The problems: taxation system favours smaller cars, expat CEOs
don't always understand business landscape.
In recent weeks,
cult motorcycle company Harley-Davidson
made waves as it announced its exit from the subcontinent just seven months
after buzz that US President Donald Trump would actually push for favourable
trade terms on his visit here. The goal being that Harley could up the ante in
terms of its Indian footprint. Instead, the company that the 1969 Peter
Fonda-starrer Easy Rider made famous, slammed the brakes hard on sales and
manufacturing operations, taking a $75 million hit because it missed volumes
and revenue targets.
Such failure isn’t
uncommon.
Between 2014 and
2015, General Motors CEO Mary Barra came to India not once but three times.
Eventually, its company Chevrolet, which started here over two decades ago,
threw in the towel and announced in 2017 that it would pull out of the country
altogether.
The other American
automotive icon, Ford Motor Co, which started in India, fared marginally
better. It first came here in 1995 with a joint venture with Mahindra
& Mahindra (M&M), which didn’t last long and then got some traction
with its first car, the Ikon, in 1999 that was truly made for India. Its Fiesta
hatchback and EcoSport threw up successful numbers but slowed down as the
company ran out of new cars to launch. In 2019, Ford announced that it once
again would partner with M&M, which had a chequered history around
partnerships: M&M-Renault (2007), Mahindra-Navistar (2005) and M&M-Ford
(1995), all struggled to hit pay dirt and ended unsuccessfully.
India is a vibrant
auto market and despite the downturn, became the fifth-largest in 2019 with
sales reaching 3.81 million units. It was the seventh-largest manufacturer of
commercial vehicles in 2019. Which is why foreign players come here. But it
wasn’t just the Americans who had a rough ride. The Volkswagen Group had a good
thing going with Skoda but then lost its way with the positioning of its VW
badge and pricing strategy, something it’s striving to correct; Japanese auto
majors Toyota and Honda, despite their engineering pedigree, couldn’t drum up
market share and volumes.
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