Harley Davidson got here to India ten years in the past, in 2010, with simply 5 places. It’s 2020, and the American cult motorbike maker has shut store within the nation. It’s forsaking thirty-three dealership touchpoints, a quantity it grew over six occasions during the last decade, and the final of which was added as just lately as December 2019.
Sellers of the Milwaukee, the Wisconsin-based motorbike maker, at the moment are navigating a hasty transition. They are saying the model left the nation and not using a plan.
From January 2021, Harley Davidson India shall be operated underneath a brand new enterprise entity managed and run by India’s largest two-wheeler maker Hero MotoCorp. Loyalists of the model say it’s an unseemly marriage. However what pinches Harley Davidson’s sellers most is the troublesome predicament the corporate left them in — caught unawares after repeated assurances from the corporate that issues within the nation, amid myriad media studies of an imminent exit, had been simply tremendous.
“There have been mails coming, it was enterprise as regular with Harley Davidson until the afternoon of September 22. I picked up my final inventory of bikes from Harley on September 23, and on September 24, our contracts had been terminated”, mentioned Rishi Agarwal, proprietor at Capital Harley, the motorbike maker’s first dealership in India.
Agarwal is winding down his Gururgram showroom, constructed as a Harley expertise centre, and can now function solely a single showroom in New Delhi as a substitute, for your entire Delhi-NCR area. “It’s truly painful to see this shutting down, if you construct one thing with a lot ardour brick-by-brick.”
Whereas Hero MotoCorp has determined to retain solely 10 out of Harley’s community of 33 sellers, those who will not proceed the cult underneath Hero’s reigns say Harley Davidson’s compensation plan for them leaves quite a bit to be desired.
The provide entails a compensation of Rs 1,500 per sq. ft of facility with 10 % depreciation for annually the power has been in operation. For example, a location which is 8-years previous will solely obtain a compensation of Rs 300 per sq. ft. This implies every location is watching a lack of Rs 2-3 crore, on showroom infrastructure alone.
The corporate has additionally provided a six-month gross sales margin for sellers who is not going to proceed their enterprise underneath the tie-up with Hero. These sellers shall be left holding near Rs 70-80 crore value of stock in merchandise and merchandise.
“We are going to lose nearly Rs 15 crore on this enterprise primarily based on the present provide now we have from Harley Davidson”, Aggarwal mentioned. He factors out that whereas Harley terminated its sellers’ contract agreements with impact from September, the sellers proceed to be sure to the corporate until December 31. This interprets into a mean expenditure of Rs 20 lakh per thirty days within the type of salaries, lease, and different mounted prices.
For a lot of sellers, Harley’s choice to experience away from the nation is a harsh lower, as a result of they had been enthusiastic riders who determined to show their ardour for the cult bikes right into a livelihood.
“From 2013 to 2020, I by no means made cash from this enterprise. The best way issues had been projected to us was that smaller displacement had been coming, and that gave us hope the enterprise will flip worthwhile”, Manish Gupta, proprietor of Tiger Harley in Indore shared. Gupta established Harley Davidson’s first showroom in Central India.
“It was by no means only a enterprise for me. I wished to supply the Harley expertise that I so completely loved to individuals in Madhya Pradesh as nicely. When this information got here I used to be devastated”.
“Their method in the direction of their companions completely modified after their partnership with Hero. The compensation I am being provided is Rs 35 lakh rupees, on my funding of Rs 4 crore, in simply establishing the showroom”, he added.
Sellers are apprehensive if they’ll make Harley’s partnership with Hero MotoCorp given the corporate has determined to tug the plug on its mid- and small- displacement bikes for the market.
Harley Davidson’s Avenue collection contributed near 65 % of all gross sales on common throughout dealerships. For dealerships in smaller, non-metro cities, the smaller displacement bikes – the Avenue and the Avenue Rod accounted for as a lot as 80 % of all gross sales.
The choice to discontinue this vary, sellers worry, will severely hit demand for the model.
“I am not to run my dealership underneath Hero as a result of it does not make enterprise sense. My market does not have the potential for greater displacement bikes”, Gupta mentioned.
Central to the Harley Davidson group are its riders. The HOG group is apprehensive that the availability of spare elements, which was already constrained as a result of pandemic, will change into even harder to return by as Harley’s provide chain is lower off. The corporate, nonetheless, has dedicated to clients that it’ll resume its provide of elements and spares January onwards.
“Availability of elements has been an issue. It took me over a month to get a tyre for my bike. We hear that Harley Davidson within the US was not taking orders for elements. Now we should not have oils or batteries, when nothing is offered, how do you get the bike serviced?”, Harmeet Singh, a Harley proprietor mentioned.
Prospects additionally range that Harley’s cult and its model messaging could not stay the identical after its affiliation with Hero.
“It [Harley Davidson in India] is a faith. That attachment can’t occur with some other model and so they can’t come as much as that emotional stage in any case…you can’t implore riders to affiliate with one other model forcibly. The speeds, managements, temperaments simply do not match”, Captain Rajesh Sehgal, proprietor of the Harley Davidson Fats Boy, mentioned.
In 2021, as Hero readies to information Harley’s subsequent chapter in India, its duties, in addition to turning across the enterprise profitably, is laid out clearly: Profitable the arrogance of riders and sellers, and maintaining the love affair with the model alive shall be problem number-one.