American motorcycle brands to face tariff heat

Earlier this month, we reported that the Indian government might cut the import duty on Harley-Davidson bikes if the US renews its eligibility for the generalised system of preferences (GSP). However, the Donald Trump-led USA has found itself in a trade stand-off with numerous countries in the past weeks – India being among them. With the tension between the two countries worsening over the past week, the Indian government has proposed an additional duty hike of 50 percent on CBU (completely built units) motorcycles above 800cc imported from USA. When (of if) it comes into effect, this change in policy will affect two of the most prominent US-based two-wheeler manufacturers – Harley-Davidson and Indian Motorcycle.

While Harley-Davidson has been the brand in the limelight during the trade stand-off between India and the USA, it will actually be Indian Motorcycle which will face the brunt of the latest revision in import duty. Harley-Davidson’s bread-and-butter motorcycle in India is the Street 750, which makes up around 50 percent of its total sales; followed by the Sportster and the Softail range. Harley-Davidson assembles all of the aforementioned motorcycles in our country (excluding the Street 750 which is locally manufactured), which means the revision in import duty wouldn’t really affect it, much. The American brand sells only four motorcycles in India brought via the CBU route – the Road King, the Street Glide Special, the Road Glide Special and the CVO Limited. These CBU motorcycles are priced between Rs 25-50 lakh (ex-showroom) and they contribute very small numbers to Harley’s overall sales.

Indian Motorcycle, on the other hand, imports all its motorcycles via the CBU route from the US. Also, all the IM motorcycles sold in India are above 1,000cc. This means that it will be affected severely by the revision in CBU tariffs on American motorcycles. It still isn’t clear how much the hike in tariffs will affect the pricing of the Harley-Davidson and Indian Motorcycle ranges in India and whether there will be any revision in tax for spare parts and other components, as well.

We are awaiting comment from Indian Motorcycle at the moment, but Harley-Davidson India issued the following statement on the government’s proposal to hike taxes, “Harley-Davidson’s purpose is to help our customers fulfil dreams of freedom around the world. We support free and fair trade and hope for a quick resolution to this issue. We believe import tariffs on steel and aluminium will drive up costs for all products made with these raw materials, regardless of their origin. We are currently evaluating our options for managing anticipated cost increases related to the proposed tariffs.”