American cult bike manufacturer Harley Davidson on Thursday said it is discontinuing sales and manufacturing operations in India, a decade after it started selling its premium bikes in the country. Industry sources said the company is looking to tie up with a partner to run its business in the country.
The India action will include an associated workforce reduction of approximately 70 employees, Harley-Davidson Inc said in an SEC filing. The development is part of the company's global "2020 Restructuring Activities". In the second quarter of 2020, Harley-Davidson had initiated restructuring activities like workforce reduction and the termination of certain contracts that would result in the elimination of approximately 700 positions globally, including the termination of approximately 500 employees.
The Milwaukee-based company refers to restructuring actions related to employees and other services as'The Rewire' . In a separate statement, Harley-Davidson said it plans to close its manufacturing facility in Bawal (Haryana) and significantly reduce the size of its sales office in Gurgaon.
The company's dealer network will continue to serve customers through the contract term, Harley Davidson said, adding it is communicating with its customers in India and will keep them updated on future support. "As part of The Rewire, an overhaul of its operating model and market structure, the company is changing its business model in India and evaluating options to continue to serve its customers.
"These actions are aligned with The Rewire which is planned to continue through the end of 2020, leading to The Hardwire, a new strategic plan for 2021-2025 aimed at building desirability for the Harley-Davidson brand and products," the statement said. From its entry to exit, Harley-Davidson's journey in the country witnessed governments of India and the US using it as a bargaining chip.
In April 2007, the then Indian government had relaxed emission and testing norms, paving the way for import of Harley Davidson bikes to India, in return for allowing mango exports from the country to the US. The import relaxation was restricted to the shipments of motorcycles up to 800 cc engine capacity or above subject to compliance to Euro III emission norms. Later in 2009, the company announced the establishment of its operations in India, followed by starting of sales of its bikes a year later. Then the company set up its completely knocked down assembly plant in Haryana and started rolling out assembled bikes from the unit in the early part of 2011.
The company's assembly plant at Bawal in Haryana was its second facility outside of the US after Brazil, and it had planned to use the unit to export to Europe and South-East Asian markets. In the recent past, US President Donald Trump criticised India's high import tariff on the iconic Harley Davidson motorcycles as "unacceptable" as the two countries negotiated for an elusive trade deal.
In the SEC filing, the company said as a result of the actions approved from August 6, 2020, through September 23, 2020, it expects to incur restructuring expenses of around USD 75 million in 2020, of which around 80 per cent are expected to be cash expenditures, including one-time termination benefits of close to USD 3 million, non-current asset adjustments of approximately USD 5 million, and contract termination and other costs close to USD 67 million. As per the filing, the full implementation of these 'Rewire' actions may require the company to commit more funds for additional contract termination and other costs.
Including previously disclosed restructuring charges, the company expects total restructuring expenses associated with Rewire restructuring actions approved through September 23, 2020, of approximately USD 169 million in 2020, the filing said. The company expects to complete the restructuring activities approved through September 23, 2020, within the next 12 months, it added.
Harley Davidson's portfolio in India includes bikes like Street 750 and Iron 883, among others with prices starting from Rs 4.69 lakh and going up over Rs 18 lakh.