Dealers of American bike manufacturer Harley-Davidson in India are considering legal action against the US company over inadequate compensation after it shut down its India operations as part of broader restructuring plans. Harley-Davidson said in September that it would be exiting the Indian market as part of its broader plans of exiting loss-making markets. Dealers have reportedly roped in law firm AZB & Partners to review their paperwork with Harley-Davidson and suggest if a legal remedy is available.
“Harley has to compensate us for our losses. That is the only bone of contention. AZB (legal firm) is studying the case,” one of the dealers of the motorcycle company said at a press conference held by the Federation of Automobile Dealers Association (FADA) in India.
FADA said it typically costs between Rs 5 crore-Rs 8 crore to set up a Harley-Davidson dealership. However, the federation estimates that compensation being offered by the company is around 10% of the investment.
Another dealer also cited the low compensation being offered by the US firm and pointed to the lack of clarity on how the after-sales system would work going ahead, while one of the dealers cited issues with spare parts availability.
According to an ET Now report, several dealers alleged that they didn’t know about the company’s decision to exit the Indian market and found out about the same only with ‘the rest of the country’.
FADA President Vinkesh Gulati was in favour of a franchise protection act for the dealers saying that the current regulations unduly favour original equipment manufacturers (OEMs) when it comes to business agreements.
Meanwhile, the company is yet to comment on the matter.
The American premium motorcycle brand in September confirmed that it is exiting the Indian market to optimise its global dealer network amidst dwindling sales. “Harley-Davidson will be discontinuing its sales and manufacturing operations in India, which will result in approximately 70 employees being laid off,” the company had said in a statement.
It then entered into a distribution agreement with Hero MotoCorp to distribute and sell its motorcycles in the country. As part of the agreement, Hero will also develop and sell a range of premium motorcycles under the Harley-Davidson brand name.
There are currently 33 Harley Davidson dealers in India. While dealers are awaiting clarity from Harley-Davidson or Hero on how their partnership will look like, the company’s dealership network is expected to be scaled down to just about 13-15 dealerships.