

Ending 11 years of operations in the country, Harley Davidson India on 25 September shuttered its Haryana plant and shrank its sales operations. The American company may continue to import and sell in India through a distributor. This is similar to the big bike distribution and sales strategy followed by Ducati, Triumph Motorcycles and BMW Motorrad, who do so through their local units.

According to an executive at a parts supplier for Harley India, global motorcycle makers that have entered India with much fanfare have found the going tough.

“Limited volumes also constrained their ability to negotiate with suppliers. Also, in India, most of the affluent population go for cheaper brands in the 350-cc range. Hence, none of these brands has major plans for India with their existing portfolio," this person said on condition of anonymity.

Harley has been importing kits and assembling some of its models in India—which entails high import duties and taxes—except the Street 750 model which was fully made in India. Import duties on semi-knocked down (SKD) or completely built units (CBU) raise the final cost of the product, discouraging many buyers, given the weak purchasing power in India. Poor sales also crimp manufacturers’ ability to improve local manufacturing and bring down prices.

According to Siam data, Harley-Davidson, Triumph Motorcycles and India Kawasaki Motors saw a combined sales decline by 21.7% to just 5,689 units in FY20 from highest 7,266 units reported in FY16. Sales of motorcycles with 800cc and bigger engines peaked at 3,525 units in FY16. Domestic volumes in this category fell to 2,605 units in FY20.

Harley-Davidson has previously blamed India’s steep import duties, sometimes as high as 100%, for its poor show. The matter also attracted the attention of US President Donald Trump, who has demanded import duty concessions from India. Last year, the government slashed import duties on imported motorcycles by 50%.

Britain’s Triumph Motorcycles and Germany’s BMW have collaborated with local manufacturers like Bajaj Auto Ltd and TVS Motor Co. Ltd for making lighter bikes to gain some foothold in India, industry watchers said.

While big motorcycle makers have been under severe pressure amid mounting losses and declining sales, companies like US-based Indian Motorcycles and Ducati have been downsizing operations. Meanwhile, more established two-wheeler firms that also have product offerings in the superbike category such as Honda, Yamaha and Suzuki have been slow in launching premium bikes over the past few years.

“The thought process is to control costs and continue with a lean structure in India," said Bipul Chandra, managing director, Ducati India Pvt. Ltd.

Chandra of Ducati India, however, denied that the Italian brand is downsizing operations in India.

As part of the collaboration, Triumph’s distribution network and staff costs, will be taken over by Bajaj Auto under an arrangement similar with the ones with the manufacturers of KTM and Husqvarna brands of motorcycles in India.

Earlier in January, the two companies signed a non-equity joint venture agreement to make mid-capacity motorcycles (250cc-750cc) for India and global markets. Under the agreement, Triumph will leverage Bajaj Auto’s supply chain ecosystem and large-scale manufacturing of small bikes, bringing down its own cost of operations.

Indicating a tough ride for such vehicles in India, Royal Enfield, the largest manufacturer of middleweight motorcycles in India, reported an 18.4% decline in sales in FY20 as slower economic growth hit sales across the country.

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