• Harley-Davidson to stop sales and manufacturing in India
  • 70 employees will be laid off and the Bawal plant to be shut down
  • The company reported its first loss in a decade in April-June 2020

Harley-Davidson has announced its exit from India, the world's biggest motorcycle market, quietly ending an 11-year ride in a country where it once hoped to gain major market share.

The iconic American company's departure also shows the difficulties faced by global brands trying to profit from the rapid growth that has made the country the fifth-largest economy.

Harley-Davidson plans to stop sales and manufacturing in India, as per the latest regulatory filings, under its new ‘Rewire’ program designed to help it navigate through tough financial times.

The company said it will focus on its more profitable bikes and core markets, such as the U.S., Europe, and other parts of Asia. The decision will contribute to the $75 million restructuring expenses in 2020.

Wisconsin-based Harley-Davidson had an anemic sales record in India and the exit comes at a time when the local auto industry has seen demand plummet amid the COVID-19 pandemic.

According to figures by the Society of Indian Automobile Manufacturers (SIAM), Harley sold a mere 103 units in July and 176 units last month. There were rumors that Harley-Davidson was planning to partner with a local company, as KTM and Triumph have done, but it has now opted to leave the market altogether.

About 70 employees are expected to lose their jobs and Harley-Davidson’s Bawal plant in northern India will be shut down. Existing customers will be served through its dealer network.

Harley-Davidson reported a loss of $96 million in the quarter ended June, its first quarterly loss in more than a decade. The company has laid off hundreds of employees after Jochen Zeitz took over as chief executive in May.

Harley-Davidson's entry into India was cleared by New Delhi in 2007 in exchange for the U.S. lifting an 18-year ban on mango imports from India, the Economic Times reported in 2018. But its products were also slapped with very high taxes and duties.

President Donald Trump has complained about the high tariffs on Harley Davidson motorcycles in India in the past. Following this, India lowered duties on Harleys to 50% in 2018, from around 100% previously, but Trump still found it “still unacceptable.”

FILE PHOTO: Harley Davidson motorcycles are displayed for sale at a showroom in London, U.K., June 22 2018. REUTERS/Henry Nicholls/File Photo

The Indian market has been a tough nut to crack for the U.S. motorcycle company. In 2012, Harley's India unit hoped to clock sales of 10,000 units per month by 2016. The company reportedly sold around 2,500 units in the last financial year.

There are 11 major players in the premium bike segment in India. Data suggests that this market, on the back of young riders, could reach as much as $161 million by 2023. Harley was one of the main players, with main competition from Triumph, Indian, Benelli, Kawasaki, Ducati, Aprilia, and the premium range bikes of Yamaha, Kawasaki, Suzuki, and Honda.

Harley's exit will be a headline setback for Prime Minister Narendra Modi's Make-in-India initiative, which aims to make India a manufacturing powerhouse, like China, and provide more jobs.

India's ranking has improved to 63rd among 190 economies, from 77th in 2018 and 130th in 2016, in the ease of doing business, according to the latest World Bank annual ratings. But corruption and red tape pose steep barriers to corporations hoping to tap into the huge middle class in the country.

Harley-Davidson's exit comes only weeks after Toyota Motor cut back on its expansion plans, citing the tax regime in India. General Motors pulled out of the country in 2017.