Harley-Davidson exits India, shuts production
The departure is also the latest setback for Prime Minister Narendra Modi’s strategy to encourage domestic manufacturing that would keep more of the fruits of a gigantic home consumer market in India.
BUSINESS Updated: Sep 25, 2020 02:05 IST
Harley-Davidson Inc said on Thursday it would discontinue its sales and manufacturing operations in India, effectively abandoning the world’s biggest motorcycle market after a decade of unsuccessful efforts to gain a foothold.
Harley had spent recent months moving dealerships in the country to cheaper locations, and the announcement followed speculation a month ago that executives had played down.
The move involves $75 million in restructuring costs, some 70 redundancies and the closure of its Bawal plant in Haryana, walking away from a market worth about 17 million bike and scooter sales a year. It will retain only a scaled-down sales office in Gurugram, near Delhi.
The departure is also the latest setback for Prime Minister Narendra Modi’s strategy to encourage domestic manufacturing that would keep more of the fruits of a gigantic home consumer market in India.
Harley has been scrambling for years to grow sales beyond baby boomers in the United States and has not posted retail sales growth there in the past 14 quarters. It recorded its first quarterly loss in more than a decade for the three months ended in June.
Chief executive officer Jochen Zeitz, who took the reins at the company in February, unveiled a major “Rewire” in July to boost profits by reducing Harley’s product portfolio by 30% and investing in 50 markets with growth potential in North America, Europe and parts of Asia Pacific.
India was one of the markets the company at that point committed to investing in more heavily. Thursday’s statement said the move to leave had been pushed through since August 6.
Harley said it now expects total restructuring costs of about $169 million in 2020, but warned that the restructuring programme -- referred to internally as “The Rewire” -- was likely to incur more charges.
“As part of The Rewire, an overhaul of its operating model and market structure, the company is changing its business model in India and evaluating options to continue to serve its customers,” it said in a statement on Thursday.
India, still far cheaper and poorer than many of the developing economies with which it competes for investment, has proven an inhospitable market for other auto industry players.
Harley’s decision comes weeks after Toyota Motor Corp. said it won’t expand further in India due to the country’s high tax regime.
Last year, Ford Motor Co pared back its interests and ceased independent operations in India by entering into a joint venture with Indian automaker Mahindra & Mahindra. General Motors, which stopped domestic sales in 2017, also plans to stop manufacturing and exports from India by the end of this year.
Growth in domestic sales has slowed of late -- with sales of cars and motorbikes falling 18% in the last fiscal year to March 31 from a year ago.
The central government has been trying to reverse the trend with a plan to offer $23 billion of incentives to attract firms to set up manufacturing, people familiar with the matter said this month, including production-linked breaks for automakers. The programme is being spearheaded by the country’s policy planning body and is similar to a scheme implemented earlier this year aimed at drawing businesses away from China.
The departure is also the latest setback for Prime Minister Narendra Modi’s strategy to encourage domestic manufacturing that would keep more of the fruits of a gigantic home consumer market in India.
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