While U.S. sales remain slow, Harley Davidson is planning to up the number of dealers selling the Motor Company’s bikes in Brazil.
The company reached an agreement with HDSP/Grupo Izzo, its exclusive dealer in Brazil, that will allow for appointment of new retailers in the future, according to a statement today that didn’t provide details. Costs of the planned expansion will reduce profit this quarter by as much as 6 cents a share, Milwaukee-based Harley said in a regulatory filing.
Harley has sold bikes in Brazil since 1993 and assembled them there since 1999. Harley also recently announced the construction of an assembly plant in India. Looks like they’re focused on growth in international markets while waiting for the U.S. economy to get back on the road.
Link: Bloomberg
BobG says
“while waiting for the U.S. economy to get back on the road.”
Aren’t we all!
B50 Jim says
“Looks like they’re focused on growth in international markets…”
In a global market, growth in international markets will reduce the money available to help the American economy to get back on track; there’s only so much to go around. Not blaming Harley here — they have to go where the cash is. But as U.S. businesses of all types chase low labor costs, the home market will naturally have less money to spend on expensive toys like motorcycles. I wonder if those “happy days” ever will return?
HoughMade says
No U.S. sold Harleys are being assembled elsewhere. The bikes assembled in Brazil, and to be assembled in India are not manufactured there, but assembled. They are assembled of parts largely from the U.S. What this means is simply that whatever Harley sells overseas takes no money out of the U.S. economy. Rather, it brings money into the U.S. economy. Sure, it would bring more money in if the bikes were assembled in the U.S., but that’s just an unrealistic hypothetical because if they were, tariffs would force pricing that would prevent the bikes from being sold there. Some of something is better than all of nothing.
Random says
Thankfully. The current local dealer is known for bad market practices, such as not stocking spare parts enough for common repairs. There was even a lawsuit from HD against them. Even though HD has a strong brand image (and are known to be reliable even facing our awful road conditions) here many people were unsure of buying bikes due to this problems.
Yeah, the bikes are only assembled here (not manufactured), that lowers some taxes when compared to importing. Some people employed here, some money sent to US – win-win situation?
Derek Larsen says
I find it interesting that HD is pushing bikes in countries with relatively lax legislation in place regarding pollution and other environmental standards. Actually, I take that back: Brazil has been one of the biggest developers in using bioethanol.
Paulinator says
…so the decision-makers at HD are picking off the BRIC club (Brazil, Russia, India and China). Why will Harley continue paying Cledis $22 USD per hour to polish chrome in an EPA monitored shop in Illinois when Parmajeet and his 6 oldest sons will do it for piece-work in a dirt lane outside of Delhi. (Don’t the “Live to Ride” leather goods already come from Islamabad?) It looks like H-D will be facilitating trade between Brazil and India soon.
Random says
Even brazilian “standard” gas is up to 25% ethanol. Not good to engines brought here without a good ECU remap (factory or power-commander-like), as bikes end up running lean. Carbs are now out of the map too (for big bikes at least), as the EP standard is an EURO-3 copy. The HD potato-potato sound remains the same with ethanol, though. 🙂
Chris R says
Seems HD is using the same play book that GE transportation is doing. Developing “kits”, then assembling in the country of purchase. Ultimately, due to economics and the need for beancounter desire for higher profit margins, components will be manufactured in the country of purchase and the so called “kits” will be nothing more than a set of “intellectual property”. Henry Ford’s theory of paying employees wages to afford His product, has become a dwindling sliver of light in America. Let’s pray for the blue collar worker that once made this country great. I hope people are paying attention to this move by HD.
Tom says
Not much hope as long as people self-righteously continue to vote against their own interests.
Eduardo Di Lascio says
For the record, with all the dealer issues going on, HC sold 2.904 bikes in Brazil, from january to october.
Tom says
The bread-and-butter for Honda’s Japanese motorcycle factories for decades was manufacturing “kits” for assembly in local markets.
Jim says
Developing export markets is exactly the proper strategy for HD and any US manufacturer. If, as expected, the Federal Reserves actions in QE2 reduces the value of the USD v. other world currencies US exporters should get a shot in the arm as US products will be cheaper in foreign markets and domestically what ever manufacturing still remains in the US will see its imported competition’s costs rise.
If HD’s sales in any of the export markets grow to the point that they can justify building a compete factory there or sourcing locally, then that could be a loss for US jobs. But frankly that is a worry so far in the future that it is not a concern.
Tinman says
Expanding markets with knock down kit bikes is surely a good thing. It certainly worked for the Japanese manufacturers, and it will work for Hd as well. The foreign demand for HDs is there, being able to deliver bikes at a reasonable price will be a success.
B50 Jim says
Will they give those Harleys Brazilian wax jobs?
Just trying to lighten it up a little.
Paulinator says
Jim, I designed a special fastener that entered production at $3.00 each. Within a year the local vendor was charging $9 bucks. It then got outsourced to China for 47 cents – about half of the actual stainless steel material cost (commodity?). The FED will have to print a lot of monopoly money to level the field against China.
Kai says
“In a global market, growth in international markets will reduce the money available to help the American economy to get back on track; there’s only so much to go around. Not blaming Harley here”
Actually, the money supply is essentially unlimited – there is no physical basis (like gold or oil) for it. Banks simply create it through issuing loans.
No matter how much investment going on around the world, there is just as money available in any particular place as there is confidence it can be paid back – or confidence that that the lender won’t get lumped with a bad debt if it isn’t.
Anyway, I think HD move is a smart-one, diversifying their market makes for a more reliable income – a slump in one area doesn’t see the company crash, as it has other markets to keep it going…
nortley says
Sorry, no wax jobs B50, but they will be available in white powder coat.
Aaron says
(i live in Brazil, Sao Paulo)
I bought an Opel from Argentine, and after i had crossed the border, and refueled with Brazilian GaSol(Gasoline+Solvent), not even 10 miles i have KILLED the engine, the fuel crashed the ECU, clogged fuel injector and dissolved the fuel pump components…
‘Cause argentinian gasoline is more like Diesel, more soft, and brazilian is made to reduce emissions, so this costed to me about 6.000 dollars, when i finally arrived in Sao Paulo, almost all parts from Fuel tank to Injector and Spark plugs were of locally brazilian VolksWagen, from original Opel remains just the body and interior…
So i read histories about people that had the same problem as i, even Bush’s Limousine when he came here for a deal of the Ethanol tecnology, had the exactly same problem!
And Premium gasoline here, is a trash additive with less Ethanol and less Solvents, and cost almost twice of the “standard”…
unfortunattely, i’ll not buy a HD here, just in a few years when i’ll return to France…