The Harley Davidson ‘Mango for Bike’ deal turns rotten

‘Mango-for-bike’ deal turns rotten. Harley Davidson entered the Indian market because of a swap deal in 2007. The noise it made during its entry is overtaken by silence during its likely exit. Harley Davidson and the ‘aams’ of India – In 1989, some consignments of rich and juicy mangoes to the US were infected with fruit flies. Consequently, a ban was imposed by the US on the import of the ‘King of Fruits’.

Back then, India’s import policy was stringent. GOI levied 60% import duty with an additional 30% local tax for luxury items. This kept US manufacturers’ plans to enter India at bay. In a swap deal, permission was granted for the iconic bike maker to enter Indian markets. In exchange, the then US President George Bush revived the import of mangoes into the US.
In 2010, Harley Davidson entered the Indian subcontinent via the CBU route. After 2 years, it commenced the assembly of motorcycles in the CKD unit in Haryana.

In Q1 FY14 Harley manufactured the first-ever motorbike – ‘Harley Davidson Street 750’ in India. But its ride throughout has not been a smooth one.

What went wrong? The pandemic caused turmoil in all sectors of the economy. Milwaukee-based Harley Davidson hit rock bottom.
The American brand’s popularity was already declining among Indians. The current scenario only accelerated the shrinkage in its operations.

The need of the hour was restructuring:

• Tweak product portfolio by 30%
• Exist in 50 odd profitable markets. India is likely to face the heat of the situation. Position of Harley Davidson in India:
• Cumulative 10 years sales: 30,000 units
• Sales (FY20): 2470 units
• Domestic sales plunged by 87%
• Exports dwindled by 40%. The iconic bike maker shows no signs of revival.

Why is the exit door near?
One of the biggest two-wheeler markets in the world is in India. Over 17M two-wheelers were sold in FY20! Demand for easy to maintain & cheap to run motorcycles is rising. 90% of consumers opt for mopeds, motorcycles, and scooters. Harley Davidson receives its first blow here. It specializes in superior bikes with large engine capacity.

Harley’s most affordable bike is priced Rs 470,000, out of the reach of most Indians. The delay in bringing economical bikes to emerging markets like India also proved detrimental to its existence. While Triumph motorcycles, BMW, and KTM tailored their portfolio, Harley Davidson maintained a small niche in the segment.

Enfield leveraged with the entry of Harley Davidson. The new entrant was hyped but fizzled out soon. Royal Enfield didn’t sit silent. It launched newer models to compete with the famous Harley. Enfield’s Himalayan off-roader and Interceptor twins made a loud noise, deafening the American bike major.

Harley’s bikes were found to be unsuitable for Indian terrain. Frequent malfunctioning, faulty brakes and burnt clutch plates called for repeated service. This burnt a hole in the rider’s pocket. A hassle-free ownership was expected for a bike priced above Rs 10,00,000. But customers were in for a high maintenance white elephant!

The mango-for-bike deal has not gone down well with the target audience.
The slowdown of Harley’s Indian operations is whipping up Triumph and Enfield. They are all set to step on the gas and extend their share in the premium segment.

Is Harley’s fate in Indian markets sealed for good?