Q: What’s with this aggressive pricing of Rs 4 lakh?
Prakash: First, the Street platform is a big launch for Harley Davidson globally. It is the first new platform in the company in 14 years with an all new powertrain, all new chassis. It was developed with customer inputs, about 3, 000 interviews in 10 countries; 500 of those interviews were in India—in Delhi, Mumbai and Bangalore. The customers wanted something that could beat the challenges of everyday riding –higher ground clearance, good suspension, attitude; that’s why we have the dark custom styling, blacked-out exhausts and forward leaning. So it’s a combination, which is a true Harley-Davidson.
One of the other things they talked about was accessibility. They said they want something that they can buy today, not something that we have to save up for in the future. The Street 750 was developed with all those things in mind. The other thing is that we built the Street 750 both in the US and in India, which allows us to price it at an almost similar cost. It is about $7,500. That’s the benefit of building something at two places.
Q: Did it involve doing something that Harley hasn’t done before in terms of component sourcing and strategy?
Prakash: It is just not about the price. One of the elements of accessibility is making the vehicle easy to ride and I think we addressed that by agility and making the vehicle more responsive. Then, it is about making the product at the right place, so that you can get it to a customer when they want it. The last bit is making it more affordable and we can achieve that by our sourcing strategy. When you localise some of that, you get a better price. If you do some of that in India, you can price it as competitively as we have done. And you know from our CKD [completely knocked down or a fully dissembled item] experience, we have passed on all of those savings to our customers. So we went from Rs 6.95 lakh to Rs 5.5 lakh and now to Rs 4 lakh.
Q: How have the volumes been for Harley-Davidson in India?
Prakash: What we have disclosed is volume till date [July 2010] and till now, we have about 4,000 vehicles on the road. So, we have grown at a steady double digit growth rate. And, even in this automotive slump, we expect that to continue. I think one of the reasons is that people find it very difficult to cut back on their passions.
Q: How are your expectations on growth in this market?
Prakash: I can see a similar kind of growth that we have seen in the premium car market. When they started, there were just one or two and now the market has exploded. I think that’s the kind of trend we are seeing in premium motorcycling also. New entrants are coming in and existing players are moving upstream. We are going to see many more choices for the customers.
Q: Marc, how’s the premium motorcycle segment doing in the Asia-Pacific region?
McAllister: Asia-Pac can be broken into mature and emerging markets. There is this dichotomy but what we are seeing is a clear growth across emerging markets. You can see the response we have had in India, we have had good growth in China and South East Asia; we are finding passion in people for our brands all over the region.
Q: Anoop, is Harley’s business profitable right now?
Prakash: Yes. I mean we wouldn’t keep investing without that. We are heading absolutely in the right direction on all fronts.