American cult bike maker Harley-Davidson has decided to stop manufacturing plant in India. The iconic US motorcycle brand will close its Bawal factory in the world’s biggest motorcycle market. India witnessed sales of about 17 million scooters and motorcycles last year. The Bawal plant was opened in 2011 but the company found it tough to compete with brands like Honda and Hero. The company has also decided to scale back the size of its sales office in the National Capital Region. The decision comes close on the heels of Toyota announcing that it won’t expand further in India. Toyota sighted India’s high tax regime as the region behind the decision. This comes as a big blow for the Indian government which has been trying hard to lure foreign manufactures under its ambitious ‘Make In India’ scheme. General Motors and Ford have also reduced their operation in India of late.
The departure of Harley will involve USD 75 million in restructuring costs and around 70 redundancies. The company said it is looking for ways to continue selling its iconic two-wheelers in India. The company’s dealers will continue to serve customers until their contracts end. When Milwaukee-based motor company entered India in 2010, it was at number two in terms of fastest-growing two-wheeler market. The company opened 33 dealers across India but they managed to sell just 25,000 motorcycles since then. The business suffered because of high sales taxes and import duties. India has so far been a tough market for foreign manufacturers despite it being cheaper than many developing economies.
The US government has previously mentioned the high taxes in India. President Donald Trump openly spoke about levies on Harley-Davidson. Ford entered into a joint venture with Mahindra & Mahindra and decided to move most of its assets last year. Earlier in 2017, General Motors had pulled out of the Indian Market. Harley has been facing some problems and recorded a quarterly loss in April and June this year. This was the first loss for the company in more than a decade. Under its new CEO Jochen Zeitz, Harley-Davidson has been cutting hundreds of jobs and shifted focus on core markets. India is not one of its core markets with average annual sales of under 3,000 units. The American bike maker has had a better run in countries like Korea and Thailand.