In a form 8-K report filed with the US Securities and Exchange Commission yesterday, Harley-Davidson disclosed its intention to discontinue sales and manufacturing operations in India. In 2007, according to Wiki, Harley-Davidson motorcycles were first allowed access to the Indian market in exchange for the export of Indian mangoes – which one Indian commentator called “mango diplomacy.” In 2009, Harley-Davidson India (a wholly owned subsidiary) opened its first plant, and was originally building 11 models on six platforms: Sportster, Dyna, Softail, V-Rod, Touring, and Street. Harley has at least 29 dealers in the Republic of India, which is the second-most populous country in the world (1.353 billion people), the seventh-largest country by land area, and the most populous democracy in the world. There’s also a booming HOG and an annual Harley Rock Riders music tour.
Harley reported its first quarterly loss in more than a decade for the one ended in June, and its new CEO, Jochen Zeitz, has been busily suturing and clamping all over in an effort to staunch the bleeding. The former CEO of Puma, as part of “operation Rewire,” has been attempting to scale back H-D production to its core markets, shrink inventory to bolster pricing, and scale back overseas expansion.
So far, Rewire has uprooted about 500 positions globally; Zeitz says regional offices have been streamlined and now have more freedom to make local decisions. “This enables us to invest in the products and platforms that matter the most, while better balancing our investment in new high potential segments.”
According to the Economic Times of India here, Harley “sold about 2,500 units in India during the fiscal year ending March 2020 while about 2,100 units were exported from the country. To put that in perspective, Harley- Davidson sold about 210,000 motorcycles globally during the same period.
Domestic sales [in India] declined by 87% during the April-June period to just 106 units while export contracted by 40% to 229 units.” Not good.
“The India action will include an associated workforce reduction of approximately 70 employees,” according to the SEC filing, a move which will bump the Motor Company’s restructuring costs for the year to around $169 million. Part of Rewire stated H-D would pull back to its 50 biggest markets, and India isn’t one of them. That country is now mired in its biggest economic downturn in ages, according to this story in Bloomberg today, which also states: “Toyota 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. U.S. President Donald Trump has often complained about the country’s high tariffs, at times specifically mentioning the levies placed on Harley bikes.”
Trump’s complaining, in conjunction with India’s economic malaise, may work out for Harley in the long run. The same Economic Times article linked above goes on to say: “Meanwhile, the import of high engine-capacity motorcycles into India may get cheaper. The government announced in February that motorcycles with engine capacity of more than 1600cc will attract single-digit import tariff, as against 50% for all motorcycles.”
In the grand scheme of international commerce, maybe it’s better for H-D to build its big motorcycles here in the US, ship to India for the relative few who can afford them – and concentrate on the new Harley-Davidson HD350/Benelli 350S/Qianjiang QJ350 Dennis Chung wrote about here.
In the current pandemic economic situation (pandeconomic?) with goalposts in constant motion, your guess is as good as ours.