Worldwide sales of Harley-Davidson Inc.’s iconic motorcycles were down 3.6 percent compared to last year, Chief Executive Officer Matt Levatich told analysts on a conference call Tuesday morning on the company’s second quarter update.
Harley-Davidson’s net income fell to $1.45 per share, down from $1.48 at the same time last year.
The company fears it will be hit by retaliatory tariffs in Europe after President Donald Trump enacted U.S. tariffs on a number of foreign goods including steel and aluminum.
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Levatich said, “when tariffs were enacted by the EU in the second quarter it put further pressure on our business.”
According to Levatich, it is estimated that the cost of a Harley motorcycle will rise by as much as $2,200 in the European market.
Two years ago Harley-Davidson announced it would move some of its production to a plant in Thailand, that once operational, will allow the company to “mitigate existing tariffs in markets in the Asia Pacific region,” Michael Pflughoeft, manager of corporate media relations for Harley-Davidson, said.
“We made the best decision given the circumstances,” Levatich said. “The best decision for our customers, our dealers and our business in this critical market.”
Trump singled out Harley with harsh criticism over the company’s decision to move some manufacturing overseas.
The so-called “trade war” comes at a time when Harley-Davidson has seen declining ridership in the U.S. and is targeting markets in Europe and Asia.
The company’s Chief Financial Officer, John Olin, said the increased tariffs will have an impact on its bottom line.
“As a result of recently enacted tariffs we expect to incur approximately $45 to $55 million dollars of increased costs,” Olin said. “This includes incremental costs of approximately $15 to $20 million dollars for steel and aluminum and $30 to $35 million dollars for EU tariffs.”
Editor’s note: This story was updated at 1:40 p.m. on Tuesday, July 24, to clarify information regarding Harley-Davidson’s Thailand plant.
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