The Federation of Automobile Dealers Association (FADA) has said that no information was provided to Harley-Davidson dealerships in India about the American brand's decision to wind up sales and manufacturing operations in India. On Thursday, Harley-Davidson announced that it has decided to discontinue its sales and manufacturing operations in India, which "will include an associated workforce reduction of approximately 70 employees." The decision is part of the American motorcycle brand's restructuring actions that it refers to as 'The Rewire'.
Harley-Davidson USA as part of its United States Securities and Exchange Commission Form 8-K filing announced on Thursday that the restructuring options under 'The Rewire' strategy includes "optimising its global dealer network, exiting certain international markets, and discontinuing its sales and manufacturing operations in India." Apparently, the news came as a surprise, not just to Harley-Davidson India employees, but also to Harley-Davidson's 33 dealerships across India. FADA President Vinkesh Gulati has said that no information was given to Harley-Davidson dealers in India who had invested in the brand. FADA, an apex national body representing automobile retail in India, contends that a Franchise Protection Act would have helped the interests of the Harley dealerships across India.
Harley Davidson filed in USA Securities closure of India Operations.— Vinkesh Gulati (@VinkeshGulati) September 24, 2020
No information to Dealers or customers who invested. @narendramodi Franchise Protection Act would have protected us from such exits-GM : MAN Trucks and UM Lohia #FranshiseProtectionAct@ashwani_mahajan pic.twitter.com/N6l0KjBiLu
"Harley Davidson, the company has not informed any of its Dealer Partners about its closure plans and dealers are yet to receive any official communication. 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. 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," said Gulati.
"With every brand closing its shop in India, India's capital flow goes down the drain. With a luxury brand like Harley, setting up its dealership costs anywhere between ₹ 3-4 crore and with a total of 35 dealerships, Rs 110-130 crore will go down the drain. Moreover, there will be customers who will not receive glitch free service as spares will now be in shortage thus leading to cases and harassment's to dealers from their customers.
"Each luxury two-wheeler dealership on an average employs 50 people. With 35 Harley dealers, around 1800- 2000 people at dealerships will lose their jobs. After General Motors, MAN Trucks and UM Lohia, Harley Davidson is the 4th Automobile Brand which is shutting shop in last 3 years in India," Gulati added.
carandbike reached out to several Harley-Davidson dealer principals, but none were willing to react to the development on the record yet. A source in a dealership told carandbike that the contract will expire on December 31, 2020, but that Harley-Davidson dealerships will continue to sell existing stock and provide service and after sales support to customers. Dealers are putting up a brave face; the understanding is that only manufacturing has been closed, the story of the brand is far from over.
Harley-Davidson India has yet to respond to a query from carandbike, but Form 8-K filing is a legal procedure to announce major events that shareholders should know about. And under the rules of filing, Harley-Davidson could not have intimidated anyone before filing. So, only after it was filed, were Harley-Davidson India employees and dealerships informed of the announcement. On its part, Harley-Davidson India released a press statement after the announcement, saying that as part of The Rewire, Harley-Davidson has announced "an overhaul of its operating model and market structure" and that "the company is changing its business model in India and evaluating options to continue to serve its customers."
However, it's still not clear if discontinuing manufacturing operations and sales means the end of the Harley-Davidson brand in India. In fact, the brand may not completely wind up operations in India, as has been perceived. As part of the new "business model", one option would be to bring in Harley-Davidson motorcycles from its manufacturing facility in Thailand and offer them in India through the same dealership network. India and Thailand have a Free Trade Agreement (FTA) and even Ducati and Triumph follow the same route, with duties working out to be far more competitive and the price advantage then passed on to the consumer. The other option is to change the operating model with a local partner, something like how Benelli operates and even MV Agusta used to follow. And from all indications, it could well be the second option that will give Harley-Davidson a second shot at the world's largest motorcycle market, that of joining hands with a local two-wheeler giant.