Harley-Davidson’s Road in Brazil

By Martin Kocandrle, Contributing Reporter

RIO DE JANEIRO – Groups of motorcycle riders rumbling past with the throaty authoritative growl that only a Harley provides is not a common scene in Brazil just yet, and may remain in the distance if the current problems for Harley-Davidson persist.

Currently Harley-Davidson is experiencing issues in the United States and most recently has requested a court injunction against its Brazilian distributor HD Comércio de Veículos LTDA, a subsidiary of “Grupo Izzo”.

According to reports Harley-Davidson Motor Company has filed a lawsuit against its current Brazilian distributor over an apparent breach of contract. While neither company has released an official statement regarding the subject it is understood that the disagreement arises from a combination of brand mismanagement and customer dissatisfaction.

Allegedly customers have been unsatisfied with the level of service offered by the current distributor Grupo Izzo, claiming to have waited from thirty to sixty days for spare parts and essential items such as license plates.

Customer service is an important aspect of Harley-Davidson’s platform, especially in a new market where it is trying to break new ground. In their annual financial report Harley Davidson states, “Every customer deserves an individualized experience in every aspect of ownership, whether they’re a long-time rider or just getting started.”

Further complaints stem from the supposed association of Harley-Davidson with competitor brands, also distributed by Grupo Izzo. The promotion of the various brands supported by Grupo Izzo drew criticism for creating a conflict of interest, and lack of focus on the Harley-Davidson brand. The result was an apparent dissatisfaction on the part of the customer with the services offered which were not properly representative of Harley-Davidson’s goals.

Since the issuing of the court injunction Grupo Izzo has 120 days to continue selling the brand of Harley-Davidson. It is expected that Grupo Izzo will appeal the courts decision and defend its position as the official distributor of Harley-Davidson goods in Brazil. In the meantime Harley-Davidson has the right to seek other partners within that time period.

The whole incident is yet another setback for Harley-Davidson, which has been struggling in recent years to maintain its foothold in the “big bike” market. While under-performance last year can be partly attributed to the global recession, more pervasive problems plague the company, such as marketing to a younger Harley demographic, and customer dissatisfaction with high prices and parts manufactured outside of the US.

The company limped through 2009 with shipments to dealerships down by 27 percent and a full year net loss of $55.1 million dollars.

It is an unfortunate incident for the motorcycle manufacture as part of its “courageous” new strategy, which predicts that international retails sales will account for forty percent of total retail sales. This new strategy involves establishing a presence in the markets of emerging economies such as China, India and Brazil, that are developing social classes willing to splurge on non-essential household items.

Although this will surely not spell the end of the road for a Harley-Davidson’s venture into Brazil it merely represents a minor setback in an otherwise foggy future for the manufacturer of the infamous “hog”.