Harley-Davidson in China

[bikerdoc]

Ah, nothing like a good motor mystery!
I'll try ringing the guys here in Shanghai at AVL GmbH, the Austrian firm that designed the JH600's thumping heart.
Click here to see AVL's contribution to the JH600
cheers!

Well Chunfeng confirm today by phone that they will be releasing a 650cc twin for around RMB40k and it will be available on Chinese domestic market December 2010. I'll have some more info tomorrow. So I think it's fairly safe to say that the domestic motorcycling landscape will be changing in the next decade if not sooner. I'd hazard a guess that laws and regulations that are in-effect today (e.g. motorcycle bans) will likely face pressure to change too. Somewhat of a maturing market. We're here in it's infancy.

[euphonius]

Breaking news from Bikerdoc! Bravo! Very good to know that a major player like CFMoto is not dismissive of the domestic market potential for larger-bore bikes.

And if we start seeing three or for or five strong domestic contenders in a gradually less-restrictive market, these prices surely will come under downward pressure. Interesting times ahead.

I came up with less in my sleuthing. My friend at Loncin said he was unaware of any link between CFMoto and Loncin's 650cc technology, but he was going to follow up with engineering. I've also not reached the AVL guys. I'll perhaps know more tomorrow.

Incidentally, AVL seems to have a large R&D center here in Shanghai. I wonder who else they are working with?

[bikerdoc]

OK, just to confirm then that CFMoto aka ChunFeng here in China, will be releasing a 650cc twin cylinder 4 stroke road bike toward the end of 2010. The two CFMoto guys I spoke (on two different phone calls) had conflicting prices with one saying RMB40000 while the one guy in yesterdays phone conversation telling me it'd be around RMB36000. Either way I'd say expect to pay somewhere between RMB36-40K on the domestic Chinese market. As the release date approaches they will release more information and update their website(s). CFMoto have no plans for a larger displacement scooter nor a dual purpose bike which I think is a pity as those of us who have ventured out know that the roads suit a dual-purpose/trail/enduro bike more than a road biased bike. Scooters too fit right in round here, and I think they could do reasonably well, though when all things are considered the average Chinese bikizen is less likely to spend their discretionary renminbi on higher priced local brands, preferring instead some imported options.

[euphonius]

Thanks, Bikerdoc. More good muckraking!

I can say there is quite a bit of interest inside China for this Chunfeng steed. If those images of a guy doing stunts on the putative prototype turn out to be accurate, it's definitely not a dual sport but more of a general street bike, which indeed is unfortunate given the state of roads and access. But those images are triggering a lot of positive buzz among Chinese bikizens. I've trolled through the comment sections and there are lots and lots of people saying, "Hope it's true" and "Great news" and "I want one" and "How much?" It remains to be seen whether the domestic market can bear these prices for domestic bikes. My feeling is that the Jialing, which is triple our quadruple what Chinese are accustomed to pay for a motorbike, is already at the upper end of what the market will bear, even though the top JH600 model is still below the two Chunfeng quotes you got. And Jialing has only sold maybe 500 pieces to civilian bikizens in three plus years on the market.

Maybe when people start seeing our laowai mob roaming the countryside on tricked out JH600s, the mainstream thinking will start to change!

[ZMC888]

Certainly looks inspired by the Kawasaki ER6.



I have a feeling most Chinese riders want either a 125 or a 1000cc bike. A 650 is too much in the middle, not big and flashy enough. I'm sure the real Chinese riders will like it, but mostly they won't have enough money to be prized away from their CB400s and Jialing 125cc dirt bikes. 40,000 RMB is a tough ask for any Chinese made bike when Chinese riders are so sensitive about kudos and brand marketing. CFmoto need to make sure the thing will work like a Swiss watch, any reports about it being less than perfect will kill the sales. I still can't understand why they can't make a decent water-cooled 400-600 single for around 20,000.

Certainly as the Jialing JH600 doesn't sell many units it is worth another Chinese manufacturer having a go at the 'middleweight' market.

[euphonius]

Considering the big push in China by H-D, BMW and Ducati, it's interesting to see other forces at work on the other side of the planet. In the past week major BMW and H-D dealers have closed up shop in one of America's richest places: Marin County, just over the Golden Gate Bridge from San Francisco. Here are a couple of reports:

Second Harley-Davidson shop closes in Marin

Mark Prado
Posted: 06/09/2010 04:29:23 PM PDT

Golden Gate Harley-Davidson closed its Corte Madera store this week, leaving Marin without an outlet of the famed motorcycle company.

Harley-Davidson closed its Novato store last fall and then consolidated its operations to its Corte Madera dealership, which shut down Tuesday.

"It's just a tough time for Harley right now and they are closing down dealerships," said Jon Magana, sales manager at the shuttered Corte Madera shop. "Sales are down."

The Corte Madera outlet at 13 San Clemente Drive had 15 employees, some of whom have already been hired by other area motorcycle shops, Magana said.

Harley buffs from around the world stop into the Corte Madera store to buy T-shirts that read "Golden Gate Harley," with a drawing of the famous bridge.

Harley-Davidson workers were at the store Wednesday clearing out inventory. The 15,000-square-foot outlet had access to one of the largest inventories of new motorcycles in Northern California.

"There is a chance there will be a new Harley dealer in Marin again soon," said Magana, noting Harley-Davidson officials have been negotiating to continue to have a store in the county.

Harley-Davidson officials at corporate offices in Milwaukee did not return a phone call seeking comment.

In the meantime, those who want to buy Harley-Davidson motorcycles, parts and accessories will have to go to Cotati. Michael's Harley-Davidson Inc. at 7601 Redwood Drive in Cotati is the nearest North Bay Harley-Davidson outlet.

"As far as parts and accessories go, I'll have to go farther to get them," said Kevin Jacobs of Novato, a Harley-Davidson rider who had patronized the Novato and Corte Madera stores.
He gets his bike serviced at MotoHaven, a Harley-oriented shop in southern Novato, but will miss the atmosphere at the Corte Madera Harley shop.

"The guy and girls that worked there were really wonderful, there was a lot camaraderie," he said. "There were Saturday barbecues where you could get together and talk to other riders."

CURRENT AS OF 6/9/10
Dear MotoMarin Customers,

It is with great sadness that we tell you that we announce the closing of the Dealership.

We've weathered many storms since the opening of the original BMW of Marin in the 70's, adapting to all kinds of variables throughout the decades of being in business. Unfortunately, the current economic storm has brought such a decline in revenue that we have lost our credit facilities with BMW.

The BMW, Aprilia, and Moto Guzzi franchises are intact for the near future, but we have lost our BMW credit that is necessary to have bikes on the sales floor and a fully stocked parts department.

In the meantime, we will do our best to obtain operating capital or transfer the franchises so that you can continue to get local Parts, Sales and Service here in Marin County.

If your bike is here, you should have been contacted by now to arrange its return. Our service operations will remain operational until all current commitments are met.

If you have further questions or require assistance please call 415-454-2041 and leave a message in the appropriate department’s voice-mail box and someone will get back to you

Thank you very much for your patronage these past years. Stay tuned for more information.

Sincerely,
S. Cary Littell Jr.
MotoMarin

[Lao Jia Hou]

It is always sad to see any shop closing. That does not seem to be the case in China, at least for now.

FYI, I was in the Beijing HD dealer last week, looking for a bike. There were about 20 gorgeous new bikes on the floor. All except 4 were sold (2 Ultras for 330K each, 1 Superglide for 170K, and some other newer model). Business appears to be booming. When I asked when additional new bikes might be available, I was told November.

Also FYI, I was given a quick rundown of some prices:

Ultra: 330K (376,528 out the door with taxes & a Jing A plate)
Heritage: 285K
Road King Classic: 270K
Road King: 260K
Fat Boy: 260K
Superglide: 170K
885 Sportster: 95K

I am not sure about the additional taxes rate (I think it is 8.9%, but I am guessing). A Jing A plate is around 18K. I'm also not sure, given the healthy sales, that there will be much room for "negotiation" on these prices.

[chinabiker]

It is always sad to see any shop closing. That does not seem to be the case in China, at least for now.

FYI, I was in the Beijing HD dealer last week, looking for a bike. There were about 20 gorgeous new bikes on the floor. All except 4 were sold (2 Ultras for 330K each, 1 Superglide for 170K, and some other newer model). Business appears to be booming. When I asked when additional new bikes might be available, I was told November.

Also FYI, I was given a quick rundown of some prices:

Ultra: 330K (376,528 out the door with taxes & a Jing A plate)
Heritage: 285K
Road King Classic: 270K
Road King: 260K
Fat Boy: 260K
Superglide: 170K
885 Sportster: 95K

I am not sure about the additional taxes rate (I think it is 8.9%, but I am guessing). A Jing A plate is around 18K. I'm also not sure, given the healthy sales, that there will be much room for "negotiation" on these prices.

To fill their showroom, they like to put bikes on display which are actually sold and probably even registered a long time ago but somehow rarely or never ridden.

Why should new bikes only arrive in November? It seems every China HD dealer has to do all importation and tech. inspection on his own, as they have no general importer.
Further, it seems there is no bonded warehouse available to them, so they only order when you order (make the down-payment) and this procedure could take some time - three months in total maybe, but November

8.9% is correct and there should be some room for negotiations. You have to spend 12-15k for a Jing A, but this mainly consists of a not so clearly specified fee

[euphonius]

OK, here's bumping a thread that's wobbled all over the place. ryanjpyle emailed this to me tonight, and I thought I'd pass it on.

I'm guessing that H-D China sent around a press release and Bloomberg took the bait. Not a bad story, but lots of misleading information, like the assertion that no bikes have been registered in Beijing since 1985, and that motorcycle bans in more than 100 cities are due to "noise and theft". Huh? (OK, well, they are talking about Harleys....)

Still, it's good to know that H-D are doing some lobbying on behalf of all of us who ride in China.

cheers!

Harley-Davidson in China Faces Two-Wheel Entry Barrier: Cars

Sept. 19 (Bloomberg) -- China’s population is almost 2,300 times greater than that of Milwaukee, where Harley-Davidson Inc. is based. The motorcycle maker still has more customers in its hometown.

About 100 cities in China, including Beijing and Shanghai, have restrictions that include banning two-wheel vehicles from elevated highways and major thoroughfares to curb noise and thefts, according to the state-affiliated Society of Automotive Engineers of China. That has stymied Harley’s growth in the world’s most populous nation.

“Regulations are a pain,” said Shanghai businessman Calvin Chen, who owns a $50,000 Harley V-Rod Muscle. “There are many roads you can’t ride on, and the rules differ from place to place.”

Harley is lobbying the Chinese and American governments to ease those laws in an effort to increase sales by as much as 40 percent a year through 2016, said Sean Jiang, its managing director for China. The biggest U.S. motorcycle manufacturer is quadrupling its number of dealerships and supporting riding clubs to capitalize on a luxury-car market that J.D. Power & Associates said will grow by about 35 percent this year.

“Any investment in China without addressing the regulatory requirements will be a castle built on sand,” said Jiang, who is based in Shanghai. “We need to be proactive in engaging with the government.”

BMW, Audi

The laws treat motorcycles the same as scooters and motorized bicycles, even though some Harleys have bigger engines than cars and may cost more because of import duties that can add 30 percent to the sticker price before consumption and value-added taxes. They also have to be scrapped after 11 years, Jiang said.

The Touring Ultra Classic Electra Glide starts at 340,000 yuan ($53,000), according to the company’s website. By comparison, Bayerische Motoren Werke AG’s BMW 320i sedan starts at 273,600 yuan in Beijing and the Audi A4L sedan at 247,800 yuan, according to data compiled by Sina.com.

Shanghai bans motorcycles from elevated highways, the historic Bund and the financial district. Beijing hasn’t allowed new registrations since 1985. Guangzhou banned motorcycles in 2007 after a surge in drive-by purse snatchings.

“Because of the import structure and high pricing, our customers here have a much higher disposable income,” Jiang said. “I don’t think they will use vehicles as a crime tool.”

More in Milwaukee

The Ministry of Commerce, the lead agency for trade issues, didn’t respond to a faxed request for comment.

Harley sold 268 motorcycles in China last year -- its best- sellers are the Touring and Sportster lines -- and aims to double that this year.

The House of Harley-Davidson dealership in Milwaukee sold “more than 500” bikes last year, sales manager Goran Zadrima said by telephone. Milwaukee’s population is about 595,000, according to the U.S. Census Bureau.

Honda Motor Co., which sells scooters and smaller 125cc bikes in China, delivered 1.29 million units in the country last year.

Harley is coming off a quarter in which it boosted U.S. sales for the first time in almost five years. Retail sales in the Asia-Pacific region increased 6.7 percent, driven primarily by emerging markets, Chief Financial Officer John Olin said during a July 19 conference call.

Quadrupling Dealerships

Harley expects to ship 228,000 to 235,000 motorcycles worldwide, an increase of 8 percent to 12 percent from last year. The company’s New York-listed shares have risen 8.2 percent this year.

International sales represented 35 percent of its revenue last year, up from 25 percent in 2006, according to the company. Harley wants to increase that to at least 40 percent by 2014.

The company opened its Shanghai office in 2005 and its first dealership a year later. It plans to increase dealerships to 28 by 2016 from seven at the end of last year, Jiang said.

Harley also is working with the Society of Automotive Engineers on a series of TV spots exploring the motorcycle culture around the world.

“With the U.S. motorcycle market fairly mature, Harley’s opportunity to gain market share abroad is a key positive,” said Sharon Zackfia, an analyst with William Blair & Co. in Chicago. “The noise ordinances in China may present a challenge.”

Zackfia has an “outperform” rating on the company.

Leisure Riding

Another challenge for Harley is overcoming the perception that two-wheeled vehicles are strictly utilitarian, Chief Executive Officer Keith Wandell said in a Sept. 12 interview in Milwaukee.

“The Chinese consumer is unfamiliar with leisure riding,” Wandell said. “They’ve always looked at two-wheelers as a form of transportation and getting to work. How do we get people to understand what leisure riding is all about?”

One way is by supporting riding clubs to promote the brand, said Wandell, who rode in a rally from Beijing to the Great Wall in April. There are chapters -- called Harley Owners Group or H.O.G. -- in Beijing, Shanghai, Qingdao and Hong Kong.

Every weekend, the Shanghai H.O.G. gathers at a Sinopec gas station wedged between an antique shop and golfing academy on the city fringes before heading into the countryside.

Bikers have to go around the nearby city of Hangzhou because it bans motorcycles, said James Rice, 45, who runs a bakery-supplies company and leads the rides on his red Ultra Classic Electra Glide.

‘Equal Treatment’

“We pay as much or more in taxes as the cars and should have equal treatment under the law,” said Rice, who moved to China from California in 1991. “To local governments, motorcycles are the transportation of poor people so outlawing motorcycles is a way to keep the riff-raff out of their city.”

Chen, who takes his blue V-Rod on the rides, said the chapter is a good place to blow off steam and make new friends. Police sometimes let riders off with a warning when they go on banned streets.

“These days, people in the city get very stressed out at work,” Chen said. “Riding a Harley, with the wind blowing through your hair, is a good way to relax.”

To contact the editor responsible for this story: Kae Inoue at kinoue@bloomberg.net

[Lao Jia Hou]

Harley ain't what it used to be ... which is both good and bad.

These days, Harley is more of a clothing company that also sells motorcycles. Harley sells an image, and what better way to show that image than by wearing it? Even if you can't afford to ride it.

Harley bikes are MUCH better than before, IMHO, but still have far too many quirks ("personality") for my taste. Other manufacturers have passed Harley in terms of quality. In fact, they've lapped Harley several times. But the other manufacturers still have a very long way to go to catch up with the Harley "cool" factor. Hang out at the Harley shop in Beijing on any weekend and you'll see dozens of customers leaving with bags full of clothing & accessories. I've never seen anything similar back home at any Harley dealer.

Interestingly, Ducatti actually mentioned in its Annual Report to Shareholders that one of its medium term objectives is to develop a branded "cool" factor with its clothing and accessories line, and to focus its marketing on developing an "image of cool bravado." Ducatti was referencing its entry into China. I heard that it just opened up a dealer down south.

Hmmmm ... I guess my farmer Honda 125 just doesn't cut it in terms of "cool". Oh well, as the original Honda ads used to say ... "you meet the nicest people on a Honda".