In a strategic move to overcome high customs duties that hinder sales of its imported motorcycles in India, Harley-Davidson has joined hands with Hero MotoCorp to introduce locally-produced premium models in the country. The Chairman, President, and CEO of Harley-Davidson, Jochen Zeitz, emphasised the advantages of the partnership, which allows the American cult bike-maker to explore "volume opportunities" and introduce competitive products in the Indian market.
The 50 percent customs duty imposed by India on fully built-up imported bikes prompted Harley-Davidson to seek a collaboration with Hero MotoCorp, following its decision to exit its manufacturing operations in the country three years ago. Zeitz highlighted the benefits of Hero's manufacturing capabilities and willingness to invest in building the Harley-Davidson brand in India. He regarded the partnership as a smart decision, even though the high customs duty remains a downside.
"And (there is) a lot of upside with much greater manufacturing capability that Hero brings in and the willingness to invest into the business, to really build us up as a brand. So, I would say it is the right decision," he told PTI.
The recent introduction of their first co-developed product in India, the Harley-Davidson X440, marked a significant milestone for the partnership. Manufactured by Hero MotoCorp at its Neemrana-based plant, the X440 offers customers an opportunity to experience the Harley brand without being subject to tariffs. With a starting price of Rs 2.29 lakh, the motorcycle aims to capture the attention of Indian riders seeking a premium biking experience.
Harley-Davidson had previously announced the discontinuation of sales and manufacturing operations in India in September 2020, following the closure of its assembly plant in Bawal, Haryana. However, in October 2020, the company formed a partnership with Hero MotoCorp to cater to the Indian market. Under the agreement, Hero MotoCorp would develop and sell a range of premium motorcycles under the Harley-Davidson brand while also providing service and parts support for Harley bikes.
When questioned about the possibility of the iconic brand making a comeback in the Indian market if the tariff issue is resolved in the future, Zeitz deferred the decision to political leadership. He questioned the rationale behind imposing high tariffs on bikes imported into India compared to bikes exported to the United States. Zeitz also expressed the company's current focus on making the X440 successful in India before considering additional models. He said that Harley's core segment is 975 plus cc bikes.
Regarding Harley-Davidson's plans for utilising India as a manufacturing base for export markets, Zeitz indicated that the company had previously manufactured its 750cc motorcycles in India for international markets. Although not ruling out the potential for exports, Zeitz reiterated the importance of ensuring the success of the X440 in India as a stepping stone to future endeavors.
"But right now, the focus is really to make sure that the product is successful in India - one important cornerstone is to get X440 to be a success in India, from there we can build and come up with other ideas," Zeitz said.
Harley-Davidson X440
Zeitz also mentioned the possibility of introducing Harley Originals, the company's apparel range, in India. Acknowledging the potential in the segment, he expressed interest in exploring such opportunities in the future. Additionally, Zeitz recognized the growing demand for premium motorcycles in the Indian market, particularly in the premium mid-segment. However, he noted that the higher price, compounded by import duties, limited the sales potential of larger bikes in India, despite the country's emerging middle class and their aspirations for luxury products.
In terms of the company's global strategy, Zeitz emphasised focusing on core segments that provide a return on investment and driving profitability. By streamlining its product complexity and increasing profitability, Harley-Davidson aims to prioritize segments where the brand's unique appeal and profitability align. Zeitz identified China and India as markets with significant growth potential and underscored the importance of establishing a presence in these populous countries for long-term growth.
While Zeitz acknowledged the inevitability of an electric Harley-Davidson in the future, he stated that it is not a near-term plan. Recognising varying rates of electrification adoption across markets, he highlighted the company's aspirations to become a leader in electrification as a holding company.
