Harley Davidson's Partial Victory in India

Just two days after I posted on the specter of Harley Davidson (HOG) entering India, the Indian government answers. While HOG has requested a reduction of the current tariffs to 10% and the ability to establish dealerships in the country, they got 1/2 of what they wanted.

After all, the bike is going to be imported by rich people. Let them pay duty,” an unnamed official said. “This means, instead of delivering its bikes to individual buyer, the company can appoint dealers in India,” the official said.

This is good news, not "great" but still very good. Great would have been getting both. HOG now has the ability to establish a dealer network in the country and while it may not sell tens of thousands of bikes there, it will begin to establish a presence and the brand. Due to the tariffs it will be a luxury item but, given the income disparity in the region, it is more than possible any drag on sales will be minimal as the vast majority of the population would not have been able to afford the bikes anyway.

Given the two choices, this one must be considered the better result. Establishing a network in the country is far better long term. Once there they can continue to lobby for tariff reductions and having the bikes in showrooms will boost sales to a middle class that otherwise may not have considered one.

Disclosure: Long HOG.

Comments

[Carl leason:]

While the Indian Gov. may allow HD to have dealers,...they don't have them yet ! India has been extremely protective of it's manufacturing.
Having worked for a large Manufacturer for over 25 years, I know that India is going to be very demamding, like the tires for the bikes will have to be made in India, the headlights, the handle bars, the brakes, the batteries,,..shall I go on ?
Perhaps we should learn from them ! LC

2008 Feb 28 11:19 AM