Harley-Davidson announced today it will be producing a 338cc motorcycle for the Chinese market which will hit Chinese Harley dealerships by the end of 2020. The motorcycle will be built in an alliance with Qianjiang Motorcycle Company based out of Zhejiang, China. The company currently produces “motorcycles, scooters and mopeds from 50cc to 1,130cc under the Qjiang, Benelli, Generic and Keeway brands. The present production capacity is 1.5 million 2-wheeled vehicles and 2 million engines per year,” according to Qianjiang’s website. Harley-Davidson reportedly picked Qianjiang “based on its experience developing premium small displacement motorcycles, established supply base, proven capabilities in emerging markets, and ability to meet consumer requirements.” Harley-Davidson said the initiative is part of its “More Roads to Harley-Davidson” strategy announced in July 2018.

“Harley-Davidson has always been about inspiring riders around the world. Our More Roads plan is all about bringing our brand of freedom to more people, in more places, in more ways,” stated Matt Levatich, Harley’s President and Chief Executive Officer, in a press release. “We’re excited about this opportunity to build more Harley riders in China, one of the world’s largest motorcycle markets, by creating new pathways to our brand.”

China is the second-largest motorcycle market in the world, behind only India. According to Statista Research, 1.43 million units were sold in China in March 2019 alone. Comparatively, only 457,371 motorcycles were sold in all of 2018 in the U.S. (MotorCyclesData.com). Retail sales of Harley-Davidsons in China reportedly grew by 27% in 2018 compared to 2017 and Asia as a whole is its third-largest market. Harley announced its intentions to expand sales of its new 338cc motorcycle to other Asian markets after its initial launch, part of a strategy to boost international sales to 50% of annual volume by 2027.

The announcement follows the move by Harley-Davidson to shift some of the production of motorcycles for the European market to its new facility in Thailand, which additionally makes motorcycles for the Chinese market. This came in response to the European Union (EU) imposing tariffs of $3.2 billion on American goods, motorcycles among them. The EU raised its previous 6% tariff to 31% in June 2018, making it $2,200 more expensive per motorcycle to export according to Harley-Davidson. Those tariffs were implemented after the Trump administration’s tariffs on steel and aluminum imports to the United States. More recently, President Trump has threatened to enact a 25% tariff on everything imported from China, which would undoubtedly come with retaliatory tariffs in a heated trade war. President Trump and Chinese President Xi Jinping will meet privately in Japan next week as both will be attending the G20 summit.  The potential consequences of an escalated trade war provides validation for Harley-Davidson’s decision to produce its new 338cc motorcycle in China.

The Motor Company’s “More Roads to Harley-Davidson” strategy also includes expansion into the electric vehicle realm. Harley acquired StaCyc, producer of electric two-wheelers for kids, back in March. It also teased the public with an electric scooter and lightweight dirt-bike at the Aspen X Games while Harley’s full-scale electric motorcycle, the LiveWire, is set to hit the market within the coming months.