Harley-Davidson to make smaller motorcycles in China ? smaller as in 338cc

Harley-Davidson for China

Harley-Davidson to make smaller motorcycles in China ? smaller as in 338cc

The company announced on Wednesday it is working with Qianjiang Motorcycle Company Limited to sell "smaller, more accessible" Harley-Davidson motorcycles in China beginning in 2020.

Trump previous year threatened to impose higher taxes on Harley after it made plans to move production for European customers overseas, part of a longer-term strategy for dealing with lower sales in the US and higher costs because of trade tariffs.

The motorcycles will include 338cc displacement engines, which are smaller than anything Harley-Davidson offers in the U.S. The company said the collaboration is part of an effort to grow its worldwide business to 50 percent of its annual volume by 2027.

The company's existing range of motorcycles is generally far larger and comes with engine capacities of more than 601 cubic centimeters. There's no indication if Harley-Davidson plans to offer it to other markets.

Even if it will be made in China, the Americans say the new bike will keep true to the "rigorous quality standards and testing processes", that have shaped recent motorcycles.

Wedbush Securities Equity Research Managing Director Daniel Ives on Harley-Davidson and the impact of Trump administration trade policies on the US economy and markets.

While it doesn't yet have a name, Harley-Davidson promises that the bike will "embody a distinctive look, sound and feel". "For many, affordability is an issue".

Harley-Davidson said it picked Qianjiang as a partner based on its experience developing premium small-displacement motorcycles, its supply base and its knowledge of emerging markets. The company views China as a major growth market, with sales in the country increasing 27 percent last year compared to the previous year.

The company said in 2018 that it plans to launch lightweight motorcycles in Asia and electric bikes globally, trying to revive demand as it faces falling sales in the United States and the threat of trade tariffs weigh on its costs.

As part of a plan it calls "More Roads to Harley-Davidson", the company expects to spend $675 million-$825 million over the next four years, cutting costs and generating $5.9 billion-$6.4 billion in revenue in 2022.

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