The American company believes passing on the new EU tariffs to dealers and customers would make a “detrimental” impact on its business
Harley-Davidson has been facing huge troubles lately due to the new tariffs listed in Europe and it could force the company to reconsider its strategic plans going forward. In a recent filing to investors, the famed American manufacturer has said that they could possibly shift production from United States for some of its motorcycles due to the EU pressure.
Opting for a new production facility outside US may help Harley-Davidson to move away from the hefty EU import tariff. It came as a result of United States government imposing high taxes on foreign goods in a bid to promote local production and distribution. President Donald Trump’s latest move has led to the hike in tariffs for steel and aluminum materials imported.
The European Union hit back at the decision and has implemented 31 percent import tariff a few days ago. Harley-Davidson has survived big financial crisis over the years and it has been defiant in tackling troubles but the new European tariffs will hike the prices of its motorcycles by a big margin where the company is enjoying good market share.
As much as $2,200 could be added to the existing price range of each motorcycle in Europe and it accounts to more than Rs. 1.6 lakh. The company believes passing on the tariffs to dealers and customers would make a “detrimental” impact on its business. But the alternative plan to avoid the possible dip in sales in Europe would be to bear all the expense on themselves.
That would mean Harley-Davidson, on a short term till the end of this year, won’t increase the price rates and will have to endure a loss estimated at around $35 million (Rs. 238 crore). However, looking ahead, HD will be planning to shift production of motorcycles, especially for the European continent, from US.
Increasing production on its manufacturing bases elsewhere could become a solution too but that would require at least nine to eighteen months of full upgradation. As a temporary solution, Harley-Davidson could opt to produce some of its EU models in India and that could result in possible price drop for our domestic market products as well.