Posted on Tuesday, November 02, 2010 - 09:02 pm:

---

quote:

Global automobile companies have lined up Indian roads taking advantage of the economic prosperity of the country. Harley-Davidson, the most iconic US motorcycle manufacturer is a prospective entrant into the Indian market. Earlier, Harley-Davidson bikes were restrained from entering India due to stringent emission norms and high import duties. The emission norms were relaxed as part of a trade agreement between the US and India on April 13th 2007. However, the large bikes are haunted by high import tariffs in India that double the original price of the bikes. Further Harley-Davidson bikes also face competition from its Japanese counterparts who already have businesses in India. Although the Indian government offers different market entry options for foreign firms, Harley-Davidson has announced that it will enter India only through the import route. How and when Harley-Davidson will enter India is to be seen.

---

---

quote:

Harley-Davidson uses mangoes to finally ride into India

Iconic US motorcycle manufacturer Harley-Davidson is finally riding, none too easily, into India ending almost five years of vacillation where even mango exports to the US were used as sweeteners to the deal.

The reason for this five-year delay is India’s protectionist strategy of charging 60 per cent import duty plus 30 per cent local taxes for luxury vehicles such as Harleys. With other sundries, this more than doubles the price of a high-quality product and Harley-Davidson has effectively failed to get this tariff removed, even by using highly imaginative methods.

In 2007, US Trade Representative Susan Schwab met her Indian counterpart Kamal Nath who agreed to give access to Harley-Davidson to the Indian market in exchange for the export of Indian mangoes to the US, but still refused to back down on import duty.

Even so, the company has now appointed five dealers in Delhi, Mumbai, Bangalore, Chandigarh and Hyderabad, and is taking orders later this month for delivery in June. Total import duties will be 110 per cent of the cost price as the bikes will arrive as Completely Built Units (CBUs) and the company seems confident there is a market here for its bikes.

This is because the Indian motorbike market is in utter overdrive and is driven by Harley’s superbike competitors Suzuki and Hero Honda. India represents the world’s second-largest motorcycle market behind China, and motorcycle sales in India for 2009 reached 8.78 million units (up 19 per cent compared to 2008).

Harley-Davidson will be expecting top Bollywood stars to snap up its full range of bikes including the Fat Boy and the Electra Glide, the latter even has a reverse gear, that with import duty will cost in the region of $80,000.

But there may be a different story to this deal. Once barriers to market such as high import duties are overcome, that’s where the real bargaining starts… and this time it won’t be mangoes.

To this point, India’s most famous motorcycle brand has been the Royal Enfield, an absolutely beautiful design classic that has seen its market share dwindle as younger and affluent bikers prefer more sporty models such as those continually advertised on TV by Suzuki and Hero Honda, the latter being a company that is split between India’s Hero and Japan’s Honda.

As the initial batch of Harleys that are coming to India as the aforesaid CBUs and have attracted such onerous import duties, the answer may lie in the delightfully named Complete Knock Down (CKD) policy, which means Harley may decide to import the par by Royal Enfield, bringing the import duty down to 60 per cent instead of 110 per cent.

For Royal Enfield this is a business opportunity it may not be able to turn down, but for Royal Enfield enthusiasts also known as Enfieldwallahs this may be a hard turn to bank, but it may be inevitable for everybody involved. An Enfield Harley just doesn’t sound right though, or perhaps they should just call it the Harley Mango.

---