Harley-Davidson Coming to India to Test a New Market

By Rama Lakshmi
Washington Post Foreign Service
Monday, August 31, 2009

NEW DELHI, Aug. 30 -- Twenty-five Harley-Davidsons rumbled through the heart of the rain-drenched Indian capital Sunday, aggressively announcing the arrival of the legendary U.S. company in one of the world's largest motorcycle markets.

The American motorcycle's long-awaited journey to India was enabled by what has come to be called the "mango-motorcycle swap" in 2007 trade negotiations, when the United States decided to allow Indian mangoes to be imported in return for the export of Harley-Davidsons.

As the engines settled into idle, onlookers milled around the black-jacketed bikers and their machines, which were set against the backdrop of India Gate, a magnificent, British-built arch commemorating Indian soldiers who died in World War I.

"There is now a confluence of factors in India that is favorable for us," said Matthew Levatich, president of Harley-Davidson's main motorcycle division. "The rise of middle-class consumption, increased government investment in new highways and the recent economic boom have ushered in a perfect time for the market for leisure motorcycle riding."

Harley-Davidson is now looking for Indian dealers so it can roll out its first bikes in the first half of 2010. The Milwaukee-based company does not plan to manufacture or assemble any of the motorcycle parts in India, instead importing the bikes, accessories and riding gear from the United States. Levatich said that if the brand considers manufacturing outside the United States at a later stage, it would be only to meet local demand, and not to sell the bikes back into the United States. Some assembling facilities exist in Indonesia, Singapore and Brazil.

Levatich said that Harley-Davidson motorcycle sales are doing better in the non-U.S. market, even though the domestic market still accounts for about 70 percent of global retail sales.

Some observers in India said the densely packed country of more than 1 billion people does not easily offer the open roads that Harley riders dream of. The creaking, potholed roads, where vehicles often jostle for space in cheek-to-cheek traffic, will be perhaps the biggest obstacle for the company, though India recently announced an ambitious plan to add about 12 miles of new highway every day.

The managing director of the company in India, Anoop Prakash, said that the country is a natural fit for Harley.

"There is a great craving for the authentic Harley-Davidson cruising experience in India," he said.

India is the second-largest motorcycle market in the world, dominated by small, inexpensive utility bikes that cost roughly $1,200 and are used by those who cannot afford to buy a car. A new Indian car called the Nano was launched earlier this year at a price of $2,500, aiming to convert millions of users of two-wheeled vehicles to first-generation car buyers.

The Harley, however, will target affluent Indians. The company will sell about 12 models in India at a starting price of about $14,000, twice the American starting price.

"A Harley-Davidson is an image more than a motorcycle. Those who want the Harley experience will not complain about potholes here and there," said Y. Bijoy Kumar, editor of Business Standard Motoring, a monthly magazine in India. "Harley's riders enjoy camaraderie and experience. Bad roads are part of that experience."

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