Harley-Davidson sets eyes on China, to start dealership in 2006

The US-motorcycle maker plans to boost its overseas sales and hopes that a Chinese dealership is the way to go.

23 January 2006
MUMBAI, INDIA

American motorcycle maker Harley-Davidson has set its eyes in China, one of the world’s largest automobile markets, in an apparent bid to make a killing.

United States’ largest motorcycle maker will fist set up a dealership in China in 2006, Chinese state-run media reported. 

China Daily quoted Harley-Davidson chief executive officer Jim Ziemer as saying that the firm would provide details about its dealership in China soon.

Harley-Davidson spokesman Bob Klein was quoted as saying that details of the Chinese dealership will be provided as early as the first half of 2006, making it clear that Harley Davidson was keen to set shop in the world’s most populous country as early as it can to reap the benefits of a booming economy.

Harley-Davidson, however, refused to divulge details about the exact location, the amount to be invested and the sales the company expects annually in China from its dealership.

CEO Ziemer said entering international markets was always a challenge, adding that China is going to be the same way, hinting at the trade barriers in the communist nation. "There are a lot of barriers," he said.

Harley-Davidson’s international motorcycle sales rose 15 per cent in 2004. In the United States, the firm’s top market, Harley Davidson sales went up 4.2 per cent. What this essentially means in other words is that of the every five Harley Davidson motorcycles sold , four are in the US. Analysts said the motorcycle maker could be setting its eyes in widening that ratio to include more international sales. 

In 2005, Harley-Davidson, based in Milwaukee, Wisconsin, revamped its sales operations in Germany, again with the aim of expanding its European business. The US motorcycle maker also set up shop in Russia, which is its first since the Russian Revolution of 1917.

The company has motorcycles of 650cc capacity or larger and is a sentimental favourite among auto enthusiasts worldwide, largely due to the flamboyant shape and distinctive thump of its motorcycles.

Harley Davidson motorcycles' retail prices start from around $35,000. Its logo licensing business also earned the firm a cool $41 million in 2004, which was about 5 per cent of the company’s net income of $5015 million.

The New York Stock Exchange-listed Harley-Davidson reported on January 19 a fourth-quarter profit of $230.0 million compared with $209.0 million a year earlier. Sales also rose 9.9 per cent to $1.34 billion. While its international retail share grew 13 per cent in the fourth quarter, comparative sales in US grew only by 3 per cent.
The firm targets shipment of 352,000 units in 2006, it said in a statement. Harley-Davidson had shipped 329,000 motorcycles in 2005, which is a 3.7% rise compared to the previous year.

Harley-Davidson’s revenue from parts and accessories for the fourth quarter of the financial year 2005 was $169.9 million, which is an increase of $12 million compared to the fourth quarter of 2004. 

From general merchandise, Harley-Davidson earned revenues of $60.5 million, which is a rise of $5.6 million, or 10.2 percent compared the fourth quarter of 2004. Harley Davidson has around 9000 employees.