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Harley is winning in Europe - without a trade war


WILLI Breuckmann could have gone for the BMW motorcycle - it was a comfortable and affordable machine, and made in his own country, Germany.

Instead, he chose a Harley-Davidson. The Road King. The 54-year-old web developer who lives in Dortmund, in Germany's north-west, said: "It comes down to a feeling, what the Germans call ein Gefühl."

The Road King is a big bike, starting around 24,000 euros (S$38,540), long and low with the iconic V-Twin engine and dual exhausts producing the famous Harley growl.

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Mr Breuckmann said: "The BMW is also very comfortable," he said. "But it was a dream of mine to get a Harley."

While US President Donald Trump rails at Europeans for restricting trade and their reluctance to buy Detroit's automobiles, the Milwaukee-based manufacturer of iconic motorcycles proves every day that consumers across the Atlantic are willing to buy American.

One of Harley's biggest German dealers says it sells 500 bikes a year. The company almost doubled its market share in Germany in the past decade, to 6.4 per cent in 2017 from 3.3 per cent in 2006.

American car companies haven't been as lucky. With less than 1 per cent market share each, high-performance American brands like Cadillac and Chrysler haven't been able to chip away at the dominance of BMW or Mercedes.

With sales in the US falling, the European market has become so important to Harley that the company is willing to invoke Mr Trump's wrath, announcing a few months ago it would shift manufacturing abroad to skirt retaliatory tariffs enacted in the president's trade war over steel and aluminium shipments. The European Union is imposing a 25 per cent tariff on US motorcycle imports in response to Mr Trump.  

Harley's success in Europe is evidence that American companies can compete and even flourish there, without a trade war - if the products are good enough. The company built a network of dealerships and tweaked the products to suit European tastes: slimmer bikes, special customisation options and even wifi on board.

Harley's approach couldn't be more different than Cadillac and Chrysler, which haven't developed cars with Europeans in mind, said Felix Khunert, an auto analyst with PwC in Germany. Europeans prefer the high performance that German engineering is famous for, he said. 

And Germans still largely use diesel - less expensive than petrol - and American-made cars generally lack diesel engines.

General Motors went so far as to sell its European operations last year; Ford has struggled to grow there, and Chrysler has exploited Italian partner Fiat in its bid to penetrate the market.

Cadillac's 12 dealerships in Germany have been doing better lately: They sold 510 cars in 2017, up from 330 in 2016. This year, they're on pace to match last year's numbers.

Rather than blame the car-makers for their European woes, the president has said European trade policy is why American cars can't compete.

Europeans were introduced to Harley-Davidsons right after World War II. American soldiers rode around West Germany on big bikes with 45-cubic-inch engines, said Christian Arnezeder, the managing director for Harley-Davidson in central Europe. Those US Army motorcycles were being repurposed for civil use, models called WLA and WLC - C for Canadian.

A generation later, in 1976, the company invoked the legacy of US troops and opened Harley-Davidson Germany. Harley in Europe has replicated the owner-community model that makes its brand so strong at home. Dealerships give easy access to services, publicity and a place to hang out and host rallies. BLOOMBERG