Harley-Davidson said on Thursday it will shut down manufacturing and sales operations in India.
The American premium motorcycle manufacturer had indicated exiting some of the loss-making international markets to re-route focus on the US market. Under its “The Rewire” strategy revealed in July, it said that it would streamline its planned product portfolio by about 30% and focus on 50 markets with growth potential in North America, Europe and parts of Asia Pacific.
Poor sales record and a dented demand outlook impacted by the COVID-19 pandemic may have forced the company to exit the Indian market. Today, the company said it expects to report $75 million in additional restructuring costs for 2020 as part of “The Rewire.”
“The Company announced to employees additional restructuring actions related to the set of actions that it refers to as ‘The Rewire’. The Company previously disclosed restructuring actions associated with The Rewire that were approved through August 5, 2020. Between August 6, 2020 and September 23, 2020, the Company approved commitments to additional restructuring actions under The Rewire related to optimizing its global dealer network, exiting certain international markets, and discontinuing its sales and manufacturing operations in India,” Harley-Davidson said in its regulatory filing with the US Securities and Exchange Commission (SEC) on September 24.
Of the $75 million restructuring expenses that it expects to incur, 80% are expected to be cash expenditures, including one-time termination benefits of approximately $3 million, non-current asset adjustments of approximately $5 million, and contract termination and other costs of approximately $67 million. It expects to complete the restructuring activities approved through September 23 within the next 12 months.
The bike maker began India operations in 2009. It was manufacturing select models at its plant in Bawal (Haryana) and was selling 13 models in India.
Harley-Davidson’s Sales Graph
The company is expecting total restructuring costs of about $169 million in 2020 including axing 70 employees in India, a market where its annual sales volumes account for less than 5% of the company’s total. Harley-Davidson India sold less than 2,500 units in the last financial year, making it one of its worst-performing international markets. A year earlier, it had sold 3,413 units. Its competitor Royal Enfield managed to sell just over 42,000 units in FY 2019-20.
About 65% of Harley’s India volumes come from smaller capacity bikes of 750cc that it assembles at Haryana.
Harley-Davidson will join the growing list of automotive
brands, such as General Motors, Fiat, Ssangyong, Scania, MAN, UM
Motorcycles, which have exited India over the last 3-4 years.
