(Reuters) – Harley-Davidson Inc <HOG.N> said on Thursday it would discontinue its sales and manufacturing operations in India, effectively abandoning the world’s biggest motorcycle market after a decade of unsuccessful efforts to gain a foothold.
Harley had spent recent months moving dealerships in the country to cheaper locations, and the announcement followed speculation in Indian media a month ago that executives had played down.
The move involves $75 million in restructuring costs, some 70 redundancies and the closure of its Bawal plant, walking away from a market worth about 17 million bike and scooter sales a year. (https://bit.ly/3mPHZnx) It will retain only a scaled-down sales office in Gurgaon, south of New Delhi.
The departure is also the latest setback for Prime Minister Narendra Modi’s strategy to encourage domestic manufacturing that would keep more of the fruits of a gigantic home consumer market in India.
Harley has been scrambling for years to grow sales beyond baby boomers in the United States and has not posted retail sales growth there in the past 14 quarters.
Chief Executive Officer Jochen Zeitz, who took the reins at the company in February, unveiled a major “Rewire” in July to boost profits by reducing Harley’s product portfolio by 30% and investing in 50 markets with growth potential in North America, Europe and parts of Asia Pacific.
India was one of the markets the company at that point committed to investing in more heavily. Thursday’s statement said the move to leave had been pushed through since Aug. 6.
Harley said it now expects total restructuring costs of about $169 million in 2020, but warned that the restructuring program – referred to internally as “The Rewire” – was likely to incur more charges.
India, still far cheaper and poorer than many of the developing economies with which it competes for investment, has proven an inhospitable market for other auto industry players.
Last year, Ford Motor Co <F.N> pared back its interests and ceased independent operations in India by entering into a joint venture with Indian automaker Mahindra & Mahindra <MAHM.NS>.
General Motors <GM.N>, which stopped domestic sales in 2017, also plans to stop manufacturing and exports from India by the end of this year.
Growth in domestic sales has slowed of late – with sales of cars and motorbikes falling 18% in the last fiscal year to March 31 from a year ago.
(Reporting by Ankit Ajmera and Rachit Vats in Bengaluru, Aditi Shah in New Delhi; Editing by Maju Samuel)
