Harley-Davidson to pull out of world’s largest motorcycle market


United States motorcycle maker Harley-Davidson is closing its operations in India, the world’s largest two-wheeler market, after the coronavirus pandemic dealt a knockout blow to a brand already struggling to drum up enthusiasm.

The company said it will close its manufacturing plant and significantly reduce sales staff in India as part of a broader overhaul to withstand the crunch brought on by Covid-19, which forced it to report a loss for the June quarter.

Harley-Davidson set up manufacturing and sales operations in India a decade ago. While leisure riding has taken off, its iconic “hogs” failed to gain traction in the country due to high prices and competition from local vintage brands like Royal Enfield.

The company tried to boost interest through local riders clubs but could not match the affordability of Royal Enfield, which dominates the premium motorcycle market. 

While Harley-Davidson’s India bikes started at around Rs450,000 ($6,100) in India, many of Royal Enfield’s lighter vehicles sell for less than Rs200,000.

The US group joins a string of vehicle manufacturers that have scaled back ambitions for India, with both General Motors and Ford also reducing their operations.

India’s auto sector more broadly has been badly hit by the pandemic. While sales of affordable motorcycles and scooters have proved resilient as drivers look for cheap, socially distanced means of travel, those of cars have struggled.

International carmakers have battled with high costs in the country, including taxes, as well as low-cost competitors like Maruti Suzuki — which sells half of India’s cars — and motorcycle manufacturer Hero Motocorp.

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The vice-chairman of Toyota’s Indian unit this month told Bloomberg that it would stop expanding its business in the country due to high taxes, prompting an angry reaction from New Delhi and a subsequent vow by the company to invest more.

Harley-Davidson’s difficulties in making inroads into India have also proved a source of trade tension between US President Donald Trump and Prime Minister Narendra Modi, with the former accusing India of unfair treatment.

Mr Modi has courted international manufacturers under his “Make in India” scheme. But it has had limited success, with manufacturing as a share of gross domestic product stagnating.

Harley-Davidson’s move will not go unnoticed by US and Indian trade negotiators, who have spent several years working towards a package to increase business ties.

Mr Trump has repeatedly said high tariffs on imported hogs into India are unacceptable. While Mr Modi cut duties from 100 per cent to 50 per cent, the closure of the US company’s assembly in India could make it more dependent on imports. Alternatively, it could maintain its presence by tying up with an Indian manufacturer.



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