American bike maker Harley-Davidson is shutting down its India operations as a part of its restructuring plan referred to as ‘The Rewire,’ under which it will withdraw from a few international markets in a bid to cut costs and streamline the operations to put in more focus on its profitable markets.
“Between August 6, 2020 and September 23, 2020, the company approved commitments to additional restructuring actions under The Rewire related to optimising its global dealer network, exiting certain international markets, and discontinuing its sales and manufacturing operations in India,” Harley-Davidson disclosed in its US stock exchange filings on Thursday.
Under the plans announced earlier, Harley-Davidson had said the key elements of Rewire were enhancing core strengths and better balance expansion into new spaces, prioritising markets that mattered, resetting product launches and line ups for simplicity and adjusting and aligning the organisational, cost structure and operating model to drive efficiency.
Harley-Davidson had set up an assembly plant in Haryana a decade ago. However, on the sales front, the company never managed to accelerate, with annual sales averaging around 3,000 units. The auto industry in India was facing a slowdown through 2019 and the COVID-19 pandemic and one of the strictest lockdowns had an even adverse impact.
India may be one of the largest motorcycle markets, but the bulk of the sales still come from the 100-125 cc commuter motorcycles. Many dream of owning superbikes, but spending Rs 5-10 lakh or more on one is a tall order.
Harley-Davidson’s rivals like Triumph and BMW have forged tieups with Indian companies, Bajaj Auto and TVS Motor respectively, a move that would help them reduce costs and also build products and target new customers across India and other emerging markets.
The cult bike maker's decision to exit India will mean 70 employees will be left redundant, the company said.
Of the actions approved from August 6, 2020 through September 23, Harley-Davidson expects to incur restructuring expenses of around $75 million in 2020, of which approximately 80 per cent are expected to be cash expenditures, including one-time termination benefits of about $3 million, non-current asset adjustments of approximately $5 million, and contract termination and other costs of $67 million.
Including previously disclosed restructuring charges, the company expects total restructuring expenses associated with Rewire restructuring actions approved through September 23, 2020 of approximately $169 million in 2020, it said. The company expects to complete the restructuring in the next one year and added that additional actions under the Rewire are expected to occur.
