Harley-Davidson to Shift Production Overseas to Offset EU Tariffs -- Update
June 25 2018 - 7:39AM
Dow Jones News
By Allison Prang
Harley-Davidson Inc. plans to move production overseas for
motorcycles it sells in Europe, in light of tariffs imposed by the
European Union that went into effect on Friday.
The company said in a securities filing Monday that it expects
the ramping up of production overseas to take at least nine to 18
months.
"Increasing international production to alleviate the EU tariff
burden isn't the company's preference, but represents the only
sustainable option to make its motorcycles accessible to customers
in the EU and maintain a viable business in Europe,"
Harley-Davidson said in the filing.
EU officials have said the EU'S tariffs are a response to the
U.S. tariffs on steel and aluminum.
The company's announcement shows how countries' responses to
President Donald Trump's tariffs stand to affect companies that do
business abroad. Last week, luxury German car manufacturer Daimler
AG warned that tariffs from China placed on vehicles manufactured
in the U.S. would hurt revenue and profit from its Alabama factory
that makes SUVs.
Harley-Davidson said motorcycles it exports to the European
Union from the U.S. will cost $2,200 more on average, but said it
doesn't want to increase wholesale prices or manufacturer's
suggested retail prices.
"The tremendous cost increase, if passed on to its dealers and
retail customers, would have an immediate and lasting detrimental
impact to its business in the region, reducing customer access to
Harley-Davidson products and negatively impacting the
sustainability of its dealers' businesses," the company said in its
filing.
Harley-Davidson said it expects costs related to the tariffs to
come out to about $30 million to $45 million for the rest of 2018
and about $90 million to $100 million annually. The motorcycle
maker said EU tariffs on the bikes rose to 31% from 6%.
Nearly 40,000 people bought the company's motorcycles in Europe
in 2017, Harley-Davidson said. Europe is the company's
second-largest source of revenue, behind the U.S.
While most of the company's motorcycles are made in the U.S.,
Harley-Davidson also has facilities in India, Brazil and
Australia.
Shares of Harley-Davidson fell 2.7% premarket.
Write to Allison Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
June 25, 2018 08:24 ET (12:24 GMT)
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