More than any other country, India is seen by Harley-Davidson (HOG -1.22%) as the key to the company's future. In the strategic road map it laid out this summer, India was where Harley's new small motorcycles would be first introduced, a key to having foreign markets account for half of all sales.

It was already going to be a difficult task, as the vast majority of motorcycles sold in India have engine displacements of under 200 cubic centimeters. But in the midsize 250 cc to 500 cc motorcycle segment that Harley will target, Royal Enfield has a staggering 90% market share. It sold over 820,000 bikes in fiscal 2018, a figure it took Harley-Davidson over three years to achieve worldwide.

Now there's a new competitor entering India's motorcycle market, auto giant Mahindra & Mahindra (MAHMF 13.68%), which will resurrect the iconic Jawa brand, a Czechoslovakian motorcycle that was originally introduced into India after World War II, but ceased production in 1998 due to financial problems at its then-owner.

Woman climbing onto a Jawa motorcycle

Image source: Jawa Motorcycles.

Return of a classic

Mahindra's Classic Legends subsidiary has signed a brand licensing agreement with Czech Republic-based Jawa Moto to reintroduce three motorcycles next year: the Jawa, the Jawa Forty Two, and the Perak. The Jawas will have 300 cc engines, and the Perak will have a 334 cc engine.

Because of its near total ownership of the Indian market, Royal Enfield undoubtedly isn't worried much about the resurrected brand. But Harley-Davidson, which is trying to break into a new class of the Indian market, will face substantial difficulty snapping off share from Enfield while battling with Jawa, which will have at least a year's head start on attracting riders.

Harley-Davidson has a factory in India, which should help it get up and running quickly. Like most of Harley's foreign plants, it operates a complete assembly facility, which builds motorcycles intended for the Indian market from parts made in the U.S. But it also has a manufacturing component that builds its Street 750 motorcycle for international markets.

Late for the next big market

India's motorcycle market is huge and growing rapidly, with over 12.6 million sold in fiscal 2018. As noted, most of those bikes were small, but in the midsize segment, over 883,000 were sold, up 25% from 2017.

Harley sold just 3,400 motorcycles in India last year, down 7% from the year-ago period, mimicking its problems with domestic sales and the rationale behind its plans to launch smaller bikes globally.

Along with the midsize motorcycles planned for India, Harley also announced it is developing several other middleweight motorcycles for global markets, including its adventure-touring Pan America 1250, a 975 cc Streetfighter model, and a 1,250 cc custom bike.

While some analysts see Royal Enfield's dominance slipping as brand fatigue sets in with its Classic 350 and Bullet motorcycles, it won't necessarily be Harley-Davidson that wins the next wave of buyers. The new Jawas could build on the lingering warm feelings riders have for the brand, much as what happened in the U.S. when Polaris Industries resurrected the Indian Motorcycle nameplate, allowing it to gain double-digit market share. Also, other brands such as Bajaj, which typically makes smaller motorcycles, will be introducing new 350 cc motorcycles as well.

The path for Harley-Davidson's future may run through India, but it faces a Himalayan-sized task to succeed against a growing legion of rivals.