Big motorcycle battle: Hero-Harley, Bajaj-Triumph and Honda are gearing to fight Royal Enfield; here's who can win

Live music. throbbing strobe lights. A room full of people of all ages, shapes, and sizes in Harley-Davidson gear. Everybody grooving to the music being belted out by a live band. And enjoying their drinks. You’d be excused if you mistook it for a bikers’ meet or a private concert.

But it was neither of those things. Instead, it was the launch of a new Harley-Davidson bike in India, which marks the coming together of India’s largest two-wheeler maker Hero MotoCorp and the iconic American bike brand. On display was a glimpse of the rugged bikers’ lifestyle that Harley-Davidson is known for, and hopes to market in India as well.

But the lifestyle that Harley-Hero seem to be counting on is not new. Starting with the first imports of Royal Enfield motorcycles in the 1950s for the Indian Army, the love Indian bike enthusiasts have for heavy bikes—that fall in the premium category—has only grown with time. And that love has birthed a new race in the bustling roads and highways of India, a race to upgrade to premium, heavy bikes. Consequently, two-wheeler makers are revving up to impress today’s discerning riders with new offerings. But first, a little background.

India’s two-wheeler market is largely dominated by entry-level (76-100cc) bikes at 51 per cent market share in FY23, and commuter (110-150cc) bikes at 30 per cent. The premium segment—that comprises bikes above 150cc—accounted for 18 per cent in the same period. But five years ago, premium bike sales accounted for just 14 per cent, while entry and commuter bikes accounted for 59 and 26 per cent, respectively. Further, of the 18 per cent premium bikes sold in India in FY23, close to 40 per cent were Royal Enfield bikes.

And this is what is enticing global motorcycle makers to enter the fast-growing premium bikes segment in India—in partnership with Indian companies—and challenge the dominance of Royal Enfield. And that is why there were two big-ticket launches in just one week in July. Hero launched the Harley-Davidson X440, while Bajaj unveiled the Speed 400 and Scrambler 400 X—developed in collaboration with the UK-based Triumph Motorcycles.

“This move will elevate the premium imagery for the Hero MotoCorp brand and help expand the mid-size motorcycle segment... Harley is the most established brand and player in premium motorcycles. It is the first time Harley is coming into this segment, with 440cc, in India,” said Pawan Munjal, Executive Chairman of Hero MotoCorp at the launch event held on July 4 at the company’s Centre of Innovation and Technology in Jaipur. “There are thousands of customers out there who would want to buy a Harley-Davidson, but it was so far out of their reach.”

Munjal is not off the mark. While heavy, premium bikes have always had a fan following in India, they had largely become confined to a few outdated models from Royal Enfield till the 2000s. And Harley and Triumph bikes were too expensive to attract a mass following. All that changed when Royal Enfield started updating its portfolio with new launches at attractive price points. It also made lifestyle the USP of Royal Enfield bikes.

Playing on this strategy has worked for the company. Today it is the largest premium bikes maker in the country. And that’s the reason Indian mass-market two-wheeler makers are forging partnerships with global motorcycle players to enter the premium segment. “It’s a high-margin product. The volumes in the 350cc-plus segments are not very significant. Entry level motorcycles are more or less 50 per cent of total motorcycle sales. And commuter is another 25-26 per cent. So only the remaining 20 per cent is the premium strata,” says Aditya Welekar, Senior Research Analyst at Axis Securities. Royal Enfield declined to participate in this story.

The Ride Ahead

Premium bikes offer higher margins per bike. But will brand value and an aspirational lifestyle be enough to help Indian players grab a slice of the pie? It’s not just these two aspects the players are relying on. The strategy is multi-pronged. For instance, when the Harley-Hero partnership was announced, Hero had said that it will also develop a bike under its own banner loosely based on the same platform. At the launch event, Munjal said the bike will be unveiled in Q4FY24. “Both Hero and Harley products will be different in character, features, sound, performance and body type, and will cater to different consumer bases. Hero has a knack of expanding the market, [and] reaching more customers,” Munjal said. “The market has been in continuous expansion and we are bringing a unique value proposition to the table.”

Further, the HD X440 is Harley’s most affordable bike in India, priced at Rs 2.29 lakh.

Then there’s Triumph, which launched its most affordable bikes—developed in partnership with Bajaj Auto—in India, in the same week. The Speed 400 was launched at Rs 2.33 lakh, and the Scrambler 400 X at an undisclosed price. “We are hopeful of [achieving] significant volumes,” said Rajiv Bajaj, MD of Bajaj Auto, at the launch. Bajaj and Triumph had started talking about it back in 2007. “These motorcycles are the smallest-capacity and most affordable ones by Triumph.”

While Bajaj is not new to the premium bikes segment (it sells premium bikes under the KTM brand, and its Dominar motorcycles), Sumeet Narang, President of Probiking Business (KTM and Triumph) at Bajaj Auto, says Triumph is going to be instrumental in the company’s premium segment play. “With all our brands, whether it is KTM or Triumph, we would be providing customers many alternative propositions. I wouldn’t call it a challenge [when it comes to Royal Enfield]. The way the market trends are moving, our products would be relevant.”

But experts say it will be difficult to beat Royal Enfield’s brand loyalty and leadership. “Although original equipment manufacturers are trying to transition to premium- and mid-size segments, Royal Enfield is the strongest brand there. Going forward, the competition will intensify for them, and this space is also becoming crowded,” says Welekar. While competition will definitely heat up, will brand value be enough to attract buyers and chip away at the dominance of Royal Enfield? Seems unlikely.

Yogesh Mathur, Director of Sales and Marketing at Honda Motorcycle & Scooter India (HMSI), says the company is gaining numbers in the premium motorcycle market in India with its strong product line-up from bikes in the 300-1,800cc segment. “Considering the strong demand and rapid shift towards premium motorcycles, HMSI will be introducing new models, including in the mid-size segment.” The company aims to expand its reach and cover the top 80 per cent of the important markets (from a premium-bikes point of view) in the next few years. According to him, there has been a gradual shift among customers towards the premium segment, driven by factors like increasing disposable incomes, change in consumer lifestyles, their purchasing paradigm, and a growing demand for high quality, technologically advanced and comfortable motorcycles. Recognising this, HMSI has tweaked its strategy.

Bajaj’s Narang, too, points towards this trend. “With an expanded distribution network and a diverse range of premium models, our goal is to cater to the unique requirements of our consumers in this segment,” he says. “Even in the premium sports segment—where our models like Adventure 390 or Duke 390 operate, typically priced above Rs 3 lakh—there’s some kind of a micro-segmentation happening... Volumes start becoming smaller, but there is room for multiple models and variants... where the customers do not want to compromise.”

Some customers want a high-performance adventure bike, some are more value-driven, while some want top-end tech products. Narang explains that customers are becoming more discerning about features, and willing to pay more for superior products. “We have four variants in the Adventure 390 segment, and the reason for launching these models was not just to grow volumes, but the fact that customers had very specific requirements.”

Experts say that the ongoing premium play might not be enough to throw Royal Enfield off its perch in the medium term, but it would play a huge role in the future strategy of its rivals. “These players sense that in the next 10 years, people who are riding a lower-segment bike today, may upgrade to a higher-cc bike, and they will prefer global brands like Harley, BMW, Triumph or KTM,” says Welekar of Axis. “They will get multiple options apart from Royal Enfield and that’s what they’re preparing for. This is their future strategy for now.”

Not Just a Numbers Game

Bajaj’s words at the launch event attest to it. Giving an insight into how the players view the market, Bajaj candidly referred to Royal Enfield as a bank. “There was a famous bank robber in America called William Francis Sutton. When asked why do you rob banks, he said, ‘That’s where the money is’. So, if Royal Enfield is where the money is, then we have no choice but to rob that bank.”

But it’s not just a numbers game, says Jochen Zeitz, Chairman, President and CEO of Harley-Davidson. “The obsession with unit sales is not something I share. It is the premium segment where we generate the most profitability. If you look at the last three years’ profitability, it has significantly gone up for the company by focussing on touring, cruiser, and launching into adventure touring... It is the profitability and desirability of the brand that counts, rather than chasing volumes.”

Harley-Davidson is clear it wants to focus on profitability, as are the others. “Currently, our primary focus is on establishing BigWing (Honda’s premium motorcycle business) as a prominent brand and provide immersive experiences to customers,” says Mathur. In 2019, the company had launched the Honda BigWing network (of dealerships) to exclusively cater to all categories of its premium offerings in India. “We are witnessing good response for our models, especially in the mid-size segment... Our goal is to capture a significant market share in the next few years.”

For players like Hero, too, it’s a great diversification strategy. “Hero has a huge presence in the entry-level segment, which is not growing... Each player wants to de-risk itself from its core,” says Welekar. “For Bajaj, for example, picking up of exports is critical, and entry level picking up is important for Hero, while for TVS, its electric vehicle play at the 125-200cc level is critical.”

The Electric Option

Experts feel that the penetration of EVs in the segment is slow and steady. “Although the demand for EVs in the premium segment is currently not strong, we will continue to focus on our strong model line-up. However we shall continue to monitor electrification trends in this segment to assess long-term demand,” says Mathur.

As for Narang, any talk of EVs for the premium segment is speculative at this stage. “When we find any of these trends emerging across segments, we’d be ready with it.” He admits he hasn’t yet come across strong customer feedback where they want a KTM, but in an electric version.

Apart from the fuel mix, a critical challenge that mass-market two-wheeler makers fear is of brand dissociation. Recently, many biking purists took to social media to criticise Hero and Bajaj for stripping the “soul” away from iconic brands like Harley and Triumph with their India-centric models. These risks make it difficult for bike makers to manage such global brands, which is why separate premium dealerships like Honda’s BigWing work. Bajaj also tried something similar with the KTM bikes. “All brand building is done keeping in mind how the customer would look at it. We deal with each brand, each segment, very uniquely,” says Narang. “When launching our KTM bikes, what the customer is buying into is a 100 per cent KTM brand. It’s not a jointly branded product and the fact that it’s manufactured by Bajaj and jointly developed between Bajaj and KTM is the back-end, is secondary to the customer.”

Tying up with local manufacturers is also a win-win for international players as they get a ready-made dealership network, a sense of reliability, easy availability of spare parts, and manageable maintenance costs.

With all eyes on Royal Enfield’s market share, competition in India’s premium segment is gearing up for a tearing ride ahead.

@PLidhoo