With all of the attention Harley has received setting up shop in China, seven dealers currently in place with plans for 28 by 2016, you would think, or at least hope, that Chinese riders would be running in and placing their orders. Well, not exactly. According to an article on Bloomberg.com, Harley sold 268 bikes in China last year. In the same time period, one large dealer in Milwaukee, House of Harley Davidson, sold over 500. So, one Harley dealer in Milwaukee sold twice the number of bikes purchased in all of China. Honda, meanwhile, selling scooters and bikes in the 125cc range, sold 1.25 million units.
The reasons for the slow sales are many, the first, as we’ve noted numerous times, are import duties on bikes, adding about 30% to the price and that’s before consumption and value-added taxes. The big Electra Glide Classic can sell for $53,000, while a new BMW or Audi sedan can be purchased for far less.
Another interesting rule I had never heard before is that motorcycles have to be scrapped after 11 years! You better ride a lot in those 11 years to make your purchase worthwhile.
Harleys also have to deal with lots of laws about where you can ride, many highways are off limits and noise restrictions also have an impact. Many areas consider motorcycles transportation for poor people and specifically restrict them to limit the type of people coming into the area.
Obviously, the Motor Company is just getting started, but these problems are not just getting the word out or normal marketing issues, these are policies specifically aimed at motorcycles that have to be resolved, otherwise, Harley sales will remain limited.
I understand the desire to get into the Chinese market, when any company looks at all of those people they figure there must be huge sales just around the corner, but the actuality seems to be something quite different. You might think Harley would have wanted to clear a few of those hurdles before committing to selling there, but the urge must have been too strong. It will be interesting to see how this plays out.
The Kneeslider has quite a few readers in China, and if any of you have some local perspective on this, we would be happy to hear what you have to say.
Link: Bloomberg
Jim says
Would be interesting to know if Ducati is available in China and how much a 1200 multistrada would go for
Paulinator says
I wonder how much IP Harley-Davidson has secured in China? I talked to a few Chinese manufacturing reps recently and they were literally gushing with pride over their nation’s ability to emulate high-end German cars. They’re even knocking off RR now…so why wouldn’t they build their own metric cruisers? And 30 dollar t-shirts? Those dealerships have got to be bleeding a river of red ink.
Tin Man says
Truely wealthy people ( Harleys Target in China) will not settle for a clone, Would you wear a Fake Rolex??
Paulinator says
Hmmm? Gee? let me guess? You have a REAL Rolex.
I fell from a jetty – into the rocky and near-frozen Georgian Bay – with my son (he was 8 at the time). He climbed out laughing and I crawled out bleeding…smashed my glasses, Timex and patella. I was grateful he wasn’t hurt and I was glad I wasn’t wearing a Rolex – other than that it was a really crappy day.
Rob says
Licensed clones.
Azzy says
They need to bring back their small engines. Every US company is missing out in a market where they could go big, by going small. Why limit it all to the dirtbikes (which Harley and Indian no longer do)?
kim says
Small displacement motorcycles – and reliable ones at that – are Honda’s strongest point; I doubt any company could beat them at that. H-D could lower the price by assembling the bikes locally, like they do in India now, thus avoiding the 30 % markup mentioned above.
Speaking of high prices, the Electra Glide Classic that costs $53K in China, goes for $91K in Denmark. But then our wages are high, and there are lots of Harleys out there.
hoyt says
I once posted a few comments (on a predominantly harley blog) about the “motor” company building small bikes and having the confidence to take on companies like Honda in these markets.
It doesn’t seem too difficult to do when the market is so large with so few willing to take on the competition.
(and of course, the bulk of the response on that blog was short-sided and do-ragged).
Tin Man says
Should we not question our U.S. government policies that allow imports from markets that use excess tariffs to restrict sales of foreign goods?? Fair Trade should replace one way Trade.
Ken says
The US government could enact stronger tariffs similar to what was done in the auto world. The manufacturers would just open assembly plants in the US to bypass those laws.
If the US really wanted fair trade, they would go to our trading partners and lobby to allow US people/manufacturers to hold patents in those countries or restrict patents here to US citizens or US majority owned buisness.
I’m no buisness expert and I am basing this off of a few things I’ve been told or read.
tc says
why not open new plants here? sure money would go to the big industry overseas, but it would also create jobs locally. foreign bike prices could potentially drop even lower, and get more riders on the roads.
todd says
opening a factory here would keep most of the money here. Not much is left over (profit) when building a motorcycle so not much goes back to the homeland. All of the employees from the guy sweeping the floors to the top level managers would be people living and spending their money in the United States. The cities would get the tax money and the service industries around and related to the plant would also benefit.
-todd
FXRocket says
Hmmm maybe HD might ship from their India plant? Maybe there might be a single cyclinder sportster that they can build there? just something to think about
Mikey says
Wait, didn’t the Buells have a single cylinder model?
Made with HD parts?
Matt says
Yes they did, It was basically a single cylinder Sportster mill. That bike would have been better suited for the Asian market IMO.
B*A*M*F says
The 11 year scrap rule is pretty obnoxious. From a government standpoint, it encourages consumption, and also will be useful in terms of pollution control later on. I get that, but I still really dislike it. Sometimes when things aren’t broken, they don’t need to be replaced.
Rob says
It’s an interesting one. Keeping the national fleet young, be they cars or motorcycles, has proven to be of benefit in resulting in less accidents and less fuel consumption. In Holland and many parts of Northern Europe owning cars over 10 years old is actively discouraged and older vehicles are singled out for extra attention come annual inspection time. There are plenty of classics on the roads so some consideration must be given to restored vehicles. I would imagine that the Chinese will allow you to keep your 11 year old Harley to tinker with and one day re-licence (and carrying more homemade i.e. made in China parts as possible haha) as restored. Good on Harley for being in and trying they might get burned but what have they lost and the potential market is huge.
HoughMade says
If they ever sell a significant number of H-Ds in China, there would seem to be some sort of business opportunity to gather 12 year old bikes with scrap value there and ship them somewhere else…..hmmmm.
Bob Nedoma says
Similar to Japan’s SUVs? Lots of right-hand-drive vehicles in Canada
rohorn says
That they sold as many as 268 is surprising – but I would love to know how many of those 268 were sold to foreigners. And how many customers bought those 268.
I also knew one dealer (In the USA) who bought his own leftovers so he wouldn’t lose the following year’s allotment.
Kenny says
Just out of curiosity.
Has there ever been a harley, bar the xr1200 and maybe the street rod, that has been designed for a foreign market.
WRXr says
China is very complex and rules on motorcycles vary from city to city:
In Beijing for example, except for some grandfathered bikes, no bikes are allowed with a displacement of over 125cc within the city center. police bikes are excepted.
In Guangzhou, home to Wu Yang/Honda, one of China’s biggest makers, motorcycles are not allowed at all down town.
The new interprovince highway access is also limited for motorcycles. Otherwise, the roads would literally be clogged with bikes and trikes all buzzing along at about 40mph.
Put on top of that, that most Chinese are aspiring to get OFF a utlitarian motorcycle and into a car. “Leisure” motorcycling as a hobby really has yet to be born.
Bob Nedoma says
exempted perhaps.
QrazyQat says
A lot of the leisure activities we think of in North America are less common, or just starting, in many areas of Asia. I don’t have experience with China, but do with Thailand, where they’re getting along fairly well economically compared to theior neighbors. Camping, for instance, is really just starting up as an acitivity. There’s a lot of interest, at least in the abstract, in mall displays of tents and camping equipment.
When it comes to motorcycles the leisure crowd (that is, the non-neccessary motorcycle as opposed to your everyday bike) tends toward vintage Honda Cubs and Vespas. You see clubs out on weekends with these bikes. There are some Thais with big bikes, even choppers, but you have to have an awful lot of money to fling around to buy something like that for funtime use only. For regular folks the usual step is from utilitarian small bike to a pickup truck for the family business (and to rent out for extra cash), and then the next step is a car. The small vintage bike or Vespa (or maybe a Yammy 500 single) is a goodly step cash-wise for a regular person. You have to be really committed with a decent job, in the bike business, or have a rich family to go out and buy a Harley or big Triumph or the like.
I’d think this dynamic is what you’d see in China, and what you’ll see in Cambodia and Laos as they start doing better money-wise.
eriefisher says
In many non-north American countries motorcycles are just inexpensive transportation. Small scooters are predominant in many countries. A $53k Electra Glide does not fit into this category. I don’t see Harley being successful with there current line up. They need to build some smaller bikes, even for their local market.
Kawistar says
The reason they scrap vehicles after 12 years in china is because the roads are so bad, a great majority of bikes have 2 cycle engines that don’t last as long, and because they are the main means of transportation, and not a weekend toy. All of that makes a small CC bike a serious death trap after 10 years, and, from personal experience, driving in the far east is already a challenge with the lack of adherence to traffic laws and narrow streets. For those who think that the Chinese are not manufacturing Metric Cruisers, just take a trip to any country outside of the western European circuit and you will see the profusion of Chinese brands at super low prices. They are building their economies of scale and are already taking away valuable market share from the Japanese Brands the world around. The only reason that they tax motorcycle imports into China is that they want the bikes sold in their country to be manufactured in their country, that way, they keep the jobs on-shore, and learn the manufacturing practices of the foreign manufacturers. I wish we would do that here in the US… product sold here should be built here; we might not be in the tight spot we are in today with all this unemployment.. The only problem is that the Republicans are in cahoots with the multi-nationals, and their constituents are retarded and can only see one inch in front of their noses. They are kept chasing their tails and freaking out with all the hate and fear rhetoric while we are being sold out for a quick buck.
gildasd says
Amen, could not say it better…
I remember how Chinese gvt used to whine and bitch when Europe had tariffs… Yet we shut up on theirs… Our gvts are short sighted losers.
HoughMade says
Interesting viewpoint. However, if safety were the main issue with the scrap rule, safety inspections would solve that issue without the scrap rule. Britain and many European countries do this. By the way, what did our Democrat President do with his Democrat Congress (until January 2011) to reverse what you see as this Republican cabal?
Kawistar says
It’s great that you should ask that question. The government has no say in whether a company wants to open or close a factory… or no real leverage. In the Eighties, before all the factories went to Asia, the factories were here. Japanese car and motorcycles were barred for a while in order to give companies enough time to become more competitive, remember? They opted to ship jobs overseas and lower production costs to attain profitability gains, instead of making changes in marketing/design teams (upper management). It is this self serving behavior that is the problem. De-regulation gave corporate America everything they wanted to destroy the Middle class… exporting jobs, changing the laws on financial investments and private banking, changing laws on govnmt. contracts, changing laws on unions, etc…. This allowed upper management to ship out (outsource and downsize) all of the “labour intensive” portions of America” so that they would not have to dilute their share of profit. If you look at the distribution/concentration of wealth from the time Reagan entered office to today, you will see the path we are taking to becoming more like South Africa and Brazil, in an alarming rate, it is pretty scary! The Chinese, are on the receiving end of this labour arbitrage and the middleclass there is growing very very fast, except, they are now not only OEM producers, but they have their own companies. That is what a “FREE TRADE AGREEMENT” is all about… You asked what did the current govmt. do to combat this… they freed the American worker who has a family member with a “pre existing condition” from bondage to a corporation with an alternative health care system. That way he/she does not have to eat S**T every day so their family members don’t lose their insurance and die. They can dream and strive for a better future and more satisfying and happy life/career without the pressure of sending a loved one to the grave. I think we should be more like China… its funny, they are the “Enemy”, but we made them what they are, so what are we?
Skizick says
Time to dust off those Harley Hummer blueprints.
john says
AMEN!!!
todd says
How could they afford to keep their dealers open? They must be selling tons of accessories. It’s hardly worth keeping themselves in that market if no one really wants the bikes and they have the stockholders to answer to.
I find it very interesting that the the 125 Honda is 4,664 times as popular as all the Harleys put together. I can’t imagine them wanting to build a 125 Honda clone, I’m not too sure they’d fare well competing with Honda in that market. This is really interesting and I wonder what Harley’s next move will be.
-todd
kim says
Given the profit margin of a H-D t-shirt vs. a H-D motorcycle, I suspect the accessories sales alone can keep the dealerships afloat.
OMMAG says
http://www.japanlaw.info/lawletter/july83/ase.htm
1983…… 7/83 US IMPOSES 45% TARIFF ON IMPORTED MOTORCYCLES
Just a reminder … at the demand of Harley Davindson based on claims of “dumping” by Japanese manufacturers the US government imposed import duties on Japanese motorcycles over 750cc in displacement.
Republican president Ronald Reagan signed the bill into law.
Based on false claims by HD North American motorcycle enthusiasts were forced to pay through the nose for decent machines. Harley got government subsidies (taxpayers gouged). … a double whammy if you were a bike enthusiast.
On the upside the jap bikes became even better……the down side …. European brands disappeared.
Tin Man says
Do you deny that Japan was dumping bikes in the U.S.?? Much as the Koreans are now doing with Automobiles. Only Germany seems to understand that a country needs to protect their manufacturing base against preditory trade practices. American consumers are to Greedy and Foolish for their own good, seduced by Wallmart and cheap Asian goods, then they wonder why their 26 Yr.old kids are still living at home.DUH.
hoyt says
Aah yes, Malwart, the very republican-friendly corp that plays right into the hypocrisy
Azzy says
And if they were? Why couldn’t Harley do the same in Japan? Ive been there twice, and seen a total of 4 HDs riding around Tokyo.
Maybe because after you pull off the HD label, all you find are labor markups. Somehow, the Japanese find a way to pay people a decent wage here in the us, and in their own country to assemble vehicles, that beat US offerings in price and many times in quality.
kim says
Not quite; the tariff was tailored to hit the Big Four only, as there was a provision for letting small-volume manufacturers (in this case the European ones) producing below a certain number of units escape that tax.
ric says
When HD gets into the real world and stops building out dated bikes for a small number of riders and gets some forward design people into their system and starts building smaller bikes that go/stop and go around corners they might just save them selvs
(Ric who rides old pom BSA new pom Triumph and also honda)
Dorzok says
he’s now building race bike under EBR because the motor company won’t let him use his own name.
Quist says
I totally agree with ric !!!!
krisna says
in asia we all know that trio japan is the market leader(suzuki,honda,yamaha). so it very difficult for harley to compete with small displacement motorcycle that have advantage in low price, low maintainance cost, and a lot more fuel efficiency than harley. i know this situation very well because i am an asian, indonesian for correctly. harley should make different strategy to increase the market in asia
Papasan says
Doesn’t seem like a hard sell to me, everybody around the planet likes t-shirts and bandanas…
akaacount says
After 11 years, don’t worry they’ll still be making exactly the same thing, so you can replace it without your superficial Harley respecting friends noticing
joe says
The Chinese only need a few Harleys, and within a couple of months they will have stripped them and revers engineered every componant .They do it with every other motorcycle ,car and machine,so why not Harley.I bet they’ve already set up fake dealerships and before long the knockoffs will be chugging down the highways.
Dorzok says
all this talk about china ripping off/reverse engineering other’s products reminds me that at one time Harley had licensed the Chinese gubmint to build “Harleys” for their military or something like that. maybe Harley outright sold them the plans for their 45ci WLs. ??? something like that.
Paul Crowe - "The Kneeslider" says
You’re thinking of Japan. See here.
Chris says
I’ve been living in China for 13 years and riding a vt250 Magna for the last 5 or so.
1) Big bikes, over 200 cc (depends a little on which province you’re in) are illegal. Vast majority of machines (95%+) are 125cc or smaller, scooters and motorcycles.
2) Bikes on the freeway are illegal.
3) Bikes in major metro areas are illegal (Beijing, Shanghai, Guangzhou, Shenzhen, Zhuhai, and increasing). And this is where the people have the money.
4) Many potential Chinese riders are too physically small to ride a Harley.
5) We are talking about at least two different Chinas: the weatlhy, urban, sophisticated East Coast, and the vast, teeming rural and unsophisticated hinterland. Young people in the trendy city centers have more money than you would believe. In fact, saving money is a loss of status; they want to spend it and show it off. For them, they will buy a Harley, legal or not, and just do the paperwork “underground”, like they are doing now. But demographically the numbers are small. For the vast majority, Harley will not catch on.
Motorcycles are being phased out by cars, and by executive order. They are, for the most part, used as packhorses; thus, the 11-year life span. They are a lifestyle brand only for a select few, and it will remain that way no matter what Harley does. This is a money loser.
There is even a little bit of status associated with having an “illegal” bike, as mine is. It means you’re too cool for school.
kim says
I’ve seen a lot of pics of sidevalve boxers, copies of the Russian copies of pre-war German BMWs. They wre used by the PLA. Are they illegal too?
steve w says
I know for a fact that companies such as Harley are paying China to protect its patent rights on products it owns and makes. That may have something to do with its presents there. When I worked for a much smaller ( to remain un named) manufacture of motorcycle parts they had to go to China and pay for protection on patents. Just another ripoff.
Erick says
If Harley wants to compete in SE ASia, and China, better build a factory somewhere in china or SE asia country, make 250cc engine or smaller, sell them by hundred thousands with price around kawak 250 (a bit higher is acceptable because of the logo in the tank). Put one or two big bike in the main dealer for added exclusivity.
v-twin 250cc scooter sounds like fun.
Tin Man says
What is so hard to understand? Harley does NOT want or need to compete in Asia, HD sells a premium product that is aspirational in nature, the worst thing they could do is sell cheap Harleys to the great unwashed masses. All HD has is its Reputation as an Icon, lose that and your just another bike.
mxs says
And that’s why they have so many dealers, in a country where it’s mostly illegal to ride their porky bikes??? LOL … unless of course your reply was tongue in cheek.
bblix says
While I’ve only ever been to China, I was surprised just how many more car there were on a recent trip this past Spring, compared to my first trip ten years ago.
At least where I was, Shenzhen, there were few motorcycles.
Aarushi Sharma says
A Harley Davidson-sponsored contest in China ends with the winner unveiling his artwork at the Milwaukee Art Museum.
http://liveoncampus.com/wire/show/3054050
Matt says
Harley stopped focusing on their bikes decades ago. If you remember they didn’t even have the engineering resources to design their own modern performance engine for the V-Rod. To the current management it’s all about the brand now. I imagine the location in China is more of a gift shop then a dealership.
Tom says
While it’s amusing to learn that Harley sold 268 more big v-twins in China than Honda sold 125cc road bikes in the USA, it’s more interesting to ask how many ST1300s Honda imported into and sold in China?
todd says
I guess if you step it up to 230-250cc street bikes Honda is probably selling at least in the 5 digits in the US. Considering that they have sold around 300 million motorcycles but have been in business half as long I’m sure they are an inspiration to H-D. You need to get a foot in the door first, then you can plan on ways of increasing market share. Their sales will only go up if they stick it out.
-todd
Tom says
According to their own financial filings, Honda sells ten times as many motorcycles in Asia as they do in North America, but make about the same money off each operation. I’m not sure all those low cost, low profit small bikes Honda manufactures really inspire Harley-Davidson, BMW, Triumph &etc all that much.
todd says
yeah, I’m sure Harley doesn’t really want hundreds of millions of people dedicated to their brand. You’re right.
-todd
Rob says
I think they should sleeve down an 883 to make a 499. That would sell over there, a cruiser version and a sport model (nothing radical bit of a fairing and pillion seat for the passengers).
Simon says
HD needs to concentrate on building American motorcycle for American riders, and that means diversifying their brand and branching out into smaller displacement motorcycles, like they used to do with the Pacer and the Sprint. (Only this time, perhaps, building them in the USA, instead of outsourcing to Italy.) They also had a scooter at one time, the Topper, and the Hummer has already been mentioned. And anyone who thinks that Harley has “given up” on motorcycles and is just selling their grand, as in T-shirts and gift shop items, simply hasn’t been paying attention. I have ridden old Harleys, and I am riding a new Harley, and I’ve ridden many different brands in between, and Harley has improved its motorcycles dramatically and continues to do so. For some reason, people in the corporate world keeping thinking that if they can only export more American products, more people in foreign countries will buy them, and this has not proven to be the case, largely because of protective tariffs imposed on American goods. Free market Capitalism doesn’t work very well if the US is the only country that practices it. In fact, it doesn’t work very well here, either. With all this talk about “job creation” and “protecting” the “job creators” by continuing to give large corporations tax breaks the rest of us do not enjoy, nobody seems to mention the fact that these “job creators” and are outsouring jobs to other countries and putting Americans out of work, and at the same time, claiming that they are reluctant to hire because of the “uncertain economy,” when the fact is that their profits are higher than ever and they have simply discovered that they can work fewer employees harder and increase their profits by cutting payroll. At some point, the American worker really needs to wake up and realize the he or she is being screwed.
Buck says
It’s too bad too since I think H-D has the potential for a really big market in China, and that’s not just because of the number of people in money. We’re talking about the only country in the world with a company that even considered buying Hummer after that went down.
daveainchina says
@Chris who is living in China. You are not exactly correct on bikes over 200/250cc being illegal in China.
I was recently looking into trying to start a business here selling Triumph motorcycles. (Many Chinese in Shanghai are crazy about anything with British credentials)
I discovered a few things. The government wants to get rid of the small scooters not motorcycles. The problem is that they translate scooters (50cc garbage machines) as motorcycles. They haven’t made full size motorcycles illegal. What they have done is change how they are registered.
Essentially large motorcycles are now registered as cars, the license plate in Shanghai this month is 52000 RMB (roughly $8200 USD). That means just to put a license plate on it, the cost is much higher than the comparable license plate for a 250cc and under plate. (like 6000 rmb or something like that I forget as I wasn’t looking at that market)
Who is going to pay an additional $8000 USD on top of a 30% duty tax (or whatever it is) and then the other taxes, which easily just push the total up to $50k for a HD which will only be ridden a few places and many people will consider the person who owns it to be crazy.
Chinese poeple as a whole think riding motorcycles etc are dangerous, considering I just broke my collarbone this past week into 3 lovely pieces and now have a plate with 8 screws in me(on my bicycle no less). Riding here, of any sort is dangerous, I see constant crashes of scooters and bicycles here in Shanghai
The most popular HD I see here is a sportster and I see a couple around frequently. The people who own them are rich and young and could easily ride larger bikes, the majority of HD bikes are just not appropriate for this type of traffic. There are plenty of people here to can handle the biggest HD bikes but they just don’t make sense in heavy stop and go traffic, they aren’t nimble enough.
I also learned that in 2015 China has to open its markets because of WTO rules. So right now in China the market for anything over 250cc is basically non-existent with the exception of a Chinese version of the Ural Sidecar.
HD bikes are not right for this market, Honda, Suzuki, Yamaha, Ducati, BMW, Triumph they all have bikes that are more ideal for this market, but I suspect they are mostly waiting for the WTO rules to kick in.
Let’s see what happens when the WTO rules change the regulations here, should be interesting.
todd says
I think Harley should partner with Cleveland Cycle Works and sell bikes like Tha Heist in China. In light of what happened with Buell it may not be the best thing for CCW but their bikes (being from China) are more appropriate for that market.
-todd