On 24th September 2020, the historic American motor company Harley Davidson announced its big decision of leaving the Indian auto market. Its manufacturing was established in India in 2009.
Why did Harley Davidson take such a major step?
It is obvious that if a company plans to discontinue its schemes or products, the biggest reason is the loss in business. Coming back to the motor company. Harley says that they have faced a tremendous loss in Indian markets. The reason includes several factors that the company is examining to make their future plans worthwhile.
The new CEO Jochen Zeitz talked about the loss that the company recently faced and along with the decision of winding up from India also mentioned a new five-year plan called “Hardwire strategy” to replace the ongoing “Rewire strategy” which will focus on achieving back the value of the company that is lost to some extent due to this heavy loss. Company has already started working on the plan and will be executed from the end of 2020 that will guide the working policies company until 2025.
Harley states that this new plan would be more focus on the quality of the iconic products of the company and would be doing more investments in markets where the company is performing efficiently. Under this plan, the company would focus more on the planned models rather than researching an innovation. Though Harley Davidson would be launching their promised models in the market under this scheme but the concepts like EV or electric bikes would be kept on hold for some time.
The latest updates state how Harley Davidson won’t be completely vanishing from India but still have to do a lot of work in the area to make a comeback.
Issues faced by Harley Davidson’s sales in India
Firstly, the Indian public prefers economical vehicle segments. The most used segment of bikes in India is fuel-efficient 150cc bikes which are opposite from Harley Davidson. Secondly, other super and cruiser bikes are also sold in India but maybe Harley failed to be a proper value for money for the Indian public. Stressing over the company’s stats and sales, Harley sales around 3000 units per year in India and has
sold around 27,000 units in India in 10 years. This may sound like a joke but Royal Enfield sells double of this much amount of units every month. Being very transparent this clearly shows the major downfall of Harley Davidson in the Indian market. After the complete analysis, it is revealed that $96 million loss was suffered by the company between April-June 2020 and there was even a loss of 60% per share. Compared with last year, Harley gained a profit of $195.6 million and $1.23 per share profit in 2019. This major difference in the stats made the company take major decisions.
Some affairs are also happening between India and USA governments due to this, as being a multinational motor company of course it will make changes in the economy of both the countries. U.S. President Donald Trump says, Indian import charges are too high and calls it “unfair” and the company also thinks India’s high tax regime is also a hurdle in their sales. PM Modi and Indian government reduced import charges from 100% to 50%, still the U.S. government remains unsatisfied. All these conflicts and issues led the company to the decision of quitting manufacturing in India.
A major American motor company winding up from India, is it the only issue? NO !! When Harley Davidson came to India it gave its first dealership in July 2010 and currently, there are 33 Harley Davidson dealerships all over the country. Due to this issue, these dealers have to undergo a big loss and the workers of Harley Davidson India already started losing their jobs and based on a rough calculation around 2000 workers would lose their jobs. This is quite depressing and the Indian government has to be answerable for this as the high taxes and duty charges are the major factors that the company couldn’t afford while facing loss at the same time.
How would Indians buy Harley Davidson’s bike?
In the latest update of Harley Davidson, the company has stated that they are just winding up the manufacturing of their bikes in India but they are willing to sell it with the dealership contacts. The service won’t be the same as before for sure !! The company would serve limited offerings, as they have seen a bad response so they will focus on the services and units that gave a beneficial result in India. Under this new hardwire strategy they will also pay more attention to the markets where they are already ruling, so services in India won’t be as same as before. It has been heard that Harley Davidson will offer after-sales in India and are also looking for an Indian two-wheeler company to do that. Most probably this will be done by their collaboration with Hero Motocorp or Mahindra as of now. This time they will be more focused on not more than 500 cc bikes as per the needs and wants of the Indian public.