CEO of Harley-Davidson, Jochen Zeitz, stated they plan to utilize their Indian manufacturing facilities for international sales. The American automaker collaborated with Hero MotoCorp in India to launch its affordable bike. Zeitz mentioned that their current focus is increasing sales of their new bike, X440.
Harley-Davidson intends to manufacture products in India and export them to other countries. In an interview with The Economic Times, Zeitz expressed the company’s strategy of utilizing Indian manufacturing facilities for global sales.
According to Zeitz, the company may consider manufacturing its 750cc bikes for international markets in India. The focus is ensuring the product’s success in India before expanding further. In 2020, Harley-Davidson ceased manufacturing vehicles in India but retained an agreement with Hero for sales.
In collaboration with Hero, Harley introduced the X440 bike in India, priced at Rs 2.3 lakh. Hero MotoCorp will manufacture the X440 bikes for Harley-Davidson in India.
Additionally, the company signed an agreement with Hero to continue selling imported products in India, as the CEO, Zeitz, emphasised. To compete against Royal Enfield in the premium bike segment, Harley-Davidson has transitioned from its previous all-in-one approach to a new strategy.
Zeitz states this shift is crucial in markets with distinctive customer perspectives and import duty concerns, signifying a departure from their previous methods.
Zeitz wanted to introduce large motorcycles into the market while avoiding high tariffs. The aim is to increase the accessibility of bikes to the Indian population. India imposes a significant import duty of 50-75% on imported motorcycles.
Launch of the new X440
Harley-Davidson partnered with Hero MotoCorp to introduce the X440, its most affordable motorcycle, in India. The X440, co-developed with Hero, has a starting price of Rs 2,29,000 (ex-showroom).
It has a 440cc engine and notable features like LED lighting, disc brakes, and dual-channel ABS. The X440 motorcycle was unveiled in May and has now been launched nationwide.
The company aims to provide a budget-friendly option to customers through its partnership with Hero MotoCorp.
The Downfall of The American Two-Wheeler Giant
In 2020, Harley-Davidson ceased manufacturing operations in India amidst the pandemic. However, the company continued its partnership with Hero MotoCorp for sales and distribution in the country.
Despite facing low sales and high import tariffs in India, the American motorcycle giant decided to collaborate with Hero MotoCorp to overcome these challenges.
In 2019, former US President Donald Trump criticized the 50 per cent tariffs imposed on Harley Davidson motorcycles in India. Instead of local manufacturing operations, the company relied on fully built motorcycle imports.
However, the jointly designed and developed X440 will be the first Harley motorcycle exempt from tariffs as Hero MotoCorp takes charge of manufacturing in India. Zeitz voiced his disapproval of tariffs and expressed a positive outlook on the partnership with Hero MotoCorp.
The reason behind Harley-Davidson’s Downfall
Harley-Davidson sold fewer than 30,000 bikes in India over the past decade. The mismatch between Harley’s product portfolio and Indian requirements contributed to low sales.
Harley’s expertise lies in producing expensive, large-capacity cruisers and tourers; however, these did not align with Indian market demands.
Furthermore, the entry-level Street 750 and Street Rod models offered lower refinement and performance than competitors. In addition, the high import duty rates on larger Harleys, which were imported as completely built units (CBUs), further complicated the situation. Harley struggled to establish a vendor base and achieve indigenization levels in India.
The Indian motorcycle market predominantly favours high-volume, low-margin commuter bikes, while Harley’s limited product range hindered its success in the 250-900cc segment. Additionally, the preference for sports bikes over cruisers among Indian buyers also impacted Harley’s market position.
Moreover, certain European manufacturers have collaborated with Indian partners to navigate the challenging market. Ultimately, this situation proved unfortunate for Harley and its fans, owners, enthusiasts, and dealers in India.
Hero-Harley Deal Can Re-establish the Brand
The Hero-Harley deal is a ray of hope for American Manufacturers. There are indications of a potential agreement between Harley and Hero MotoCorp for importing and local assembly.
Such a deal could lead to reduced operating costs for Harley while still offering Indian buyers access to their bikes. The fate of existing Harley dealers and the integration with the Hero regime remains uncertain.