Why Harley-Davidson Quit World's Largest Motorcycle Market

Iconic U.S. motorcycle brand Harley-Davidson Inc HOG has decided to exit India - the world's largest motorcycle market, as a part of its "Rewire" strategy of having a leaner operating model.

What Happened: Harley had been struggling to make in-roads in India's motorcycle market dominated by low-cost players. As a result, it decided to shut shop in India as a part of its restructuring strategy introduced by Jochen Zeitz, chairman, president, and CEO, who had joined in May this year.

Harley expects to complete the revamp in the next 12 months, which will include a reduction of approximately 70 employees, and a restructuring cost of $75 million.

The company has hired former Tyson Foods, Inc. TSN executive Gina Goetter as the new Chief Financial Officer, effective Sept. 30.

"India is a high volume, low margin market. They weren't structured to play that game, being at the very pointy end of the pyramid. The lifestyle element that goes with owning a Harley bike is also not fully developed in India yet," Hormazd Sorabjee, Editor of Autocar India told BBC.

The coronavirus pandemic has dealt a blow to the bike maker, which was struggling already with an average sale of 3,000 units a year.

The company could not beat the affordability of Royal Enfield, which dominates the premium motorcycle market. Harley's bikes in India started at INR 450,000 ($6,100) compared to Royal Enfield's lighter vehicles selling for INR 200,000 ($2,717.67), reports the Financial Times.

Why It's Important: Harley's exit comes after General Motors Company GM and Ford Motor Company F scaled back its India operations. The country's auto sector has been struggling for some time and Japanese carmaker Toyota Motor Corp TM has decided to not expand in India owing to higher taxes, reports FT. Indian Prime Minister Narendra Modi's "Make-in-India" has had limited success in this regard.

This will not bode well with the Trump administration, which has accused India of unfair treatment. It can be a sticking point with the U.S., with whom India is negotiating a free trade agreement, according to BBC.