Business Harley Davidson has officially exited from India – Shut down their manufacturing plant
Harley Davidson’s exit from India may have limited financial impact on the country, but it could be a negative sign for investors. Such developments may be a cause for concern in the current scenario where the government is working to kick-start the economy and attract foreign investment.
2k job losses possible
According to FADA (Federation of Automobile Dealers Association), Harley’s exit can lead to around 2k job losses across its dealerships. Around 70 employees deployed at the company’s assembly plant in Bawal, Haryana will also have to start looking for new work opportunities.
Speaking about the development, FADA President Vinkesh Gulati said that luxury two-wheeler dealerships usually employ around 50 people. As there are 35 Harley dealerships, around 2k dealer staff could lose their jobs.
In financial terms, Harley’s exit would result in losses of around Rs 130 crore. Setting up a dealership for luxury brand such as Harley costs around Rs 3-4 crore. With 35 dealerships going out of business, the overall capital loss will be nearly Rs 110 – 130 crore.
Dealers kept in the dark
Talking about dealerships, their main complaint is that Harley took an abrupt decision and did not provide any information to them in advance. As a result, they are now staring at an uncertain future. Mr Gulati said that such developments happen because currently there is no Franchise Protection Act in the country.
As of now, Harley has not officially informed its dealerships about the decision to close the assembly plant. Harley said that its dealerships will continue to serve their customers throughout the period of the contract term. Harley is also in touch with customers and has assured that they will be updated about the next steps.
Harley’s India exit is part of its global business restructuring plan wherein the company will be reducing its product portfolio and exiting from unviable markets. Harley will focus on markets with potential, ones that can deliver targeted profits. The company also aims to reduce its global workforce. Around 500 employees are expected to be terminated and close to 700 positions globally will be eliminated.
Search for a local partner
It has been reported that Harley is looking for a local partner that can import and sell the company’s bikes in the Indian market. Sources have revealed that Harley is currently in advanced talks with Hero MotoCorp, India’s largest two-wheeler manufacturer. However, both Harley and Hero MotoCorp have refused to confirm this. We do hope such an arrangement becomes a possibility, as it will create a win-win for all stakeholders including Harley fans and dealerships.