Harley-Davidson To Shift Production Overseas To Offset EU Tariffs

Harley-Davidson plans to shift more production of motorcycles overseas to avoid stiff European Union retaliatory tariffs on the American brand's motorcycles. The retaliatory tariffs imposed by the EU are in response to President Trump's trade measures, deciding to increase import duties of steel and aluminium imports. President Trump has time and again pointed out to the iconic American motorcycle brand, as he pursues a protectionist trade policy, but instead Harley-Davidson seems to be facing the heat, following the retaliatory tariff hikes in the EU and announced even in India.

Also Read: Trump Slams Harley On Moving US Production Base

Harley-Davidson has said in a statement that tariffs on motorcycles exported to the EU have increased from 6 per cent to 31 per cent. With Harley-Davidson's sales in the United States slowing down and Europe being a crucial overseas market, the company said it will shift production to its overseas facility to avoid raising costs.

"Harley-Davidson believes the tremendous cost increase, if passed on to its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region, reducing customer access to Harley-Davidson products and negatively impacting the sustainability of its dealers' businesses," the company said in a public filing.

Sales of Harley-Davidson have slowed down considerably in the US domestic market over the last couple of years, while overseas sales have strengthened. Harley-Davidson now increasingly relies on overseas markets with a dwindling customer base in the US. The company now manufactures and assembles some bikes and parts at its facilities in Brazil, Australia, India and Thailand. Last year, the company sold 40,000 new motorcycles in Europe, equivalent to one-sixth of its worldwide sales, making the EU the most important market after the US. In India too, Harley-Davidson is the leading premium motorcycle brand in sales volumes, selling more than 3,000 motorcycles every year.

Although sales in India are dominated by the largely made-in-India or assembled-in-India models, the rising sticker price of its models in Europe could very well deal another blow to pressure on Harley-Davidson's annual volumes.