2 days Ago By Moneycontrol
US motorcycle manufacturer Harley Davidson has called for reciprocal duties on its foreign rivals as it faces a potential 50% tariff proposed by the European Union (EU), reports The Wall Street Journal. “Competitor brands should not be allowed to take advantage of low-cost manufacturing and preferential import duty when accessing the U.S.
market,” Jonathan Root, the company’s chief financial officer, told a congressional trade panel Tuesday. The EU has proposed these tariffs as a retaliation to duties imposed by the Trump administration. The company’s motorcycle prices will steeply increase if these tariffs are implemented in April.
For example, its touring bike Road Glide, priced at $28,000 in the US, currently sells for around $77,000 in Denmark after 25% value-added tax and 150% luxury tax are added. The proposed new EU tariff would take the Road Glide price to $124,000. The company further said that its products are afflicted by unfair trade policies in other markets, too.
The iconic motorcycle maker, based in Milwaukee, has been both a beneficiary and a victim of tariffs. Back In the 1980s, the Reagan administration imposed duties on imported bikes, rescuing Harley from near-bankruptcy and helping it to dominate the domestic market. Later in 2018, the EU imposed a 25% duty on Harleys for three years during a global trade spat over metals.
The company had to absorb the $166 million cost to retain down retail prices. Also this forced it to move some of the production to Thailand to reduce the bill. Motorcycle-industry consultant Michael Uhlarik said the Harley Davidson has little room in Europe, dominated by Asian and homegrown brands such as Triumph, Ducati and BMW.
“Even a 10% to 20% increase in pricing plus antipathy toward American brands in general would be a death knell,” he said. Meanwhile, Harley’s chief executive, Jochen Zeitz, described the bikes as a symbol of freedom and adventure. Though the company says it is profitable in Europe, its business in the region has been declining.
Some riders and dealers complain that the bikes have become too pricey and the variety too meager. Additionally, another fatal step came a few years ago when Harley discontinued its least expensive motorcycle, the Sportster. It accounted for a third of sales volume in the European region, but the company called it a money loser whose decades-old engine didn’t meet modern air-quality standards.
The Sportster’s replacement, the Nightster, has a cleaner and quieter engine but hasn’t matched its predecessor’s appeal. “They were significantly over engineered and too expensive, so we lost the entry level,” said Christian Arnezeder, a former leader of Harley’s central European operations. Dealers and riders said Europe’s strict clean-air standards have muffled the signature growl of Harley’s V-Twin engines.
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