Dealers in India for Harley-Davidson Inc said on Tuesday they are exploring legal action against the iconic American motorcycle brand after it effectively exited the market as part of a broader restructuring plan.
A number of dealers have hired leading Indian law firm AZB & Partners to review their paperwork with Harley-Davidson and suggest if there is a legal remedy, Rishi Aggarwal, a dealer for the motorcycle company, told reporters.
“Harley has to compensate us for our losses. That is the only bone of contention. AZB is studying the case,” he said during a press conference organised by The Federation of Automobile Dealers Association (FADA) in India.
Harley-Davidson did not immediately respond to a request for comment.
The U.S. company in September said it would discontinue its sales and manufacturing operations in India after a decade of struggling to gain a foothold. A month later it entered a distribution deal with India’s Hero MotoCorp which will also develop motorcycles to be sold under the Harley-Davidson brand.
India is one of the world’s largest motorbike and scooter markets but the bulk of sales come from low-end, commuter models.
Harley-Davidson’s annual sales in the country halved to 2,470 motorcycles in the fiscal year to March 31 from 4,641 units five years earlier, industry data shows.
General Motors (GM), MAN Trucks and UM Motorcycles have also exited India in the last three years, creating uncertainty for dealers that typically invest millions of dollars to set up showrooms.
FADA said it typically costs between 50 million and 80 million rupees ($673,682-$1 million) to set up a Harley-Davidson dealership. Compensation being offered by the company is around 10% of the investment, it estimates.
“They have come back to us with some numbers but it is not even 10% of what we are looking for. It is peanuts,” said Arjun Bafna, who has been a Harley-Davidson dealer for 10 years.
The automaker is reportedly changing its India strategy with topline-only models and is planning to stop manufacturing from the country. The company is currently consolidating its operations as part of its global strategy to focus on its key global markets.
Reports citing sources close to the matter have revealed that the decision to consolidate operations in India comes in light of the premium bike segment that has shrunk after failing to fully expand to its potential.
Following the same, Harley-Davidson and India’s Hero MotoCorp announced a partnership for the Indian market.
As per the distribution agreement, Hero MotoCorp will sell and service Harley-Davidson motorcycles and sell Parts and Accessories and General Merchandise riding gear and apparel through a network of brand-exclusive Harley-Davidson dealers and Hero’s existing dealership network in India.
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