Harley-Davidson To Exit India: World’s Biggest Motorcycle Market
Iconic US Motorbike Firm Unable To Compete In India Against Honda And Hero
It has been announced that the world’s biggest motorcycle marketplace located in India is to be shut down as Harley-Davidson is pulling out their operations from the country. The decision to stop motorcycle manufacturing in India, along with scaling back on their overall operations in India by the iconic US motorbike brand, has been done due to the increasing tax regime of the country. Harley-Davidson announced this after Toyota stated that it would not be further expanding its operations in India due to high-income tax management.
Effects on India due to the departure of Harley-Davidson
This exit by Toyota and Harley-Davidson has proven to be a massive blow to the country’s Prime Minister Narendra Modi, as he has been trying multiple foreign manufacturing brands to expand their operations in India. The departure of operations for Harley-Davidson from India has involved $75 million in the form of restructuring costs along with 70 redundancies and shutdown of their manufacturing plant located in Bawal in northern India.
This manufacturing factory was initiated in 2011 in India, but since then, Harley-Davidson has suffered from competing with other brands, including Japan’s Honda and India’s local brand Hero. Around each year, more than 17 million scooters and motorbikes are sold across the country.
While the region is much less in cost as compared with other developed countries across the world, India is the country which has been proven hard to crack by foreign automobile manufacturers and brands. General Motors decided to move their operations from India in the year 2017, while Giant automaker Ford decided in 2019 to move their complete assets and merge with the local vehicle corporation Mahindra & Mahindra to reduce the losses they suffered from their Indian operations.
The United States President Donald Trump has complained regarding the high-income tax implementation by India, especially on the Harley-Davidson merchandise, which is being sold in the country. There has been around 50% reduction in the import tax amount of India, but still, the brand struggled to find footings in the country and its competitive marketplace.
The corporation of Harley-Davidson has also suffered from all its operations across the world due to the coronavirus pandemic. According to their quarterly loss of this year between April and June, the company has experienced massive losses in just a few months as compared to the previous decade. Due to this, the firm has let go of hundreds of individuals by their recently appointed chief executive Jochen Zeitz, along with focusing on their new models and core marketplaces to prevent further loss in the future.
Downfall of Harley-Davidson in India
Harley-Davidson launched its merchandise in India with lots of fanfare almost a decade ago. But since their launch, the company has been struggling to firm their operations in one of the world’s biggest motorcycle market. As their motorbike sales have an average number below 3,000 units every year, the iconic US motorcycle brand failed to plant their foothold in Asia over which they were very much hoping on.
This loss in the selling of Harley-Davidson motorcycles, coupled with an increasingly high amount of income tax, has slowed down the firm’s operations in India along with reducing their capability to compete with other automaker brands, which ultimately lead to their decision of shutting down the operations of Harley-Davidson in India.
The cause of this downfall of Harley-Davidson in India is because the company has a completely opposite strategy. India is a country with a high volume, low margin marketplace. The completely different way of living with a Harley-Davidson bike is also not completely developed in a country like India.
As compared to India, Harley-Davidson has been able to uplift its merchandise in other Asian countries, including Thailand and Korea, as the marketplace and structuring costs, there are more in favor of the company.