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US motorcycle maker Harley-Davidson announced on Thursday that it is exiting Indian market after restructuring of its global operations. Earlier in the year Harley had said that it planned to reduce its product portfolio and exit lower volume markets, without specifying which ones.
Harley-Davidson said it expects to report $75 million in additional restructuring costs for 2020 related a set of actions that it refers to as “The Rewire,” including discontinuing its sales and manufacturing operations in India after 11 years of operations in the country.
The announcement comes two months after Harley unveiled a strategy to shift focus back to more profitable motorcycles and core markets such as the United States.
Harley-Davidson has shut its India factory as business remains sluggish and sales are not expected to grow in coming times. If sources to be believed, the company may soon announce a partnership with Hero MotoCorp, the local Indian two-wheeler company and market leader.
Sources said that Harley has been downsizing its operations in India and is understood to have laid off workers in the market as business has slowed down, especially in the wake of coronavirus pandemic.
“Between August 6, 2020 and September 23, 2020, the Company approved commitments to additional restructuring actions under The Rewire related to optimizing its global dealer network, exiting certain international markets, and discontinuing its sales and manufacturing operations in India,” the company said in a statement.
Of the $75 million restructuring expenses that Harley expects to incur, 80% are expected to be cash expenditures, including one-time termination benefits of approximately $3 million, non-current asset adjustments of approximately $5 million, and contract termination and other costs of approximately $67 million, the company stated in the regulatory filing.
Moreover, the company said it now expects total restructuring costs of about $169 million in 2020, and this will also include a workforce reduction of about 70 employees in India, a market where its annual sales volumes account for less than 5% of the company’s total. It expects to complete the restructuring activities approved through September 23 within the next 12 months.
The strategy announcement came after Harley reported unexpected quarterly loss due to disruptions caused by the coronavirus pandemic.
Motorcycles and related products revenue dived 53% year-on-year to $669 million, badly hurt by the temporary suspension of production during the quarter due lockdowns to curb the spread of the new coronavirus.
Retail sales in the United States, its biggest market, plunged 27% year-on-year, the steepest fall in at least six years.
