Harley-Davidson just revealed the most important new motorcycle in its history

Harley-Davidson

Harley-Davidson announced that it’s partnering with a Chinese manufacturer to build a small-displacement motorcycle for the Asian market.
The bike, at 338cc, would be much smaller than Harley’s smallest US product.
Harley CEO Matt Levatich has set a goal for international sales to make up half of the company’s total.
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Harley-Davidson, the iconic American motorcycle manufacturer, has been generating buzz the past few years with its LiveWire electric bike, slated to launch later in 2019.

Harley’s aren’t cheap, but the LiveWire is notable for it’s expected price tag of nearly $30,000.

Electric motorcycles are an extremely niche market at this point, but it if anybody is going to rev up buyers, it’s Harley.

Meanwhile, on Wednesday the company made a far more significant announcement: a small-displacement motorcycle — 338cc — for the China market, to be built with Qianjiang Motorcycle Company Limited, a subsidiary of Geely, which in another capacity owns Volvo.

Harley needs to court Chinese and Asian buyers in a big way; in the US, motorcycle sales have been declining for years, and although there’s no looming catastrophe and Harley still posts large profits on the hulking bikes in does sell, CEO Matt Levatich’s strategy hinges on making sales outside the US half of the company’s total.

"We’re excited about this opportunity to build more Harley riders in China, one of the world’s largest motorcycle markets, by creating new pathways to our brand," he said in a statement.

The right bike for the Asian market

Harley-Davidson

Harley is renowned for its heavy, loud cruisers, but in recent years it’s been moving down the displacement ladder. The company now sells a 500cc bike for about $7,000, the Street 500.

Small displacement makes sense if you’re trying to attract new riders who might have learned the ropes on a 250cc Honda Rebel and a motorcycle training course (or simply zipped around on a little dirt bike as a kid). Harley has left that space for the Japanese, for a variety of reasons — mainly because in the US, motorcycles are ridden more in the pursuit of fun than out of necessity, and the company wants to follow the money and sell pricey toys to affluent buyers.

Harley has also traditionally reasoned that its riders graduate from an entry-level bike to a "real" motorcycle when they take the Harley plunge.

In Asia, however, motorcycles are daily transportation. In that region, small bikes are popular. Harley’s logic is to get the brand established at the lower rungs of the market and distinguish Harley quality from a sea of cheap motorcycles, setting buyers up to ascend from small bike to a larger one.

Effectively, Harley’s move here is all about branding. That raises the obvious question of whether a sub-500cc motorcycle can be a tue Harley-Davidson.

The little Harley that could

Pablo Martinez Monsivais/AP Images

"Like all Harley-Davidson products, this new model will embody a distinctive look, sound and feel that will spark powerful connections with riders," the company said in a statement, addressing this issue without offering too much in the way of technical details.

"The new Harley-Davidson motorcycle and engine will be produced in a Qianjiang facility in China and adhere to the rigorous quality standards and testing processes followed for all Harley-Davidson products," Harley added.

Harley released a rendering of the new bike, and it’s a departure, flying Hog colors and the Harley shield but looking more like a typical upright Japanese bike. It goes without saying that the bike won’t have anything like the stonking V-Twin engine under the hood.

The bike goes on sales in 2020, Harley said. The company didn’t release pricing, but it’s safe to assume that it would be one of the more expensive two-wheelers in it category.

It would be impossible for Harley to build this bike in the US for export, but the decision could draw the ire of President Trump nonetheless. He’s attacked Harley-Davidson in the past for it decision to outsource production to markets where it intends to sell new motorcycles.

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Source: Business Insider – feedback@businessinsider.com (Matthew DeBord)