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Harley-Davidson plots India sales drive
Financial Times, 28 August '09
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Harley-Davidson said on August 27th it planned to start selling its motorcycles in India next year, in a clear move to exploit the subcontinent's fast-growing market and mitigate losses suffered in the US.

India is the second-largest market for motorbikes and is dominated by small and inexpensive models - which cost on average less than Rs. 60,000 (US$ 1,227) - and are used as an alternative to cars.

India, where motorcycle sales have grown 15 per cent this year, could help lift Harley, which slashed its sales forecast for the year in July after having reported a sharp drop in its US and global sales due to the financial crisis.

"Given the rapid development of India's economy and physical infrastructure, this is exactly the right time to bring the world's greatest motorcycles to one of the world's largest motorcycling nations," said Matthew Levatich, Harley's president.

Analysts are sceptical about whether Harley's premium bikes, which have starting prices ranging from US$ 6,999 for a 883 model to US$ 25,299 for a Fat Bob in the US, will be able attract Indian bikers, given that the US group will have to add a 105 per cent duty on all its motorcycles.

"They can expect decent sales only if they price it competitively, say starting at Rs. 700,000," said Debsena Banerjee, an automotive analyst from Segment Y Automotive Intelligence, a Goa-based consultancy. "If not, then with people spending less in today's time, Harley might find it tough selling the desired number of bikes."

The other main challenge for Harley will be India's creaking roads and highway infrastructure. Although India's transport ministers Kamal Nath said this year that the government would spend about US$ 21 billion to overhaul the country's road network, it could take years before plans are implemented.

Harley, which has opened a subsidiary close to New Delhi and has begun looking for dealers in India's main cities, has not yet said which models will be on sale in the subcontinent and at what price.

The US group will also merchandise accessories and riding equipment throughout the country.

The company's main competitor would be India's Royal Enfield - a direct descendant of the famed British motorcycle maker - whose designs are little changed from the 1950s and whose bikes also enjoy a cult status among vintage bike aficionados.

Royal Enfield, based in the southern city of Chennai, India's automotive hub, has seen its business grow more than 20 per cent this year and plans to add four new dealers to the existing 149 in the country.

Yamaha, Honda, Ducati and Suzuki are the other main foreign competitors with which Harley will have to battle for market share.