Harley Davidson Shuts its Production in India

Harley Davidson recently gave a blow by announcing that it would close down its manufacturing and sales operations in India. This move by Harley Davidson Inc has been done post making decade long but failed effort of establishing themselves in India. India is the world’s biggest motorcycle market with the potential of sales of about 17 million bikes per year. This was expected from the past few months as Harley Davidson was looking for a cheaper dealership in other countries.

This shut down will involve closing their Bawal plant situated in Haryana. It will include $75 million in restructuring costs and around 70 redundancies. They will only keep their scaled-down sales office in Gurugram, Delhi open. This move is also a blow to Prime Minister Narendra Modi’s “Make in India” strategy whose purpose was to encourage people for increasing domestic manufacturing that will lead to economic development.

Harley has been struggling to get retail sales growth in the United States from the last 14 quarters. It has reported the first quarterly loss in more than a decade. Jochen Zeitz, Chief Executive Officer, reduced Harley’s product portfolio by 30%. Under his leadership, Harley invested in 50 potential markets in North America, Europe, and some countries in the Asia Pacific.

He specified that they are currently reviewing their business model in India. He also mentioned that they are looking for new ways to serve their customers here. Harley Davidson was committed to making huge investments in the Indian market.

Although India competes with other developing countries for investments, it is not comparatively cheaper than others. Due to this, many automobile manufactures have started to consider it an unfavorable market. The past few years is showing the trend of automobile manufacturers turning away from India for their manufacturing activities.

Toyota Motor Corporation recently declared that they would stop expansion in India due to high taxes charged by the government. Ford Motor Company exited its independent operations in India after making a joint venture with Mahindra & Mahindra. By the end of 2020, General Motors will be stopping its manufacturing and exports in India. They closed their domestic operation way back in 2017.

The last fiscal year has shown a decline in the sales of cars and bikes. To attract global investors, the central government has come up with the program to provide $23 billion as incentives for companies looking to set up a manufacturing plant. This program was implemented by the policy planning body of India. A similar scheme was implemented at the start of the year to attract companies who were leaving China.