Trying times for the auto Industry

ByNabeel Ahmed

Oct 13, 2020
automobiles, harley-davidson, India

Harley-Davidson bids goodbye to Indian fans while Toyota seems to be in a bad mood 

Since March 2020, when a countrywide lockdown was announced to contain the spread of the novel Coronavirus, automotive companies have been having a hard time. In the past few months, with the easing of restrictions, the situation has started improving for the automobile world, but there is still a long way to go before sales figures can reach pre-Covid levels.

Amidst this slump in sales, the iconic American motorcycle brand Harley-Davidson has made the announcement that they will cease sales and production activities in India. They will, however, continue to provide after-sales services to their customers.

The move by Harley Davidson came in the wake of the brand initiating its ‘Rewire’ strategy under which it will be pulling operations in several low sale markets while at the time consolidating its presence in high profitability markets.

In India, the company reported a $96 million loss between April and June 2020. According to SIAM (Society of Indian Automobile Manufacturers), the brand sold some 103 units in July 2020 and some 176 units in August 2020.

Harley-Davidson is seen as an icon for bikers when it comes to the cruiser segment. The brand shutting down its manufacturing facility in Bawal is a big blow to the admirers of the brand.

Toyota India subsidiary has announced a Rs 2,000 crore investment in India after news of it halting expansion in the country surface image// Getty Images

Toyota flip flop

 In a surprising turn of events, Toyota Kirloskar Motor, the Indian subsidiary of the Japanese car manufacturer, within the span of a day announced an investment of more than Rs 2,000 crore soon after its top officials said they will be halting expansion in the country.

Toyota, which had a market share of around 4.63% in 2018, has been doing better than Tata Motors and Honda in India. However, on 15 September 2020, Shekhar Vishwanathan, vice-chairman of Toyota Kirloskar was quoted in a Bloomberg report saying that the company won’t expand further in India due to high taxes, which make it difficult for automakers to achieve economies of scale. “The message we are getting after we have come here and invested money is that we don’t want you,” he said, according to the report.

However, just hours after the report came out, Kirloskar made public its investment plans in the country while stressing that India is an “integral part” of its global strategy. It also said it expects the Indian government to take steps to support the auto industry through tax cuts.

“In the wake of the slowdown that has been exaggerated by the Covid-19 impact, the auto industry has been requesting the government for support to sustain the industry through a viable tax structure. We remain confident that the government will do everything possible to support the industry and employment,” Toyota Kirloskar said.

The company further said that it continues to be committed to the Indian market and its workers and will do everything to protect its marketshare, along with its workforce and sales network.

The statement from Toyota motors came in response to a tweet by Prakash Javadekar, Union minister of environment, forest and climate change, who termed the Bloomberg report “incorrect” and said Toyota will invest more than Rs 2,000 crore in India over the next 12 months.

The conflicting stands taken up by the company have come in the backdrop of a slowdown in sales as well as the economy of the country. However, with the reopening of the markets and the festive season right around the corner, auto manufacturers are hoping for a turnaround.

What remains to be seen, however, is how automakers will deal with the lasting impact of the slowdown of growth of the Indian economy and the shock in sales due to the Covid-19 pandemic.

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