Harley-Davidson has to be having one of the worst years in its century-plus of history, and it’s just gotten another tough bit of news: EU regulators have ruled against its offshoring manufacturing plan, and will continue to apply hefty tariffs to its bikes brought into Europe.
Back up the tape just a bit, to the start of the year. H-D’s Q1 financial results were better than expected but the all-important number—North American sales—slipped by Q2. And then things got real bad, with a concentrated social media campaign organized by online activists who disliked a perceived tilt to left-leaning politics by Harley-Davidson management.
The end result was an absolutely disastrous Q3 financial report, with sales in the trash, greatly accelerating a long-term trend. Around the same time, we saw Harley-Davidson moving production of Sportster and Pan America models overseas, to Thailand—this would allow Harley-Davidson to bypass hefty tariffs on US-built bikes in the Euro market, theoretically. Yes, it would anger many MoCo faithful, since Harley-Davidson had promised US-market bikes would always be built in the States, but changes had to be made and the company needed some financial stability.
This ploy seems to also have failed. The Court of Justice of the European Commission, which adjudicates these matters, has ruled Harley-Davidson’s production shift was solely done to dodge their expensive EU-market tariff, and that therefore the tariff still applies. No wonder—Harley-Davidson’s own paperwork said as much, which didn’t give them much of a leg to stand on when arguing with the court.
That means Harley-Davidson motorcycles will continue to have a 56 percent tariff in the EU, driving up their cost far past domestic alternatives.
So, now we wait until February 3, 2025. That’s when Harley-Davidson’s year-end financial report comes out. Will they turn it around in 2024? It’s not looking good, but it’s possible sales will pick back up in the final weeks, and Harley may save itself yet. They’ve come back from worse. On the other hand, if things deteriorate further, you’ve got to wonder: Is Harley boss Jochen Zeitz going to be axed? Despite his years of experience on the company’s board, he will eventually be shown the door if he can’t keep shareholders happy.
Perhaps the President elect will slap down some hardcore tariffs on any bike originating from Europe. That could mean the end for the KTM group that’s having their own financial troubles.
“The Court of Justice of the European Commission, which adjudicates these matters, has ruled Harley-Davidson’s production shift was solely done to dodge their expensive EU-market tariff, and that therefore the tariff still applies. No wonder—Harley-Davidson’s own paperwork said as much, which didn’t give them much of a leg to stand on when arguing with the court.”
I clearly don’t understand the EU Commission then. HD got tariffs because its bikes were built in the US. So it moved production to somewhere else to get around the tariffs, but the EU Commission STILL is imposing tariffs? Which leads me to believe the tariff has little to do with where the bikes are built.