Price pressures are mounting for Harley-Davidson and Indian Motorcycle after President Donald Trump’s trade wars have badly backfired for the American motorcycle manufacturers.
The companies are being hit by both higher prices for raw materials and retaliatory duties in Europe and some other countries.
For the moment, only prices in Europe will increase an average of $US2200 (almost $A300, €1880) in the northern autumn after the European Union placed a 25% tariff on American goods, including American-made bikes.
This was in retaliation to President Donald Trump placing import tariffs of 25% on steel and 10% on aluminium.
That means Harley and Indian are getting hit at both ends – by more expensive steel and aluminium at the manufacturing end and tariffs at the sales end.
So far only Harley has announced it will lift prices in Europe.
While Harley sells about 40,000 motorcycles a year in Europe, Indian still has negligible sales on the continent, although it is a big market for off-road vehicles and snowmobiles from parent company Polaris.
A price hike in Europe would be a disaster for Harley as it is one of only two regions in the world where sales rose last year. They were up 6.8% in the Europe/Mid East region and up 7% in Latin America.
Worldwide, Harley’s sales dipped 7.2% last year and rose just 0.2% in international markets.
Price pressures
Trump seems determined to end the era of globalisation and the fallout is still very uncertain.
Australia has a free trade agreement with the US, so price pressures will not be as high here as they are in Europe.
However, there will still be some price pressures on Harley-Davidson and Indian because of the increased cost of raw materials from the steel and aluminium tariffs.
It will be interesting to see the price list when the companies release their 2019 model range this spring.
India trade war
The trade war seemed to have started when Trump mentioned that “one country” had imposed 100% tariff on Harley-Davidsons.
It was a product that sparked a fervour among Trump supporters as Harleys are made in Republican heartland.
However, Trump wasn’t correct, as usual.
The tariffs were not 100%, but much lower and only on a minority of fully imported bikes.
Most sold in India were assembled and the Street family are made in India, so they attract much lower tariffs.
Since then, India has halved the tariff on fully imported motorcycles over 500cc and those bikes were exempt from retaliatory tariffs to US tariffs on Indian steel and aluminium.