Harley Davidson to Exit Indian Market
You no longer will be able to hear the sound of new roaring Harleys screaming through the roads of India as the company has stopped manufacturing massively and is scaling back its production in the country.
This decision of Harley Davidson was announced a week after Toyota declared that they are going to scale back the production of their cars and will now expand the brand in India further due to the country’s heavy tax regime.
It would cost almost $75m for reconstructing 70 redundant showrooms and complete shutdown of their Bawal manufacturing plant in North India.Harley Davidson was not able to keep up with the Indian brand Hero and the Japanese brand Honda even with their plant opened in 2011.
India has been a tough market for foreign motor companies due to the furious tax they need to pay, thus holding all the foreign-based automakers and bike makers avoid India as a market.
General Motors has also stopped the sale and went back in 2017. However, Ford has agreed to tie with local brand Mahindra & Mahindra in order to keep producing in India while generating profit.
Previously, Donald Trump had complained about India’s heavy import tax on vehicles specially mentioning the tax placed on their home-grown Harley Davidsons.India has slashed the import tariffs by 50% yet the company has struggled to strive in the market and all that led to take this big decision.
Harley has been suffering with problem of their own and has suffered loss of the decade in April and June this year. They have been experiencing great job loss under the leadership of their new CEO Jochen Zeitz and the company is now focusing on targeting their core markets only.
Harley Davidson was a huge hit and had a great fan base when it was initially launched in India, but slowly the brand didn’t manage to evolve itself according to the Indian market. With a sale number of 3000 units per year, the company didn’t have a chance against the local Indian giants, which sell millions of units every year.
The failure is being blamed on the company’s inefficiency of adapting themselves according to the market by driving up volume and cost cuts through local tie-ups.
“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 Davidson has been relatively successful in establishing a good market in countries like Korea and Thailand mainly due to cost structure and low tariff.