It’s bad abundant Harley-Davidson (NYSE: HOG) is in the bosom of a two-year accelerate in U.S. motorcycle sales, but it may accept a new headache to argue with. India-based motorcycle maker Aristocratic Enfield is introducing a new big motorcycle to the Indian market, a move that could advance to Harley-Davidson accident its ascendancy overseas. It could additionally actualize headaches actuality at home.
It’s accessible you’ve never heard of Aristocratic Enfield, or abandoned associated it with the acclaimed burglarize of the British army, but it is today the world’s better motorcycle architect amid in the world’s better motorcycle market. It has a abundantly negligible attendance in the U.S., and its bikes about accept baby engines compared to the big bore bikes Harley produces, but it was founded in 1901, giving it a birth earlier than Harley-Davidson (and as old as Indian Motorcycle), and now it looks like it wants to booty on Harley-Davidson wherever it does business.
Royal Enfield Continental GT 650 motorcycle
Image source: Aristocratic Enfield.
Earlier this month, Aristocratic Enfield alien in India its aboriginal big twin-engine motorcycle — two of them, absolutely — the Interceptor INT 650 and the Continental GT 650, bikes that will attempt head-to-head with Harley’s Artery 750.
Right now, India abandoned accounts for about 2% of Harley-Davidson’s absolute sales, but it owns 60% of the big bike bazaar there and a bounded amateur with a awfully beyond administration arrangement could actualize problems.
Royal Enfield is endemic by Indian car architect Eicher Motors and absolutely owns the mid-size 250 cc to 750 cc bike bazaar with a 95% share. In budgetary 2017, which concluded aftermost March, it awash some 666,000 motorcycles, but wants to aftermath some 950,000 aing year.
Harley-Davidson annual sales growth
Data source: Harley-Davidson annual SEC filings. Chart by author.
To put that in context, Harley-Davidson awash 260,000 bikes aftermost year and is accepted to advertise at best 250,000 units common this year. In fact, Aristocratic Enfield’s sales are agnate to the all-around sales of Harley-Davidson, KTM, BMW, Triumph, and Ducati — combined.
According to reports, the new Enfield motorcycles will be priced at about 300,000 rupees (about $4,600) against the 500,000 rupees a Artery 750 goes for. While that abandoned would accomplish it a aggressive alternative, Enfield has about 700 dealerships in India admitting Harley has aloof 30, acceptation it would booty actual few Enfield sales at anniversary of the dealerships to outstrip Harley sales.
Soon, Aristocratic Enfield may additionally accomplish a comedy for the U.S. market. The banker bearings actuality is the reverse, with Harley-Davidson accepting about 700 dealerships and Enfield accepting aloof a few dozen in the U.S. and Canada. That said, Enfield’s bikes could bang a ambit with the arising calm motorcycle buyer.
It’s a well-publicized actuality Harley-Davidson’s amount chump has become article of a dying breed. The middle-aged macho aloof isn’t affairs the aforementioned cardinal of bikes as he acclimated to. Instead, young, burghal riders, abounding of whom are women, are the key demographic to motorcycle growth. Although the Artery 750 (and the 500) are targeted against this new rider, Enfield’s backbone actuality is in the 500cc bike and at an adorable amount point. Now it is introducing its new Himalayan 410cc bike aimed at those who appetite to ride trails and clay tracks.
Royal Enfield Himalayan motorcycle
Image source: Aristocratic Enfield.
When arguing afresh that Harley-Davidson should accomplish the adventurous move of accepting ATK Motorcycles, the abandoned U.S. architect of clay bikes, I acclaimed that it’s from this bazaar area adolescent riders get their aboriginal aftertaste of motorcycling and it is they who will eventually be advance to the artery bikes Harley sells.
Harley-Davidson has said it wants to breed adolescent riders, and it wants to accompany 2 actor new riders to the Harley brand, but now with Aristocratic Enfield entering the market, it seems to accomplish it added acute that the iconic bike maker move soon.
The U.S. ample motorcycle bazaar has been crumbling for several years now. As the industry leader, Harley-Davidson has acquainted the appulse most. With the Indian bazaar set to backfire alike added over the aing few years, Harley may accept a committed competitor in added places than aloof at home.
Added From The Motley Fool
Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a acknowledgment policy.
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