Harley-Davidson in China

[MJH]

They could bring back the Sprint….that was actually a 250cc and also a 350cc horizontal engine. Not that I am fan of that or anything, but the point is that they could have developed and still can something more sustainable and developed in china.




The company has issues its more about manipulating the perception of value then anything, IMO. I do not think that the Chinese venture makes them worth more…


Others do though, I personally think they are limited in that market and could and will be basically kicked out with GUO5 which is forth coming and inevitable.

[MJH]

It is not impossible to design and engine that meets emissions and looks like it is vintage, it is not impossible to make it durable and reliable and also offer respectable performance.

But here is the thing, research and development adds cost to each unit and in that it has to be sold in volume to recover the costs. So in that it should be global and distributed globally to as many markets as possible.

That is why the Chinese copied what already existed and cannot viably get beyond it, the market for larger get smaller total unit sales and in that drives the costs. One end is the custom shop and the other end is the volume mass production.

I am assuming that prices of fuel will keep going up and scarcity of resource as well, small and affordable has degrees of separation within it. Brand name has no real value unless it actually represent a better product.

I am fairly certain that if HD launched a complete line from a retro scooter to a 350cc EFI small standard they could demand 25% more then others, if marketed under the HD brand in china. But they would or could not be versions of other models they would have to be property and patented products that meet all the higher standards, but look like a page out of the past offerings.

HD should be lobbing the Chinese government for a FDI that is solely owned and operated by them. If they want to change something they should change that, they could then get a market share in china and build into the market.

In that they should build their own proprietary parts and in that export those to other countries for assembly. That’s a mater of integrating into markets apposed to whoring the high end in them. It gets more products to more people and also creates jobs.

They could do what the Chinese are doing and should be, doing it better, in an alternative realty.

[ZMC888]

All this is conjecture MJH. Harley could make a smaller bike in China. But really its not very likely. The Chinese super-rich that own these don't want every Tom Dick and Zhang owning one. They love Louis Vitton, Chanel etc It's all branding, if you own an exclusive enough brand you can charge more than the product is worth.

[Lao Jia Hou]

I do not see HD as a good thing, the only American motorcycle manufacturer and so limited.

Sigh ... us Victory & Indian owners never get any respect ... guess that's why I also need some Rollin' Thunder in my garage ... I need something appropriate under my butt when I want to "keep up with the Zhangs".

Oh wait, Sonny Barger gave up his HD and now rides a Victory! Oh oh oh ... and Victory has a higher Made-in-the-good-ole-USA content than HDMC. Oh well, no respect ... no respect.

Seriously, though, Harley actually makes pretty good bikes these days. The branding is a huge bonus and probably what attracts many new buyers (a good thing). HD has also learned some very painful (and expensive) lessons about straying too far from the herd. And its China prices aren't too out-of-line, although the pricing structure in China is rather strange (e.g., the Sportster seems not too far out of whack with USA pricing, but the larger bikes are completely ridiculous).

And like Prada, LV, etc ... the Genuine HD products have an insane following here. Spend a weekend at the Beijing Harley dealer and you'll see crowds of customers packing out huge shopping bags full of Genuine HD clothing & accessories (at prices that would make any expat's head spin). Yet not far away, damn good knock-offs can be had for a tiny fraction of the price.

I hope the Zhangs don't look too closely at my leathers.

[bikerdoc]

I would have liked to seen HD reinvent itself for the Chinese market, their effort to change the perceptions in china are more offensive then flattering. It all comes off as opportunistic whoring, selling huge bikes one at a time and for ridiculously high prices.
The market in china is small sized bikes, something HD executives totally cannot embrace.
Which is a shame, they should be designing and building singles for the Chinese market in the Chinese market.
Not that they have to make Hummers or Pacers, they certainly should avoid bringing back the Scat as a model name, but they really should have seized the opportunity to venture back into singles and small engine, that look old but incorporate modern technology into them.
.....
I would not recommend hard tails either, but they should have engineers that could capture the look without compromising comfort and functionality.
.....
They could have brought back the M50 in china,
They also could have brought back the Topper
......
Who is it that prevent such a initiatives is it that they are afraid of loosing the Hells Angles or Pagans as clients? I was told that some dealers, actually many of them refused to offer the Buell line, when it was offered. Refused to attempt to gain a new clientele or were afraid of the interaction outside the fold? Makes me wonder if they run subliminal suggestions in the classic rock they play at the dealers? “real men only ride a Harley”?

Hmmm, MJH are you experiencing a bad day I guess? The beauty is you have a choice, to either buy or not buy any or none of the HD offerings or any other manufacturer for that matter. If you want something specifically suited to your personal desires, then shop around. If you find that there are not a lot of offerings that suit your budget or taste, then look beyond the 'garden gate.' You have a rather simplistic view of what is an intensely complicated market and base to manufacture from or sell into (I am referring to manufacturing/sales/marketing in China).

[bikerdoc]

They are just whoring the market as it is, they are capitalizing on the exclusivity caused by the regulations and tariffs. That takes the product way above the median income into upper incomes and for sure in china numbers are always larger as a proportion. So they are mitigating the low ROE from slow sales in the USA and other markets by making more profit on what is currently very small unit sales in China, but highly profitable.

So they are marketing what is an average product, not a great product because Harleys are not that great a bike, not that fast not even that well made.

That does not inspire me as an investor, unless something changes the forecast for sales is not that high and limited by the number of people willing to pay that much for one. The demand for larger bike is there but I wonder how much there is at the current prices, that has an actual real limit.


The majority of total motorcycle sales are in the current market, as it is, are small models represent the largest part of the market. They could sell into that if better made and better supported, but HD is not notorious for that are they? They are not poorly supported, but they are not consider bullet proof , they are buggy and quirky, actually a lot of them come off the lines with engineering flaws, they have the balls to call it character, as in it gives the bike character. They do not have the people that can do that, they are not offering much in new technology, they never really have.,

They could in an alternative world actually invest in china and develop its market at the level it is at currently. But they cannot, they are inherently limited or self limiting.

The perception of Japanese quality in china may be an indirect result of the many Japanese/Chinese joint ventures. The products bearing the Japanese brands are often made in china and have the same quality issues do to the in common factors, low pay and over worked and lack of diligence in addressing that in the hyper fast hyper competitive market.

Harley is moving towards the Orange County Chopper business model, making less and raising the price. The end point of that is making one at a time and charging outrageous prices, in china that is what they are doing, actually they just offer small unit sales at very high prices. They may have a much larger potential market there but its limited with the current prices. Actually that is were Buell is today, separated from HD they became a specialty shop only offering one very expensive model to a few.

HD would never open a factory in china to make the larger bikes, they could though buy into a manufacture there and produce a line under its current offerings. But that would be in an alternative reality, they are not Honda they do not have engineers that can build jet engines, good thing Honda executives are not afraid of venturing out of the box.

I do not see HD as a good thing, the only American motorcycle manufacturer and so limited.

Harley-Davidson are a commercially & profit driven business not a 'not-for-profit' nor a NGO. They have a right to try to enter into other markets and try to make a profit, which is what they are in business to do. Things are tough economically on a global scale, and things will not be improving anytime soon, especially in the US of A. This also is dragging many economies down. HD gaining a foot hold into PRC is no different than most other companies beating a path to PRC, as a possible saviour of ones business. If they don't then many others will with vigour. I don't have any issue with that.

Why label them (HD) or insinuate that they are morally corrupt for entering into China, and continue to manufacture the majority of their products in the USA, which is after all their right and reflects their business model and stance. Who can blame them given the major problems over QA most companies experience in China. This cannot and should not be underestimated IMHO. Anyone wanting a cheaper small displacement bobber/chopper style motorcycle in PRC should take a look at a Regal Raptor DD350. I saw one that an acquaintance was going to buy from a local dealership several weeks ago. My impression - not a bad looking bike. Only rmb22000.

While I may concur that HD models are not that great, and perhaps are not my 'cup of tea' either, but to accuse HD of ripping of the Chinese market with what you consider an inferior product at exorbitant pricing is somewhat naive in my opinion. Beauty is, we have the right to have an opinion and express it without fear. Actually HD have the cheapest of imported motorcycles with one of the 883 sportster models at around rmb93000. The closest competitor that has anything priced close to that is BMW with the G650GS, which is ~rmb117000 excluding ABS (~rmb130000 with ABS) and only because the single cylinder engine is being made by Loncin, who seemed to have taken the engine design for use in one of their own bikes. One of the big trade-offs/risks of having anything manufactured in PRC despite how much controls one tries to have in place.

All imported motorcycles are expensive here, simply because they are bought into China fully assembled, with little if any Chinese made parts, and consequently attract the maximum amount of taxes and duties payable, is that HD's fault... NO! All imported products and vehicles attract such additional charges, and luxury brands attract even more with additional luxury tax. The manufacturer do not get any of that slice of the action.

When I did my MBA a couple of years ago, one of the lecturers was telling us about one of the luxury brands who entered into the Chinese market being left surprised and bemused when their products were not meeting any of the sales forecasts, even though the brand slightly reduced the MSRP of the product lines. When the company conducted market research, they learnt that the local populace expected higher pricing structures, and consequently the brand raised prices accordingly and the sales increased exponentially as a result, so much so, that the brand couldn't get product to market fast enough. Lesson here being that one has to consider macro and micro factors and controls in a market. It's an interesting if not complicated part of the Chinese domestic market, fraught with many traps.

If one want's to point the finger over exorbitant price gouging on various products imported into PRC, then go knock on the CCCP's door. That issue lies squarely at the feet of the Polit Bureau. If one is going to ridicule HD over how much their products are retailing for over which they have little control then how about all the other manufacturers too, whether it be; BMW, Ducati, Benelli, Piaggio, Hummer, Lamborghini, Ferrari, et al. all of which more or less import fully assembled vehicles and products which have ridiculously expensive price tags as a result, why? because China is using a form of protectionism. Labelling it anything else is sugar coating it. I'm not saying it's wrong, as I can see multiple factors at play here, but it is what it is.

MJH, since you seem hell bent on attacking HD business model, their product line and the lack of smaller displacement bikes, then cast your net much wider since they do not stand alone. If they were to do so as you wish, they may very well undermine the very business and good will attached to it, turning off scores of buyers or potential buyers.

I I still had my own business that was labour intensive and contemplating moving to China, I would still consider very carefully before setting up a manufacturing operation inside the Great Wall of BS (aka, China) [and that is my personal opinion based on ten years of experience living and working here].

I'd go a step further and add that if I was part of the board of HD then I would also not consider manufacturing in an environment that is not trustworthy and that by default excludes a China operation. Not only that MJH, if HD did move manufacturing here, again, there is the real risk that potential buyers might be turned off the product for a variety of reasons as stated above. This will hit the HD bottom line and even their long term survivability.

The major issues I see as doing business with PRC; trust, honesty, ethics, QA/QC and lack of all of these components... so much so that once I leave China, I will wherever possible not buy anything that is made in China. If that means I go without or pay more, so be it, I try to buy with a consumer conscience.

I was riding with more than a dozen HD local riders a few weeks back... all of them were rmb200000+ models and owned by wealthy Chinese, and many had extras and accessories bought from HD Shanghai or Wenzhou, and all of the bikes were 100% legal. A good foreign friend of mine has a 883 Sportster (also 100% legal) and he feels embarrassed to ride with this group of guys given what they ride. I on the other hand rode my Dragstar classic which I prefer over any of the HD, but blends in more than my mates Sportster. I have no issues over their choices and how much they paid.

MJH, you might like to also consider importing your own motorcycle, as I and the same mate with the Sportster are were talking about doing last night (he wants a Ducati Multistrada 1200S, which he rode in Germany just a few weeks back which is Eur$14000 plus 60% yet is selling here for rmb300000, I on the other hand am torn between a F800GS or XT1200T). We plan to get together and discuss this further this coming week.
We have a mutual mate who has imported two new Land Rovers from Germany within the past 9 months which was part of 4x4 convoy that drove from Germany through Europe, Russia into China.
Importing vehicles and new motorcycles is doable. We have a mutual acquaintance who imported his own near new R1200GS last year.

Rather than just talk about it, we are going to do it.

MJH, you want something specific, then go yourself and buy it then import it.

[MotoKai]

And like Prada, LV, etc ... the Genuine HD products have an insane following here. Spend a weekend at the Beijing Harley dealer and you'll see crowds of customers packing out huge shopping bags full of Genuine HD clothing & accessories (at prices that would make any expat's head spin). Yet not far away, damn good knock-offs can be had for a tiny fraction of the price.

Spend a weekend on a JH600 and you'll have crowds asking you in Chinese: "Is that a Harley?" Everything's a Harley (or should be). I usually try to build their Chinese pride by sharing with them the background of the JH600 - Made In Chongqing!

But they are often disappointed. They're not impressed. Luxury impresses. Harleys impress.

[bigdamo]

Sigh ... us Victory & Indian owners never get any respect ... guess that's why I also need some Rollin' Thunder in my garage ... I need something appropriate under my butt when I want to "keep up with the Zhangs".

Oh wait, Sonny Barger gave up his HD and now rides a Victory! Oh oh oh ... and Victory has a higher Made-in-the-good-ole-USA content than HDMC. Oh well, no respect ... no respect.

Seriously, though, Harley actually makes pretty good bikes these days. The branding is a huge bonus and probably what attracts many new buyers (a good thing). HD has also learned some very painful (and expensive) lessons about straying too far from the herd. And its China prices aren't too out-of-line, although the pricing structure in China is rather strange (e.g., the Sportster seems not too far out of whack with USA pricing, but the larger bikes are completely ridiculous).

And like Prada, LV, etc ... the Genuine HD products have an insane following here. Spend a weekend at the Beijing Harley dealer and you'll see crowds of customers packing out huge shopping bags full of Genuine HD clothing & accessories (at prices that would make any expat's head spin). Yet not far away, damn good knock-offs can be had for a tiny fraction of the price.

I hope the Zhangs don't look too closely at my leathers.

I thought Victory motorcycles was a Canadian company under the POLARIS banner? I could be wrong.

[ChinaV]

I thought Victory motorcycles was a Canadian company under the POLARIS banner? I could be wrong.

Polaris Industries (NYSE: PII) is a manufacturer of snowmobiles, ATV, and neighborhood electric vehicles. Polaris is based in Medina, Minnesota, USA. The company also manufactures motorcycles through its Victory Motorcycles subsidiary. Polaris no longer produces watercraft.

I was a Polaris dealer back in the 90's, loved their snowmobiles, but the rest of the product line never really got me that excited.

Cheers!
ChinaV

[MJH]

They do not sell the 883 Roadster in the USA, only the XR1200 which retails for $11,799.00
But in India the 883 Roadster sells for $15,366.00 and in china they sell for $17,000.00

The 883 Iron is sold across all markets….it’s the lowest priced model HD offers at $7,999.00
It sell for $19,377.00 in China
It sells for $13,319.00 in India

I am not 100% sure but I believe the HD sold in India are assembled in India?

Polaris is out of Minnesota and Victory and Indian are both their brands.