Commentary

Harley Collaborating With Chinese Company To Build Smaller Bike

Harley-Davidson is partnering with the Qianjiang Motorcycle Company to build a smaller motorcycle in China that it says  will expand its access in Asia and bring “our brand of freedom to more people, in more places, in more ways.” 

The new bike will have an engine displacement  of just 338cc as opposed to 1,746cc, for example, on Harley’s 2019 Road King. “Most motorcycles sold in the U.S. have engines of 601 cubic centimeters or more, according to Harley,” Austen Hufford reports  in the Wall Street Journal.

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“Harley wants to sell half its bikes abroad by 2027, up from 42% in 2018, as domestic Hog sales to a shrinking base of aging customers continue to decline. The push overseas carries its own risks. The fastest-growing sales there are for smaller bikes in developing markets that sell for much less than the $25,000 black-and-orange machines coveted by American riders,” Hufford adds. 

“Harley declined to reveal a price range for the new motorbike, but Qianjiang said it would be ‘affordable’ and Harley said it would be introduced elsewhere in Asia after the initial launch in China,” Reuters’ Rachit Vats and Sanjana Shivdas report.

“The international motorcycle market is huge, but Harley-Davidson has not been able to penetrate it with large/expensive bikes,” Craig Kennison, an analyst with brokerage Baird, tells them. “Our recent dealer survey work reinforces the need for Harley-Davidson to add more first-time riders. For many, affordability is an issue.”

Indeed, money talks.

“The company said last year it was moving some manufacturing to Thailand due to European Union tariffs on motorcycles shipped from the United States. The European Union raised its 6% tariff to 31% last June in response to the Trump administration's tariffs on steel and aluminum imports,” CNN Business reports.

President Donald Trump has yet to weigh in on the announcement. Last year, he encouraged a boycott  against Harley if it proceeded with a threat to move some manufacturing overseas to avoid the tariff hit. 

“Harley’s in a weird spot. But like how Buick sells a ton of cars in China but is trying to get over its image as a has-been here in the U.S., Harley has found that its image overseas has much greater upside than here,” observes Erik Shilling for Jalopnik. “What’s interesting about that strategy, is that Harley is growing in Asia and other markets by selling lighter-weight motorcycles, which is the same strategy that Honda, Kawasaki, Yamaha, and Suzuki used to nearly break Harley itself when they entered the American market in the ’60s and ’70s.”

The new motorcycle and its engine will be manufactured at Qianjiang's factory based in the city of Wenling  in east China’s Zhejiang Province, according to  Xinhua.

“Founded in 1985, Zhejiang Qianjiang Motorcycle Co., Ltd, is a subsidiary of Geely Technology Group specializing in the research and development, manufacturing and sales of motorcycles and engines as well as key components. In 2005, the company acquired Benelli, an Italian motorcycle manufacturing company with a 100-year history,” the Xinhua story continues. “Since Harley-Davidson announced its plan to build more riders globally in July 2018, the group has continued to expand its dealership network in China and invest in marketing, e-commerce and product supply.”

For all its bluster, Harley has, in recent years, “been moving down the displacement ladder. The company now sells a 500 cc bike for about $7,000, the Street 500,” Matthew DeBord reports for Business Insider.

“Small displacement makes sense if you're trying to attract new riders who might have learned the ropes on a 250 cc Honda Rebel on a motorcycle training course (or simply zipped around on a little dirt bike as a kid). Harley has left that space for the Japanese for a variety of reasons -- mainly because in the U.S., motorcycles are ridden more in the pursuit of fun than out of necessity, and the company wants to follow the money and sell pricey toys to affluent buyers,” DeBord continues.

Can’t wait to see how Harley will customize small-displacement models for the long-overdue “Easy Rider”  sequel, featuring a doddering boomer tossing his Apple Watch to the ground and softy throttling into the sunset as Leonard Cohen’s “Going Home”  plays in the background. 

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