Why Harleys at INR 3.3 Lakhs?

The past few days have been anything but joyous and hope filled for the Indian automotive enthusiast like never before. Right from the India-EU Free Trade Agreement(FTA) which could make luxury cars manufactured in the European Union to the Indo-Japan FTA which simply could translate into cheaper spare parts for high end Japanese motorcycles as well as cheaper imports from Japan. Now, here is another massive bit of buzz that could potentially have motorcycle enthusiasts dreaming and dreaming big.

Indian Alphonso mangoes turned sweeter when they were exchanged for Harley Davidson to set shop in India. Barack Obama’s visit to India, earlier this year seems to have further sweetened the deal for motor heads as Harley Davidson is making a massive shift in tack. Now, instead of merely setting up an assembly facility to assemble CKD kits from the United States, Harley Davidson India will now go the whole hog and manufacture it’s cult motorcycles in India, ground up. And this includes an Indian vendor base as well since Harley Davidson is aiming at a “mother plant”, which will be the first of it’s kind outside of it’s manufacturing facilities at USA.

What will then happen? You and me can finally start dreaming big. Dreaming of riding on the rapidly improving Indian highways, with the wind in our faces, with the soul stirring exhaust of the engine, with what motorcyclists cherish the most, the absolute freedom in the heart, the freedom of being one with the open road. Just you and the machine and the road. Sorry for the circumvention, but in other words, Harley Davidsons could be sold for as low as INR 3.3 Lakh as manufacturing in India is a whole load cheaper than that of America. And with Indian vendors making Harley parts, it won’t get better than this.

As Indian manufacture of Harley Davidsons begin, Harley will also start exporting it’s made-in-India motorcycles to other emerging markets where Harleys sell for steep prices due to their high manufacturing costs in Uncle Sam country. So, what that means is more jobs for Indians in India and more sales for Harley, in India as well as in other emerging markets. A win-win situation, ain’t it? As for the Japanese big four, this should serve as a good enough reason to contemplate at least CKD assembly operations to gain the all important volumes as the Indian elephant’s purchasing power peaks.

Meanwhile, we’re still perplexed at why the folks at Financial Express are going hammer and tongs at Harley for setting up base in India, with them even going to suggest that national interests have been replaced by corporate interests. Sounds very, very leftish. All said, right here, on ICB, we carried a wordy piece on how India could save Harley Davidson, and just in line with our analysis, it really seems to be happening. And that, if not anything else is one more reason for you to stop by everyday at www.indiancarsbikes.in.

India Car And Bike Price Hike Again

Auto companies, reeling under heavy input costs, say they may not be able to absorb any hike in duty and additional burden would be passed on to the market. These include top companies like Maruti and Hero Honda, which witnessed 20% dip in quarterly profits on account of higher input costs. "We are concerned as there is already a lot of pressure due to higher input costs. If the excise duty goes up, we will have no option but to pass it on to the market as we are in no position to absorb any additional cost," Maruti Suzuki's CGM (sales & marketing) Shashank Srivastava told TOI. So, an entry-level car priced at around Rs 3 lakh will be dearer by Rs 6,000 if the excise goes up by 2%. Auto companies had in early January hiked prices by around 1.5%-2% to offset higher input costs. Used Autos

Hero Honda said any additional hike is difficult to absorb. "All options are open. While rising commodity prices and inflation are key determinants, what happens in the Budget is very crucial," said Anil Dua, V-P (marketing and sales).

Ravi Sud, Hero Honda's CFO, said any hike would have a negative effect on demand. "We would like the concession to continue as it has helped in the growth of the industry. The two-wheeler sector is very sensitive to prices and any hike will pinch growth," he said.

The government had extended a total of 4% concession on the excise duty after recession hit global economies in late 2008 and early 2009. The benefits boosted demand to record levels and saw the Indian auto industry emerge among the fastest-growing markets globally. Interestingly, the growth was achieved even after the government withdrew the benefits partially by raising excise duty by 2% in the Budget last year. The buoyancy, say analysts, strengthens the government's case to up the duty again and bring the duty back to the pre-crisis level. However, the auto industry is arguing that sales are already under pressure on rising interest rates and fuel prices. Hyundai Showroom in India

"If the excise duty goes up, it has to be passed on by the industry. There is no way the industry can absorb the burden," Pawan Goenka, who heads auto body Siam and is the president of Mahindra's automotive division, said. He said the effect of excise hike could be "severe" for the industry as it already reels under the negatives of higher interest rates and commodity prices. Jnaneswar Sen, marketing head of Honda Siel, said, "Yes, we will increase prices if the excise duty goes up."