An Indian owner of a Harley Davidson motorcycle takes part in a bike rally in Bangalore: AFP

US bike maker Harley-Davidson has announced that it will discontinue sales and manufacturing operations in India as part of its “rewire” program in the wake of the Covid-19 pandemic.

Harley-Davidson plans to shut down its assembly unit in Bawal, Haryana state, and lay off 70 employees. It may announce a partnership with a local two-wheeler company, Times of India reports.

Last month the Milwaukee-based cruiser bike maker indicated that it would exit some of the loss-making international markets and focus more on the US market. India’s annual sales volumes account for less than 5% of the company’s total, and is one of the worst-performing international markets.

Harley-Davidson’s poor sales record and a dented demand outlook due to the coronavirus pandemic are to blame for the company’s exit from India. It has been in the Indian market for nearly a decade, but has so far managed to sell only 27,000 bikes, barely half of what the country’s segment leader Royal Enfield sells in a month.

In the first quarter of this fiscal, it sold only 100 motorcycles and for the whole of the last fiscal it was 2,470 units. About 65% of sales volumes come from smaller capacity bikes of 750cc.

Though India is one of the biggest two-wheeler markets, it is dominated by the commuter bike segment, many of which are below 150cc. The leisure bike segment, which Harley Davidson caters to, is too small and it is dominated by Royal Enfield’s Bullet motorcycles.

Another deterrent is affordability. Harley-Davidson faces a heavy import levy as its components are mostly imported. An entry-level Street 750 costs around 470,000 rupees ($6,270), while a Royal Enfield’s Bullet can be purchased at a quarter of this price. Even without levies, the price difference between the two bikes is wide.

Harley-Davidson will join the growing list of automotive brands, such as General Motors, Fiat, Ssangyong, Scania, MAN, UM Motorcycles, which have exited India over the last few years.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now.