The iconic US motorcycle brand, Harley-Davidson has decided to stop manufacturing and is massively scaling back its sales operations in India, the world’s biggest motorcycle market.
Harley’s decision comes weeks after Toyota also said it wouldn’t expand further in India due to the country’s high tax regime.
The exit comes as a blow for Indian Prime Minister, Narendra Modi’s efforts to lure or retain foreign manufacturers.
Harley’s departure involves $75m (£59m) in restructuring costs, around 70 redundancies and the closure of its Bawal plant in the northern part of India.
The plant was opened in 2011 but Harley-Davidson has struggled to compete with local brand Hero as well as Japan’s Honda.
About 17 million motorcycles and scooters are sold each year in India.
While it is cheaper than many other developing economies, India has proven a tough market to crack for foreign automakers.
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.
US President, Donald Trump has previously complained about India’s high taxes, specifically mentioning the levies placed on Harley-Davidson bikes.
An official US report also disclosed that India’s tariff rates on other members of the World Trade Organization (WTO) remain “the highest of any major economy.”
India’s import tariffs were slashed by 50% as a result but Harley-Davison has still struggled in the competitive market.
During a discussion with members of the Congress on the steel industry after India slashed the tariffs, President Trump said the decision of the Indian government to reduce the tariff from 75 per cent to 50 per cent was not enough and asked that it should be reciprocal, as the US imposes “zero tax” on the import of motorcycles.
“..If you are Harley-Davidson, you have 50 to 75 per cent tax, tariff to get your motorcycle, your product in. And yet they sell thousands and thousands of motorcycles, which a lot of people don t know, from India into the United States. You know what our tax is? Nothing.”
Harley-Davidson has also been suffering its own problems and recorded its first quarterly loss in more than a decade between April and June this year.
It has been cutting hundreds of jobs under its new chief executive, Jochen Zeitz and focusing on core markets and models.
The iconic US motorcycle brand was founded in 1903 and has built a very loyal customer base. It has owners’ clubs all over the world. Along with Indian, it was one of two major American motorcycle manufacturers to survive the Great Depression
It hit the global stage in 1969 thanks to the classic road movie Easy Rider starring Dennis Hopper, Peter Fonda and Jack Nicholson.
Its bikes, nicknamed “hogs”, are also made in factories in the US, Brazil and Thailand.
Harley has been looking to grow the brand beyond baby boomers in the US, with smaller models and all-electric versions.
