More than two crore scooters and motorcycles are sold every year in India, an astounding figure by global standards. The Indian two-wheeler market, the biggest in the world (followed by China, which is the second-largest), is expected to keep growing at a moderate pace, hitting 2.5 crore units per annum by the year 2025. Yet, none of this was enough to prevent Harley Davidson from winding up its operations in India.

The American company, which primarily produces large-capacity cruisers, recently announced its exit from India, citing consistently low levels of demand for its bikes, which made it unviable for Harley to continue running its manufacturing and assembly operations in Bawal, Haryana.

The Harley dealer network in India, which wasn’t informed in advance about the company’s impending exit, is looking at incurring big losses. With 35 Harley dealerships in the country, each set up with an estimated investment of around Rs 3-4 crore, there’s going to be a lot of people who are going to be very, very angry with Harley.

An estimated 2,000 people (including people working at the Harley factory and Harley dealerships) will lose their jobs, while customers have also been left high and dry, with no clear communication from the company about what Harley intends to do about aftersales, spares and servicing requirements. It’s an unholy mess.

So, what went wrong? Harley Davidson, which was quite gung-ho about the Indian market when it came here in 2011, sold less than 30,000 bikes in India over the last decade. The primary reason for this is probably that Harley’s product portfolio simply wasn’t well matched to Indian requirements.

What the American company does best is big, large-capacity, long-distance cruisers and tourers that are expensive to buy and run. Entry-level Harleys like the Street 750 and Street Rod are priced at 4.7-6.0 lakh, but offer significantly lower levels of refinement and performance as compared to similarly priced bikes from Japanese and European manufacturers.

For bigger Harleys, prices start from around Rs 11 lakh and stretch all the way up to the stratospheric Rs 55 lakh. While Harley assembled its smaller, cheaper bikes at its plant in Bawal, the bigger bikes were all CBU imports, which got hit by the sky-high import duty rates that India is notorious for.

But even for its entry-level models, Harley was never able to build a vendor base for itself in India and indigenisation levels were pretty low across all models. Imported components again meant import duties and higher prices across the board, which hurt the company’s operations in India.

Yes, India is still a ‘high-volumes, low-margins’ market for motorcycles and the largest selling bikes here are small capacity commuter bikes that are cheap and fuel-efficient. Only a small handful of companies like Hero MotoCorp, Bajaj and Honda are able to produce and sell such bikes in very large numbers, at very high levels of cost efficiency.

At the next level up, there’s a significant market for 250-900cc machines; this is a segment that has a large number of players, including Royal Enfield, Jawa, KTM, Triumph, Ducati, Yamaha, Kawasaki, Suzuki, Honda, Bajaj, TVS and BMW. All these manufacturers offer a wide range of naked and fully-faired bikes, including cruisers, touring bikes, sports bikes and dual-purpose bikes, with prices ranging from Rs 2-10 lakh. This is the segment that would have been the perfect fit for Harley, where they should have been able to make a killing. However, their limited product range in this price segment was one of the reasons that did them in.

Another factor that probably did count is that sports bikes (the kind of machines that KTM, Ducati, Triumph and Japan Inc. do best) are far more popular than staid old cruisers in the ‘lifestyle’ segment in India. Harley, on the other hand, primarily only does cruisers, which young Indian buyers don’t fancy too often.

While Japanese bike manufacturers, who have been at it in India for decades, are now confident of making it on their own, some European bike manufacturers still do feel the need to collaborate with an Indian partner in order to succeed in this very challenging, demanding market. KTM is with Bajaj, Triumph also has an agreement with Bajaj for developing mid-capacity bikes and BMW has an agreement with TVS.

Early indications are that Harley Davidson might also go down this path, instead of abandoning the Indian market completely. There is talk that Harley may enter into some kind of an agreement with Hero MotoCorp, whereby the latter will become the sole importer for Harley motorcycles in India. Going one step further, Hero may even undertake to locally assemble and/or manufacture some of Harley’s more basic models, on a contract basis.

If the Harley-Hero deal does work out, it remains to be seen whether the American bikes will be sold via the Hero dealer network, or whether existing Harley dealers might still have a chance to salvage some of their investment and keep functioning under the Hero regime. Either way, Harley will be able to reduce its operating costs drastically, while still offering a chance to Indian buyers to fulfil their ambitions of parking a Harley cruiser in their garage, though probably at prices that will be higher than before.

In the end, it’s a sorry state of affairs for Harley, and a sad thing for Harley fans, owners, enthusiasts and dealers in India. Whether Hero (which doesn’t actually have a good track record with Buell, Harley’s former subsidiary, which it cruelly kicked to the kerbside a couple of years ago) steps in to partially save the day, and how the Harley saga plays out in that case, remains to be seen.