In the third week of June, Harley-Davidson (HOG) posted 5.8% gains as compared to a 2.2% rise in the S&P 500 Index. Last week, the company announced its partnership with China’s Qianjiang Motorcycle Company Limited. Under the new partnership, both the companies aim to collaborate to launch a premium 338cc motorcycle targeted at Chinese and other Asian markets. The new premium small displacement motorcycle is likely to be available by the end of 2020.
The news boosted investors’ confidence, as it reflected Harley-Davidson’s rising focus on the Chinese market at a time when it’s facing sales troubles across all its key markets.
Will Harley-Davidson face Trump’s criticism?
In June 2018, Harley-Davidson announced its plan to move a part of its motorcycle production to Europe to avoid European Union tariffs. However, the company’s plan to move production to Europe didn’t go well with President Donald Trump.
On June 26, 2018, Trump threatened to levy high taxes on Harley-Davidson if it moves production to Europe. In his tweet, the President said that “A Harley-Davidson should never be built in another country-never!”
As Trump’s 2020 election campaign has already started, he might not hesitate to target Harley-Davidson again for its new plan to build premium small displacement motorcycles in China.
On June 24, Harley-Davidson stock ended the session at $35.32 with a massive drop of 3.6% for the day. Technically, no major support level in its stock lies above $34.00. The 14-day setup of relative strength index indicator was close to the line of equilibrium at 51.3, reflecting mixed bias in the underlying momentum.