Being faced with a continuously reducing market share and demand in its home market, Harley Davidson, the legendary American motorcycle developer and manufacturer, is seeking to venture into some of the largest motorcycle markets of the world in Asia – visually into India, China, Vietnam, and Indonesia, in order to reverse it fortunes.
The opportunities for Harley Davidson of offsetting the shrinking demand for kits bikes in its home market of the United States and for growth in its overseas customer base is immense. However achieving that would not be an easy task for the once top bike seller of the US because all of the markets have multiple strong players who have been entrenched in the markets for years. To complicate things further, these competitors also offer bikes at much lower prices compared to those of the lowest that Harley has so far been able to reach.
The opportunities for Harley in those market could however outweigh the potential competition – say for example in the Indian market which is the Indian market which is the largest market for motorcycle in eth world – larger than even the United States. At 1.3 billion people, the population of the market is more than four times that of the US and its economic growth in recent years has driven the success of the Indian owned heavy bike models from Royal Enfield.
Originally bearing a British heritage, this Indian motorcycle company has a long and illustrious history. The company has been manufacturing bikes for more than a century just like Harley. Currently, it is the largest manufacturer of heavyweight motorcycles in India as well as in the world – much ahead of Harley Davidson in terms of units produced.
Jinesh Gandhi, an analyst for Motilal Oswal in Mumbai said that there is however plenty of prestige among Indian bikers for Harley Davidson. He however said that for 95 per cent of Indian consumers, the prices of the Harley bikes are simply out of reach.
“Harley-Davidson needs to launch products affordable for India and other emerging markets, like many of their peers (BMW, Triumph, etc.) are doing,” Gandhi said. “They can bring down the cost by lowering content and making India a manufacturing hub for the global market.”
This has created a difficult position or Harley Davidson. While it appears a natural and logical strategy for the company to focus on robust emerging economies for growth of its business and in ensuring a better future for the iconic brand, analysts mentioned two impediments on that path.
“Harley has some of the highest motorcycle margins in the world,” said Raymond James analyst Joe Altobello. “That is the good news. And that is also the bad news. There is only one way to go.”
The focus and growth of the company into these emerging and robust but low priced markets could lead to an increase in the volume of bikes it sells but it could also result in the company achieving a lower margin for each unit it sells.
“The question is how much degradation are they willing to take?” he said.
(Adapted from CNBC.com)