Following regulatory tariffs imposed by the European Union following US President Donald Trump’s decision to impose tariffs on steel and aluminum, Harley Davidson is mulling shifting of production to Asia.
These new tariffs which were raised by the EU from 6% to 31% could cost the company $90-100 million annually. This in turn would add an additional $2,200 to the cost of motorcycles sold in Europe.
Last month, Harley Davidson revealed extensive future plans. The biggest was their focus on Asia, which is currently seeing a huge rise in demand for entry level motorcycles. Harley Davidson is looking for a local partner in Asia to setup manufacturing unit for 250-500 cc single cylinder motorcycles. This has clearly not went down well with their fans and country President back home.
As this announcement hit headlines, some of the Harley Davidson owners stated that they would boycott the company. In a tweet, on Sunday, Trump expressed disapproval at Harley’s plans to move production overseas. He tweeted “Many @harleydavidson owners plan to boycott the company if manufacturing moves overseas. Great!”
Harley Davidson’s plans include making entry into countries like India and China as the company faces this financial burden. The company already operates plants in Brazil and India while the company plant in Australia is also closing down with a new plant opening in Thailand.
In an interview to CNBC last month, Harley Davidson CEO Matt Levatich stated that in view of the new levies the company was forced to make alternative production plans. US sales have dipped following lack of millennial buyers while total global sales from exports amounted to $24.1 billion in 2017.
As Asian countries accounted for the largest share of exported bikes the company has decided to move production overseas, especially in Asia, where there is more demand and manufacturing costs are low.