Harley Davidson exits current biz model in India; announces plant shutdown, to cut salesforce

Team Udayavani, Sep 24, 2020, 6:33 PM IST

New Delhi: American cult bike manufacturer Harley Davidson on Thursday said it is discontinuing its current business model in India.

As part of the process, the company is planning to close its manufacturing facility in Bawal (Haryana) and significantly reduce the size of its sales office in Gurgaon, the bike manufacturer said in a statement.

The company is communicating with its customers in India and will keep them updated on future support, it added.

The company’s dealer network will continue to serve customers through the contract term, Harley Davidson said.

“As part of The Rewire, an overhaul of its operating model and market structure, the company is changing its business model in India and evaluating options to continue to serve its customers,” it noted.

The Milwaukee-based company refers ”The Rewire” as a term to describe restructuring actions related to employees and other services.

Industry sources said the company is looking to tie up with a partner to run its business in the country.

“These actions are aligned with The Rewire which is planned to continue through the end of 2020, leading to The Hardwire, a new strategic plan for 2021-2025 aimed at building desirability for the Harley-Davidson brand and products,” the statement said.

In a separate SEC filing, the American firm said that 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.

The India action will include an associated workforce reduction of around 70 employees, it added.

As a result of the actions approved through September 23, 2020, the company expects to incur restructuring expenses of around 75 million in 2020, of which around 80 per cent are expected to be cash expenditures, including one-time termination benefits of close to USD 3 million, non-current asset adjustments of approximately USD 5 million, and contract termination and other costs close to USD 67 million.

Full implementation of these ”Rewire” actions may require the company to commit more funds for additional contract termination and other costs, it added.

Including previously disclosed restructuring charges, the company expects total restructuring expenses associated with Rewire restructuring actions approved through September 23, 2020, of approximately USD 169 million in 2020, the filing said.

The company expects to complete the restructuring activities approved through September 23, 2020, within the next 12 months, it added.

Harley Davidson’s portfolio included bikes like Street 750, Iron 883 among others.