The following is a statement from the Federation of Automobile Dealers Association:
The recent announcement of the exit of Harley-Davidson motorcycles in India has left Indian Dealer community hugely bitter and angry. Saddled with big loans and an uncertain business environment glaring at their face, the dealers are crying hoax as they are being coerced with ‘take-it-or-else leave’ offer. The dealers are questioning the tall promises made by the brand and its core values of ‘brotherhood’.
Demanding a fair deal, the dealers and chapters have intensified their pitch to jointly expose Harley-Davidson who continues to make coercive offers to vulnerable dealers. The 33 dealers and chapters are exploring legal action even as Harley-Davidson is seeking to develop, sell and service motorbikes under a deal with Hero MotoCorp Ltd in India over the next 3 years.
AZB & Partners, a leading Indian law firm based in India, is currently reviewing the paperwork with Harley-Davidson dealers to suggest a legal plan of action. The Federation of Automobile Dealers Association (FADA) in India is backing the Harley-Davidson dealers in their demand for a fair settlement deal.
The American motorcycle company is offering the dealers a mere US$20 per sq. ft. value depreciated at 10% per annum for the years in operation and a 6-month reimbursement of the sale margins. This deal is applicable only on condition of accepting the Hero-Harley dealership. The dealer brotherhood is crying foul by attempts of coercion and insensitive treatment by the company, terming it as the “worst deal ever” in the Indian market. The compensation offer is only close to 20% of the sum that General Motors had paid while shutting down its India operations in 2017.
Said, Mr Vinkesh Gulati, President FADA, “Harley-Davidson is not living up to its claim of brotherhood as its cornerstone and is giving Indian dealers a raw deal. When General Motors, another American company wound up its India operations in 2017, the dealers were offered a substantially higher compensation and the settlement was far more reasonable.”
The Harley Dealers Association in a statement on 23rd September when Harley-Davidson announced to wind up India operations, said, they were expecting the decision to be implemented in the true spirit of upholding the brand’s spirit of brotherhood and to respect the interest of its dealers.
For the dealers of Harley Davidson, the cost of setting up a showroom has been much higher than that of any other auto brand. The reason is because of Harley-Davidson’s insistence for dealerships or chapters to reflect the scale of its brand in display, size, location and customer offering. Harley-Davidson dealerships are not 1,000 square feet of retail space to sell motorcycles, but spread across 9,000-odd square feet of area including a cafe, a workshop, garage, lockers and even a shower facility for riders to give them an experience unique to the Milwaukee-headquartered group.
Gaurav Gulati, an avid Harley Davidson rider-turned dealer, turned a once-abandoned warehouse in Delhi into India’s best motorcycle dealership. The compensation means nothing in comparison to the US $1.2 million investment and factoring US $20,000 per month towards rent expenses.
Gulati Said, “The compensation offered is so poor that it completely shatters the philosophy of ‘brotherhood’ that Harley created. Harley has failed us to compensate us for the deep losses we have incurred. After working so hard and passionately, we feel cheated by such tactics. After believing in Harley’s India dream and holding the flag high, we feel let down, despite having stood by the company all through.”
Adarsh Tulshan, an avid Harley-Davidson rider-turned dealer says, “The compensation offered is almost negligible compared to my US $1.5 million investment and a $30,000 monthly rent and employee salaries. The compensation offer being made is a mere 10% of the investments I have made, leave aside the losses I will have to incur to make Harley the most selling premium motorcycle in India with more than 50% market share year on year”.
South India based dealer, Ramu Yelamanchli, who had invested his huge amounts to set up a dealership for his son is a worried man. He said, “If Harley was unsure of the Indian market why did they entice us to keep investing our hard earned money? They capitalized on our emotional attachments for a 100 plus year brand. Now they are prying on the emotional situation of certain dealers and are forcing them to accept their shoddy terms of settlement. It is indeed very unfortunate.”
Ramu lamented, “The whole brotherhood story of “riders first” has been left shattered in the manner in which Harley-Davidson has chosen to execute this settlement. Who will bear the loss of scaling down and why should I pay for it?”
Manish Gupta, who owns the Harley-Davidson dealership in Central India said “We have been left with uncertainty about the fate of our investments and a gloomy business outlook. The brand made big promises such as a new smaller segment for bikes and several methods to improve sales. We expect Harley-Davidson to appropriately compensate us and honor the essence of brotherhood”.
Added Gupta, “Collectively, nearly US $25 million has been invested in dealerships. Now these investment will become zero. We have to continue paying rent and salaries to our employees during the uncertain times. The compensation deal had only soured Harley-Davidson’s ill-planned India story during its exit than sweetening it.”
Founded in 1964, Federation of Automobile Dealers Associations (FADA), is the apex national body of Automobile Retail Industry in India engaged in the sale, service and spares of 2/3 Wheelers, Passenger Cars, UVs, Commercial Vehicles (including buses and trucks) and Tractors. FADA India represents over 15,000 automobile dealers having 26,500 dealerships including multiple Associations of Automobile Dealers at the Regional, State and City levels representing the entire Auto Retail Industry. Together we employ ~4 million people at dealerships and service centres. FADA India, at the same time also actively networks with the Industries and the authorities, both at the Central & State levels to provide its inputs and suggestions on the Auto Policy, Taxation, Vehicle Registration Procedure, Road Safety and Clean Environment, etc. to sustain the growth of the Automobile Retail Trade in India.