Want to see fair and equitable trade agreements: Harley-Davidson chief

Managing Director, Harley-Davidson, India and China, Peter MacKenzie poses on a Harley-Davidson Low Rider during launch of the company's two new 'Softail' motorcycles | PTI photo
Iconic American motorcycle brand Harley-Davidson has been in the news in recent days, with US President Donald Trump nudging India to reduce the import duty on high-end bikes. Peter MacKenzie, managing director, Harley-Davidson India and China, tells Ajay Modi in an interview that the company would like to see lower taxes and a fair and equitable trade agreement with all markets, including India. Edited excerpts:

How do you see the two markets that you head?

 
You cannot compare the two countries, China and India, from a cultural perspective. But there are similarities for us: both markets have an evolving leisure motorcycle culture, and in both we have been present for just under 10 years. In both markets, competitors are coming as they see more demand in the leisure motorcycles space. Both markets are of similar size for us. In China, we continue to grow, but in India, there was some decline last year across higher displacement motorcycles. However, with more competition coming in, we expect this space to grow.

In India, you sell less than 300 units a month. How do you see this volume?

 
The volume is comparative to the actual total demand in India. The total demand for motorcycles over 600cc is relatively small for a country of this size. But we see this expanding. We are still number one in the 600cc plus segment. It is a nice position to be in, and we would like to continue to maintain that.

What will be your growth recipe for India?

 
In line with our global strategy to be more accessible and more relevant, we will continue to ensure that our dealerships are located in the right markets and continue to deliver a truly authentic lifestyle experience that puts us ahead of competitors. Purchasing a Harley-Davidson is not just about buying a motorcycle, it is about buying into a lifestyle. That is the element which helps set us apart from competitors.

Who would you consider as your competitors?

 
Anybody producing bikes of over 600cc. We are all competing for a piece of that market. There is a lot of competition in the market. It is also an indicator that the segment will grow with players trying to bring people to leisure riding.

By that definition Royal Enfield is not your competitor?

 
They are certainly emerging in that space with the introduction of their 650cc bike. The culture of leisure motorcycle is something that will continue to grow. This is why competitors are coming in and building larger displacement bikes.  

Given the volumes, are all your 26 dealerships in a healthy situation, making returns on investment?

 
We are always mindful of the health of our dealer network. We continue to monitor that. We must understand that sale of motorcycles is not the only revenue stream for dealers. There is merchandise, accessories and services also that bring in revenue.

What part of your India sales is imported as completely built units (CBUs) and what part is locally assembled with imported components? How are the two taxed?

 
The locally produced product is certainly higher than the imported ones. The two are taxed differently. CBU has a higher import duty than a locally built or assembled product. The calculation is quite complex in the case of assembled products. On some imported components, the import duty was recently raised from 10 to 15%. There are other taxes on top of this. On CBU, the import duty has been reduced to 50%.

Is that a comfortable tax rate?

 
Anybody selling goods in the country would always like to see lower taxes. And CBU bike prices have come down after the tax cut.

US President Donald Trump has been raising the tax issue with India. How do you see these statements? Is duty reduction the need of the hour to expand in markets like India?

 
We would like to see fair and equitable trade agreements in any country where we sell our goods. I think there are people looking into that. There are lots of conversations going on.

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