Harley-Davidson, American-based motorcycle manufacturer is one of the world’s largest motorcycle manufacturer with an annual profit of more than 2000 million dollars. It is believed that ‘a ride on Harley-Davidson can make any weekend epic’ and when you ride it you feel free. The agenda was to sell an experience, not a product.
However, in 2019 they incurred a loss of 250 million dollars and 75 million dollars in 2020. Owing to its losses, the company has decided to shut down its operations due to incurring losses. Especially in a country like India, where sales declined by 50%.
The company has planned to shut its operations and halt the production operation unit in Haryana. The company will be in touch with their customers and will serve them according to their contract term. They are looking forward to change their business model in India and might collaborate with local motorcycle manufacturers like Bajaj, Hero, etc.
Harley said that the main reason for losing their customers was due to the increasing age of their customers and focused only on a particular part of the world. However, the major reason being their inability to innovate and the model of their bikes and adapting to the trends in the market.
India is one of the biggest markets for two-wheeler motorcycles, where over 17 million two-wheelers were sold in the last financial year. However, it is not a market for such big bikes like Harley-Davidson. Heavy and noisy bikes are not much preferred in a country like India. Indian mostly prefer a pocket friendly and easy to maintain vehicle. They own scooters, and motorcycles with less than 150cc which completely opposite of Harley-Davidson.
They could have survived in India if they had restructured the models of the motorcycles as per the demand of customers. It is difficult for foreign companies to exactly analyze the local dominating consumer behaviour. In such cases, companies collaborate with local businesses. For instance, KTM had a tie-up with Bajaj Auto, BMW partnered up with TVS. At the same time, the company’s sales went up in China by 41% as the had collaborated with a motor company in the country. But a major consequence of this strategy is that the exclusivity of the brand and product is lost.
Though the shutdown of production unit in Haryana, would lead its workers unemployed. In the pandemic, with 23.5% people were rendered unemployed, this would further add to the struggle.
India majorly holds a greater rural population than urban, roads are narrow with mud pits and potholes and constant traffic issues. In such topography, it is usually not suitable to ride a heavy and large bike. The people can handle a bike recurring malfunctions like brake failures or stones in the petrol tanks. Purchasing a 10-15 Lakh motorcycle comes along with a no inconvenience experience expectation.
The growing competition with Royal Enfield narrowed down the scope of Harley-Davidson. They offer bikes according to their consumer’s comfort. The bikes are light, easy to maintain and pocket friendly. When Harley Davidson arrived in India, people were excited for the same to boost the image of their bikes but ultimately bought the brand they preferred.
Whenever Harley-Davidson came up with a new model of motorcycle, Royal Enfield had a more conventional model. Harley never came up with a suitable motorcycle for India resulting in Enfield taking over the market.