Harley-Davidson:
Market Entry Strategies in India
Global Strategic Management
Prepared By:
Aanal Prajapati
Amit Parmar
Harsh Jani
Payal Popat
Indian Motorcycle Industry
Motorcycle is the major contributor to the automobile sector of the
India.
There are wide growth opportunities in future due to increase in
disposable income.
Advanced technology, low maintenance cost, and ability to perform
well on Indian roads are the major growth drivers for the industry.
Overall economic development is another reason for the increase in
the demand for motorcycles in India.
There are variety of motorcycle brands available in India.
Major players operating in India are HONDA, SUZUKI,
KAWASAKI, YAMAHA, DAELIM, LML, HERO, KINETIC,
TVS, BAJAJ etc. who have adopted different market entry strategies
to enter in India.
Major demand among Indian consumers is for 100cc (light weight)
bikes.
The factors which influence consumer buying decision :
1. Product quality
2. Performance & design
3. after sales services
4. Brand image
5. Cost
Current scenario suggests that demand for higher engine capacity
bike is increasing in India. The current players in market are making
suitable changes to meet the demand.
Harley-Davidson in India : Market Entry
Considering growth opportunities for high engine capacity bikes,
HD was eager to enter Indian market since 2005.
Due to higher import duties and stringent emission norms, H-D is
struggling to enter in Indian market.
In addition, there is a trade dispute between India and US
government related to the ban imposed on Indian mangoes.
Apart from this, there were no emission guidelines for motorcycle
with engine capacity above 500cc.
In India H-D is targeting the youth with higher disposable income.
In April 2007, a deal was struck between US and India which
mutually benefitted both countries.
According to the emission guidelines India has agreed to apply
Euro-3 norms for large bikes.
Different Entry Strategies adopted by Foreign Players
Most of the foreign motorcycle companies entered in India either
through technical collaboration and joint venture.
Suzuki and Honda adopted licensing and established subsidiaries
in India.
Royal Enfield from England entered into Indian market by
establishing an assembly unit.
They import parts from England and assemble them in India as
duties payable on parts is less compared to completely built units.
The German large bike manufacturer, BMW entered into India
through joint venture with Hero group in 1997.
But it failed in India due to high price. Despite reducing price by
more than 50%, sales of BMW bikes did not increase and so it had
to terminate its venture in India.
Feasible Entry Strategies for Harley-Davidson
Vice President of H-D, Timothy K Hoelter has announced that
whenever they enter Indian market it will be through the sourcing
route.
H-D buyers prefer an all-American brand and bikes produced in US.
The Feasible Market entry strategy for HD in India is through import
of CKD and then assemble in India.
Import CBUs as price does not matter for niche customer. Thus
Dealership is one of the best entry strategy for HD.
Own Subsidiary is not a viable option for the following reasons
Large Capex, Sales Volume very low/niche,
Import of Technical Expertise, Time consuming for ROI.
Product Modification, After sales services and Accessories
availability should be the main things to concern.
As it is a symbol of Rugged Individualism, Independence, Logos,
HOGs and their Ride For Fun should be focussed and thus the
market segmentation should be done according to that.
