Air conditioning for your helmet, Ducati hooking up with Hero, and Harley-Davidson vs. President Trump – this episode is a triple threat of hot topics…and deep squirrel holes.
Hoping to pressure Harley-Davidson into keeping its production in the United States, President Trump this weekend tweeted words of encouragement to riders who planned to boycott the American motorcycle brand. This shouldn’t be too surprising, considering that Harley-Davidson has increasingly found itself at odds with the White House, primarily over President Trump’s trade negotiations and agreements. The tension started with the United States withdrawing from the Trans-Pacific Partnership (TPP) trade agreement, and reached a boiling point when President Trump imposed tariffs on aluminum and steel. Now with Harley-Davidson signaling its plans to create a new business plan for the 21st century, the Trump Administration is increasing the pressure for Harley-Davidson to maintain the status quo.
Episode 83 of the Two Enthusiasts Podcast is out, and in it we talk mostly about Harley-Davidson’s big fat new bike road map announcement.
Before we get to that though, we talk some news: Triumph North America losing its COO, MV Agusta’s new Moto2 race bike, Aprilia’s rumored parallel-twin sport bike, and emission concerns in Europe & Japan, as well as California.
From there, we talk about Harley-Davidson – its ADV bike, its streetfighter, its custom model, and its electric lineup. We also talk about the company’s business plan going forward, and what we see in Harley-Davidson’s future.
There is a lot of ground to cover in this show, but thankfully we had plenty of caffeine to help us through it. Enjoy!
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Elected on a platform to do away with regulatory interference, especially Obama-era fuel economy targets, the Trump Administration is now looking to end California’s waiver under the Clean Air Act.
Ending the waiver effectively means that the United States would finally have a unified set of regulations for vehicles emissions and fuel efficiency standards, as California (through the California Air Resources Board) often sets higher requirements, through its Clean Air Act waiver.
Looking to gut the regulatory force of CARB, this news would also mean that vehicle makers would have lower targets to hit for gas mileage efficiency (37mpg instead of 46.8mpg), which in turn means that brands would have to sell fewer electric vehicles as well.
Lastly, under the proposed changes, vehicle emission standards would freeze at the planned 2020 levels, until the year 2026.
We have already reported on the European Union’s 25% tariff increase (6% to 31%) on American-made motorcycles, and how those import taxes are going to affect in particular Harley-Davidson. The short version: not well. Seeing that writing on the wall, Harley-Davidson has responded to Europe’s retaliatory tariffs, though it is perhaps not the response that the American government was hoping for when it began taxing aluminum and steel from European Union member states. As such, Harley-Davidson plans to shift its production for motorcycles destined to the European market from its factories in the United States to it facilities abroad.
If you haven’t heard of the Trump administration’s plan to impose sizable tariffs on steel and aluminum (25% and 10%, respectively), then you have done a remarkably good job of ignoring current political events.
Trump’s plan caught many by surprise, and the details of the tariffs are still forming, but one thing is clear: it doesn’t bode well for Harley-Davidson.
Like most manufacturers, an increase on raw steel and aluminum will mean an increase in costs, but Harley-Davidson also has the dubious honor of being part of the European Union’s focus for retaliation.
This is because the EU says it will tax motorcycle imports from the United States, in retaliation for Trump’s tariffs on steel and aluminum.
Surprisingly, Harley-Davidson has been quiet about all these maneuvers in the political space…until now, that is.
Strangely enough, we have talked about trade wars several times before, here on Asphalt & Rubber, as the Trump administration has been keen to use this tool in its toolbox, often with effects that reach into the motorcycle industry. The first time around, we talked about how the Trans-Pacific Partnership (TPP) affected the motorcycle industry, namely Harley-Davidson, and how the United States’ withdrawal from the agreement would likely be a negative effect for US motorcyclists. We have also had to talk about how fighting over beef imports could lead to possible tariffs on small-displacement European motorcycles in the United States, a tariff that would seriously hurt Piaggio/Vespa scooter sales and KTM dirt bike sales.
The annual AIMExpo is a pretty big deal for the American motorcycle industry, it being the de facto consumer and industry trade show for motorcycling, and all. This year’s event might get some extra attention though, as Vice President Mike Pence is slated to deliver the keynote address at the trade show. According to DealerNews, the Vice President has the event on his schedule, and has told his aides to “make it happen”. Of course, a lot can happen between now and September, when it comes to the schedule of the person who is just a heartbeat away from the presidency. Surely the Vice President’s presence at the trade show is designed to reinforce the commitment from the Trump administration to America’s manufacturing industries, and to talk about the state of the US economy.
An Asphalt & Rubber reader sent me link recently, outlining how President Trump’s pullout from the Trans-Pacific Partnership (TPP) would adversely affect international sales for Harley-Davidson.
At first I was just going to post a quick synopsis and send you all to read it for yourselves, if you wanted to dive deeper into the meat of the story. But then, I did some digging of my own.
The story, done by Forbes, doesn’t connect the dots too well. And while I agree with the author’s ultimate point, the reasoning he uses to get there is fairly flawed.
His argument boils down to the fact that the TPP would lower import costs for brands doing business in Asia, and since Harley-Davidson sells 40% of its bikes in the Asian market, it would therefore benefit from the USA becoming a TPP signatory.
The issue of course isn’t as cut-and-dry, and requires a bit of digging into what markets would become more favorable for Harley-Davidson, and where the future of the Bar & Shield brand resides. Buckle-up, because here we go.
A bill has been presented to the United States House of Representatives that would seek the closure of the Environment Protection Agency (EPA) by 2018. Proposed by Rep. Matt Gaetz (R – Florida), HB 861 will likely be a mixed bag for motorcycle enthusiasts, as it will deregulate environmental restrictions set at the federal level, leaving states to draft or adopt their own provisions, which will likely have a fracturing effect on the regulatory market for motorcycles. But, it will also mean the abolition of EPA regulations that many motorcyclists oppose, like the blending of ethanol in our fuel, and restrictions on noise, emissions, and vehicle modifications.
President Trump was scheduled to visit Harley-Davidson tomorrow, but those plans have since been scrapped because of Harley-Davidson’s worry about protests at the event.
Trump’s trip was supposed to include a tour of Harley-Davidson’s Menomonee Falls factory, where he would then sign several executive orders that relate to manufacturing in the United States.
With protests continuing over President Trump’s taking office, and the subsequent executive orders and personnel changes he has made to the government, reports are swirling that Harley-Davidson has backed away from hosting the 45th president.