NEW YORK -- Harley-Davidson is developing smaller motorcycles with a Chinese partner in an attempt to cultivate new markets as ridership in the U.S. and Europe stalls.
The U.S. motorcycle maker announced Wednesday that it signed an agreement with Qianjiang Motorcycle, which will produce the new model at Qianjiang plants in China. This is the first time Harley has ever contracted production out to an outside partner.
Qianjiang is a unit of leading Chinese automaker Zhejiang Geely Holding Group. It also produces bikes for Benelli Motorcycles, which Qianjiang acquired in 2005.
Harley is renowned for its black-and-orange, heavyweight motorcycles with an engine displacement of more than 600cc and price tags that can run well over $25,000. The company does most of its business in the U.S. and Europe, but younger demographics in these markets seem to be losing interest in two-wheelers, which in turn have squeezed sales.
To increase its presence in the growing Asian market, the company is looking to bolster its lineup of small and mid-size bikes with a displacement of 250cc to 400cc, with cheaper retail prices aimed at younger and novice riders. First among them will be a 338cc model to go on sale in China in 2020.
Last year U.S. President Donald Trump warned the company it could be "the beginning of the end" if it decided to produce more motorcycles overseas to avoid E.U. tariffs.
Harley will continue making its larger models in the U.S. But it plans to move production of exports to China from Wisconsin to Thailand by the end of the year as a way to avoid a 25% tariff on American-made motorcycles Beijing imposed last year.
The company also aims to introduce smaller models in India, the world's largest two-wheeler market, as well as in other Asian countries. It hopes to increase sales outside the U.S. to 50% of its total by 2027, up from the roughly 40% now.