Introduction to Harley Davidson's Exit from the Indian Market

Harley Davidson’s Withdrawal Strategy

Despite not fully withdrawing from the Indian market, Harley Davidson significantly scaled down its operations. The company now partners with Hero MotoCorp, a leading motorcycle manufacturer in India, to import and sell Harley Davidson bikes. However, their presence remains limited, with showrooms and bike sales still operated by Hero.

Harley Davidson initially had aggressive expansion plans, yet these are no longer being pursued. This shift in strategy underscores the challenges the company faced in the Indian market.

Reasons for Harley Davidson's Failure in the Indian Market

No Full-Scale Manufacturing

Challenges Due to Manufacturing

One of the primary reasons for Harley Davidson's failure in the Indian market is the lack of a proper manufacturing setup. With heavy excise duties on exported products, the company faced additional costs, making it nearly impossible to compete effectively in a price-sensitive market like India.

To reduce these charges, Harley could have established a low-cost factory in India. This move would have helped to offset the import costs and made the products more affordable for Indian consumers.

Wrong Market Targeting

Price and Market Affordability

India's vast motorcycle market is not only large but also price-driven. Despite the huge potential, Harley Davidson struggled due to its products being too expensive for the average Indian consumer. Starting at 550,000 rupees, the cost of a Harley was significantly higher than other popular brands like Royal Enfield, which start at around 550,000 rupees as well.

Moreover, the maintenance costs for Harley bikes were excessively high, making it less attractive for customers. By contrast, the price of owning multiple Royal Enfields surpassed the cost of one Harley.

Improper Distribution Network

Limited Dealership Options

Harley Davidson's distribution network was not well-suited to the Indian market. The company mandated exclusive Harley centers, which limited the freedom and profitability for distributors. In comparison, brands like Bajaj and Yamaha allowed distributors to sell all their motorcycles in one showroom.

Harley only had 35 dealerships across the country, while BMW had more than 100. The high cost of opening a Harley dealership (3-4 crores) further hindered their ability to provide dealers with the necessary support and freedom.

Lack of Focus on Tier 2 and 3 Cities

Strategic Market Miss

Luxury vehicle makers like Mercedes, Audi, BMW, and Volvo have significantly expanded into Tier 2 and Tier 3 cities, leading to double-digit growth. In contrast, Harley Davidson concentrated on Tier 1 cities and overlooked the potential in Tier 2 and 3 markets, resulting in missed opportunities and financial strain.

Poor Service and Support

Challenges in Customer Satisfaction

This lack of focus was exacerbated by poor service and support. Parts for Harley bikes came from the United States, leading to delays of 1-2 months. This inefficiency made the buying and maintenance process inconvenient for customers and hindered the brand's reputation.

If Harley had improved its service infrastructure, it could have made the customer experience more convenient and appealing. Waiting for months for parts and support is not ideal and ultimately harmed the brand's image.

Conclusion

The failure of Harley Davidson in the Indian market can be attributed to a combination of manufacturing, market targeting, distribution, market focus, and service inefficiencies. By addressing these issues, they could have better positioned themselves to succeed in the competitive Indian motorcycle market.

Through our detailed analysis, we hope to provide valuable insights and lessons for businesses entering or operating in the Indian market.