Harley-Davidson is pulling out of India, the world’s biggest motorcycle market.
Harley-Davidson, the iconic US motorcycle brand, is pulling out of India, the world’s biggest motorcycle market, involving $75m (£59m) in restructuring costs, around 70 redundancies, and the closure of its Bawal plant in northern India, resulting in a blow for Indian Prime Minister Narendra Modi’s efforts to lure or retain foreign manufacturers.
India has proven a tough market to crack for foreign automakers, BBC reports, as General Motors pulled out of the country in 2017 while Ford agreed last year to move most of its assets into a joint venture with Indian vehicle giant Mahindra & Mahindra. US President Donald Trump has previously complained about India’s high taxes, specifically mentioning the levies placed on Harley-Davidson bikes. Harley Davidson came into India with much fanfare a decade ago. But it has since, struggled to find a foothold in one of the world’s most lucrative two-wheeler markets, with sales averaging under 3,000 units every year, the iconic American brand simply couldn’t capitalize on the big Asia opportunity it was betting on.
“India is a high volume, low margin market. They weren’t structured to play that game, being at the very pointy end of the pyramid,” Hormazd Sorabjee, Editor of Autocar India told the BBC. “The lifestyle element that goes with owning a Harley bike is also not fully developed in India yet.”
Harley’s exit may not have a significant economic impact, but is bad optics for the Modi government, which is preparing to roll out a $23bn package to lure global manufacturers to set up base in India as part of the country’s ‘Make In India’ policy. Bloomberg adds that Modi’s 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 program 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. Harley recorded its first quarterly loss in more than a decade for the three months ended in June and has been cutting hundreds of jobs under Jochen Zeitz, who took over as chief executive officer in May. The former CEO of sneaker company Puma SE has narrowed the motorcycle maker’s focus to core markets and model segments, scaled back ambitions for expansion overseas and starved dealers of new bikes to shrink inventory and improve pricing.
For some time now, the Milwaukee-born company has been facing a stony challenge, one that’s beyond the quality or capacity of its engines. Read more about it here.
