Market Overview

Harley-Davidson Inks New Partnership In China

Harley-Davidson Inks New Partnership In China

Iconic motorcycle brand Harley-Davidson Inc (NYSE: HOG) reached an agreement with the Chinese manufacturer Qianjiang to build a small motorcycle that will be sold in global markets, The Wall Street Journal reported Wednesday. 

What Happened

Harley-Davidson's new partnership calls for Qianjiang to manufacture a new motorcycle with an engine displacement of 338 cubic centimeters, WSJ said.

That makes it the the company's smallest bike in decades and nearly half the size of the typical 601 cubic centimeter engine in most motorcycles sold in the U.S.

Even though the bike is small, it will still be considered a premium product in the Chinese market, the report said. The Chinese manufacturer boasts the necessary experience in building small motorcycles and has the expertise to ensure the bike looks and sounds like a classic Harley motorcycle.

Why It's Important

Harley is front-and-center in the growing global trade war. President Donald Trump blasted Harley in a Tweet in August 2018 and said it was "great" consumers were threatening to boycott the company if it moved production outside the U.S.

What's Next

Harley's announcement is consistent with the Milwaukee, Wisconsin-based company's prior comments to the effect that it will move production overseas to avoid new duties, WSJ said.

The company will continue looking at other factories in China and in other Asian countries for additional production, according to Wednesday's report; the company has guided to increase the mix of international sales from 42% of total sales in 2018 to 50% by 2027.

Harley shares were up 0.74% at $35.24 at the time of publication Wednesday. 

Related Links:

Harley-Davidson Beats Low Q1 Expectations, But Analyst Says US Retail Environment Challenging

'Easy Rider,' Harder Sell For Young People: UBS Asks Whether Harley-Davidson's Moment Has Passed

Photo courtesy of Harley-Davidson. 


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