A section of the dealers of the iconic US bike maker Harley Davidson in India after it chose to stitch up an alliance with Hero Motors ,complained that they were offered compensation far below expectations.
The support package given by Harley is not equal to the loss suffered by us since August this year and till Hero comes on board which will be atleast another 6 months, said an affected HD dealer.
The Harley-Davidson management offered a compensation of Rs. 1,500 per sq. ft. with a 10% annual value-depreciated rate and a 6-month reimbursement of the margins of sale.
This compensation, dealers maintain is way below compared to the Rs 300 crore the dealers invested over the last decade.
And on on average each dealer has been incurring a loss of Rs 30-40 lakh per month , said another HD dealer.
“From September 23 this year, when Harley-Davidson decided to wind up operations in India, we are uncertain about the fate of our investments and future business outlook. The brand had been in a growth mode since January this year that would include introduction of a new smaller segment of bikes and several methods to improve sales. We expected Harley-Davidson to appropriately compensate us,” one of the affected dealers said.
The Harley-Davidson Dealers Association, that represents the 33 outlets in India, facilitated the growth of the brand in India for 11 years.
Dealers, still awaiting clarity from Harley-Davidson or Hero MotoCorp on the next steps, estimate the network will be scaled down by more than half to 13-15 dealerships from the current 33.
Dealers point to the mid-sized bike Street, which accounted for 70-90% of sales in upcountry and metro markets and has been out of production for more than a month.
A section of Harley-Davidson dealers said continuing with many recently opened showrooms may not be viable, especially in smaller towns and in metros including the National Capital Region and Bengaluru, which have several such outlets. With its mid-sized popular bike, the ‘Street’ out of production for more than a month and which accounted for 70-90% of sales in upcountry and metro markets, a section of Harley dealerships feel it was not viable to continue with recently opened showrooms, especially in smaller towns.
Harley-Davidson announced its tie-up with Hero MotoCorp last month.