Harley-Davidson has announced that the company is building a new motorcycle factory in Thailand to serve the Asian market. The factory will come up in Thailand's Rayong province, southeast of Bangkok and will allow the American motorcycle brand to avoid Thailand's tariffs of up to 60 per cent on imported motorcycles. It will also help Harley-Davidson get tax sops when exporting to Thailand's neighbours, including India. Thailand has a free trade arrangement with members of the Association of Southeast Asian Nations (ASEAN).
The Thailand plant won't be Harley-Davidson's first overseas factory though. Harley-Davidson already has a plant in Bawal, India where the Bar & Shield brand's best-selling Street 750 model is manufactured. Harley-Davidson's most recent model, the Street Rod, is also manufactured at the same plant. Harley also assembles motorcycles at a plant in Brazil and has a wheel factory in Australia. The Thailand factory will build motorcycles for the Asian market, which have so far been imported from India or the US. It is intended to serve the Chinese market as well with ASEAN pursuing an enlarged free-trade area with Beijing.
"The Thailand facility will allow us to be more responsive and competitive in the ASEAN region and China," Katie Whitmore, Harley-Davidson public relations manager, said. "Increased access and affordability for our customers in the region is key to growth for the company in total," she added. "There is no intent to reduce H-D U.S. manufacturing due to this expansion."
But Harley-Davidson isn't the only motorcycle manufacturer looking to take advantage of free trade agreements within countries under the ASEAN umbrella. Both Triumph and Ducati have plants in Thailand and most Ducati models sold in India are actually made in Thailand and imported to India, but have a cost advantage over straight imports from Italy.
It's still not clear which Harley-Davidson models will finally be manufactured in the Thailand plant, and what cost benefits the Indian customer will finally get on those models. For now, Indian customers still benefit from the "made in India" Harley-Davidson Street 750 and the Harley-Davidson Street Rod. The New York Times, which first reported the news, observes that the Harley-Davidson Thailand plant will assemble low-cost motorcycles. So that probably means that high-end bikes in Harley-Davidson's touring range will still be imported from the US. And motorcycles made in the Thailand factory will be sold in Asia, not the United States, which its domestic plants will continue to serve.
"This is absolutely not about taking jobs out of the United States," Marc D. McAllister, a managing director of international sales at Harley-Davidson based in Singapore told the New York Times. "This is about growing our business in Asia."
In 2016, Harley-Davidson reported its best-ever retail sales in the Asia-Pacific region, as well as Europe, the Middle East and Africa, growing by over 5.9 per cent. In the Asia-Pacific region alone, Harley sales grew 2 per cent. Comparatively, Harley-Davidson's US sales have been slow and declined 3.9 per cent in 2016. In India, for example, Harley-Davidson has a market share of over 50 per cent in the premium motorcycle space and Harley sales have grown by over 30 per cent over the past two years. But the fact is that 80 per cent of Harley-Davidson India's volumes are from the made in India models, largely the Street 750. And if these numbers are any indication, the Thailand plant could well extend the 'made in Asia' model range to make owning a Harley more accessible to customers, not just in India, but in the entire Asian region.