When I say AI, I don’t mean Artificial Intelligence; I refer to the ‘America and India’ T-shirt US President Joe Biden gifted Indian Prime Minister Narendra Modi during his recent visit to the US. But if you were to go out and ask the average American about a great example of India-US collaboration, you’ll probably hear about Lays’ ‘India’s Magic Masala’ flavour chips that have become hugely popular.
Yet, on 3 July, a day before Americans set off fireworks to celebrate their independence from British rule, another example of Indian-American collaboration was unveiled at Kukas, a township just outside Rajasthan’s capital city of Jaipur. This was the new Harley-Davidson X440 motorcycle, developed in collaboration with (and largely by) Hero MotoCorp, India’s biggest two-wheeler company. There were a lot of happy faces at Hero’s Centre for Innovation and Technology (CIT), where the India-made X440 was unveiled. Not only is this motorcycle the first single-cylinder Harley-Davidson bike to come out in almost five decades, it also marks Hero’s entry into the lucrative middleweight motorcycle segment, currently dominated by Royal Enfield.
Hero has posted mediocre sales numbers over the past few months and growth in the overall two-wheeler market has also been tepid. But the middleweight segment, considered ‘premium’ in India, has been growing fast. In the previous financial year, while the overall motorcycle market grew by 15 per cent, and is still off its peaks from 2017-18, the premium segment has been exploding, as highlighted by Royal Enfield’s immense success. In fact, as per a press release sent to me, the Chennai-based manufacturer sold a record 207,171 motorcycles in the April-June quarter of the current financial year, a growth of 31 per cent over the same period last year.
Also read: Honda has had an underwhelming run in India. Its newest SUV Elevate hopes to change that
What this collaboration means
For Niranjan Gupta, the newly appointed Chief Executive Officer of Hero MotoCorp, the rationale behind entering the segment is obvious. “Not only is it the fastest growing segment of the market, growing 30 per cent last year, it is also one of the most profitable segments.” Hero, which took over sales for Harley-Davidson back in 2019 when the American motorcycle company shut its manufacturing and marketing operations in India as part of a corporate restructuring, will take the opportunity to sell the X440 not just at the few Harley-Davidson showrooms in India but at over 100 premium Hero showrooms across the country. All this before the launch of a Hero-branded motorcycle with the same 26.5 horsepower engine that will be launched in early 2024 but with a few tweaks to the styling, suspension and ride dynamics.
But can the Harley-Davidson X440 help both Hero MotoCorp and Harley-Davidson? As Pawan Munjal, Executive Chairman, Hero MotoCorp, reminds me, import duties surrounding Harley-Davidson had briefly (and adversely) impacted India-US trade relations during the initial part of former US President Donald Trump’s tenure – leading to a response from New Delhi that restricted export of Alphonso mangos to the US. Hero might need to enter this segment more urgently than electric two-wheelers, as the company’s revenues have grown at a compounded annual growth rate (CAGR) of just 1 per cent over the past few years, and net profits have declined by a CAGR of -5.5 per cent in the same period.
But Hero MotoCorp is a stalwart in the Indian two-wheeler industry, and despite tepid numbers in the past, it is confident about the future. That, coupled with the launch of the X440, has seen the company’s stock rise on the exchanges (though underperforming in the overall market). Things at Harley-Davidson are a bit worse; sales have declined sharply for the past few years and fell to just 178,251 units in 2022, down from 242,788 in 2017. The company’s ‘Rewire’ strategy, centering around its ‘Livewire’ electric motorcycle, has been slow on the uptake, with the $30,000 (approximately Rs 25 lakh) electric motorcycle seeing very limited offtake. While Jochem Zeitz, CEO, Harley Davidson, said that the X440 would be exported from India to global markets, Munjal and he were firm that domestic demand in India was the priority.
With an aggressive price starting at Rs 2.29 lakh and going up to 2.69 lakh for the top model, Hero and Harley hope the market will reward them. Yet, taking on the dominance of Royal Enfield is no easy task. Hero’s former partner Honda has already discovered that its CB350 H’ness has barely made a dent in the sales of Royal Enfield’s iconic 350s.
Royal Enfield itself is moving both into higher and lower segments simultaneously, making its bikes more affordable with products like the Hunter 350, which starts at under Rs 1.5 lakh. It has also succeeded with the Interceptor 650 in the higher segment, which starts at above Rs 3 lakh. At the same time, another competitor, Britain’s Triumph – where Pune-based Bajaj is a strategic and technical investor – is also launching its Speed 400 and Scambler 400 motorcycles right now.
The others want to emulate the success of the partnership between German bikemaker BMW Motorrad and Chennai-based TVS. BMW and TVS jointly developed a 310cc product that is sold under both badges, all made in Tamil Nadu’s Hosur. Both companies have seen their sales grow over the past few years. And in addition, all of these partnerships highlight one more critical aspect: when it comes to cars, China may be the ‘it’ market, but motorcycles are all about India, baby!
@kushanmitra is an automotive journalist based in New Delhi. Views are personal.
(Edited by Zoya Bhatti)