Harley-Davidson 'blind sides' Indian partners with shock exit from market

Indian dealers of Harley-Davidson have threatened to drag the American bike-maker to court for closing shop in the country after selling only 25,000 units in the past 10 years in the world's largest motorcycle market.

Indian automobile lobbies have also rushed to rescue the Harley-Davidson's 33 local partners, alleging the Milwaukee, Wisconsin-based firm offered a “raw deal” when it chose wind down business in India, which accounted for only five percent of Harley-Davidson's global sales.

In September, the American firm announced its decision to pull the plug on local production after it ran out of road because of blistering competition from India's budget bike makers.

But just a month later, Harley-Davidson struck an agreement with India's Hero MotoCorp, world's largest two-wheeler manufacturer, to develop and sell motorcycles under the iconic American brand.

Neither Harley Davidson nor Hero Motocorp has so far commented on the controversy.

But an automobile lobby argued the October deal effectively blind-sided Harley's Indian partners -- 28 of them mere bikers who had spent from their own pocket to set up lavish showrooms.

Harley-Davidson partners fume
“When the first news came out in July, the company told us to not believe them … And we believed them,” said Rishi Agarwal who has four signature showrooms in India.

"So yes, we were left blind-sided," Agarwal told a news conference.

Adarsh Tulshan said he set up an outlet in Kolkata city since 2012 and opened his second showroom just last year in the nearby town of Ranchi. He appeared visibly upset.

"Harley-Davidson is such a big name. I didn't expect this from them and now I do not know what to do with the Ranchi dealership which is so new,” Tulshan said.

The out-of-business dealers also rejected compensation offered by Harley-Davidson and said they had roped in a leading law firm to seek remedies from the US firm.

The Federation of Automobile Dealers Associations or FADA alleged compensation offered by Harley Davidson was around 10 of the investment the dealers made to set up business.

They were offered just 17 Euros as pay-back for each square feet of their showroom, it added.

"Compensation being offered is a joke as it does not even cover the cost of the launch party that I threw at the inauguration of the dealership in 2013," said Manish Gupta, another Harley dealer.

Many Harley owners say their precious machines could face garage rot if spares and service drain out from India's market.

Franchise protection laws
FADA also argued Indian laws fish-tailing in favor of manufacturers such as Harley-Davidson must be put back on track to protect their local partners.

“Indian dealers require a franchise protection Act,” FADA President Vinkesh Gulati said.

 “We are working towards such regulations as we have seen so many companies exiting and leaving their dealer partners in lurch …We are determined to see it through to safeguard the future of the dealer fraternity,” he added.

Harley-Davidson tried but could not squeeze past Royal Enfield, which in September alone sold 60,041 units of one of the world's oldest motorcycle brands in India and abroad.

Indian bike-makers spluttered during the coronavirus lockdown but reported quick recovery last month when sales went into high gear.