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After Harley announcement, FADA calls for Franchise Protection Act
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SME Times News Bureau | 25 Sep, 2020
With the announcement of Harley-Davidson to close its India
manufacturing facility, the Federation of Automobile Dealers Association
(FADA) called for the need for a Franchise Protection Act in the
country to avert brands from abruptly closing their operations leaving
their channel partners and customers in a fix.
On Thursday, the
cruiser bikes giant had said that it plans to close its manufacturing
facility in Haryana's Bawal and significantly reduce the size of its
sales office in Gurugram.
"The company has not informed any of
its dealer partners about its closure plans and dealers are yet to
receive any official communication," the association said in a
statement.
"It goes without saying that dealers who have invested
their hard earned capital in this iconic brand are left like an
abandoned baby without any compensation package."
Consequently, FADA called for a Franchise Protection Act in India.
"With
every brand closing its shop in India, India's capital flow goes down
the drain. With a luxury brand like Harley, setting up its dealership
costs anywhere between Rs 3-4 crore and with a total of 35 dealerships,
Rs 110-130 crore will go down the drain," the statement said.
"Moreover,
there will be customers who will not receive glitch free service as
spares will now be in shortage thus leading to cases and harassment to
dealers from their customers."
The association pointed out that a luxury two-wheeler dealership on an average employs 50 people.
"With 35 Harley dealers, around 1,800-2,000 people at dealerships will lose their jobs," FADA said.
"After
General Motors, MAN Trucks and UM Lohia, Harley Davidson is the 4th
Automobile Brand which is shutting shop in last 3 years in India."
On
its part, Harley-Davidson said that it plans to close its manufacturing
facility in Haryana's Bawal and significantly reduce the size of its
sales office in Gurugram as part of 'The Rewire' initiative which
intends to overhaul the company's operating model and market structure.
According to the company, it is changing the business model in India and evaluating options to continue to serve its customers.
"Harley-Davidson
plans to close its manufacturing facility in Bawal and significantly
reduce the size of its sales office in Gurgaon (Gurugram)," the company
had said in a statement.
"The company is communicating with its
customers in India and will keep them updated on future support. The
Harley-Davidson dealer network will continue to serve customers through
the contract term."
It added that these actions are aligned with
'The Rewire' initiative which is planned to continue through the end of
2020, leading to 'The Hardwire', a new strategic plan for 2021-2025
aimed at building desirability for the Harley-Davidson brand and
products.
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