Harley-Davidson’s India Exit To Impact 2,000 Jobs Across Dealerships: FADA
Harley-Davidson Inc.’s India exit has put at risk up to 2,000 jobs across 35 dealerships in the country, a dealers’ association has said.
Dealers too will be at the receiving end of the move as they are likely to lose up to Rs 130 crore they invested in setting up stores at prime locations across India’s top-tier cities, Federation of Automobile Dealers Association said in a statement Friday.
The Milwaukee, Wisconsin-based motorycle manufacturer will discontinue sales and manufacturing operations in India as part of broader additional cutbacks announced to employees, according to a regulatory filing. Harley-Davidson said it will dismiss another roughly 70 employees as part of its exit from the country and that its latest moves will boost restructuring expenses this year to about $169 million.
"Harley Davidson has not informed any of its dealer partners about its closure plans, and dealers are yet to receive any official communication," FADA President Vinkesh Gulati said. It goes without saying that dealers, who have invested their hard-earned capital in this iconic brand, are left like an abandoned baby without any compensation package, he said.
It takes anywhere between Rs 3-4 crore to set up a dealership for a luxury automotive brand such as Harley-Davidson, and with a total of 35 dealerships, Rs 110-130 crore will go down the drain, Gulati said. "A luxury two-wheeler dealership—on an average—employs 50 people. With 35 Harley dealers, around 1,800-2,000 people at dealerships will lose their jobs.”
Moreover, there will be customers who will not receive glitch-free service as spares will now be in shortage, thus leading to harassment of dealers from customers, Gulati said. India's capital goes down the drain with closure of every single brand in the country, he said.
Harley’s decision to exit India comes weeks after Japan’s Toyota Motor Corp. said it won’t expand further in India due to the country’s high tax regime. General Motors Co. pulled out of the country in 2017 while Ford Motor Co. agreed last year to move most of its assets into a joint venture with Mahindra & Mahindra Ltd. after struggling for more than two decades to get traction in the market.
MAN Trucks and UM Lohia too shut shop in India recently.
"Had there been a Franchise Protection Act in India, brands like these would not have abruptly closed their operations, leaving their channel partners and customers in a fix," Gulati said.
That Harley is pulling out of a thriving two-wheeler market, the largest in the world, speaks to a troubled international strategy in need of overhaul. It comes as Prime Minister Narendra Modi is pushing his “Make in India” program, with the auto sector (including two-wheelers) as a key part and potentially $23 billion in production incentives on the way.
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Both India and Harley are thus seen as walking away from what could have been a big opportunity.