PEST ANALYSIS Harley Davidson Company

Political Factor

Currently there is political stability in the country that allows for sustainable
development of the motorcycling industry in Chile. One of the points that
may affect the industry are the standards that have been required since
2009, in which the government allocates motorcycles in the new
Decontamination Plan. This standard indicates that the Euro III or EPA 2010
system must be implemented to mitigate emissions of toxic gases such as
carbon monoxide, hydrocarbons and nitrogen oxides. Currently, motorcycles
are governed by the 1980 EPA standard, which allows motorcycles to have an
emission level 20 times higher than a catalytic car. The fact that these
standards must be met implies that motorcycles must incorporate new
technologies and with this (since 2009) there has been an increase in prices
between 5% and 15%, according to ANIM. The above could stagnate sales
and therefore, the market accessed.

Also another point to consider is the traffic law that has been in force since
February 12, the traffic law has new requirements for motorcyclists in
terms of safety equipment. Wearing gloves is now mandatory. The
implementation process began on December 11, 2007, when the
modification to Supreme Decree 234 (in force since 2000) was published.
Safety equipment for motorcycles, according to traffic law, supreme decree 234.

Other standards required for the operation of a motorcycle established by

the traffic law are:

Mandatory use of helmet attached to chin certified by international

standard.
Wear a regulatory helmet, attached to the chin with buckles or locks that
secure it to the head (certified by an international standard such as the DOT
of the United States; EU, of Europe, and IJI, of Japan).
Wear eye protection, which may consist of glasses or be an integral part of
the helmet.
Wear gloves made of abrasion-resistant material that cover the entire
hand, including the fingers.

Wear closed footwear that covers the foot, preferably with non-slip soles.

Wear clothing that completely covers legs and arms, preferably made of
friction-resistant material, when driving on roads with a maximum speed of
80 km/h or higher.

Economic factor

Chile is going through a relatively stable economic moment, the motorcycle

industry has not been affected as a product that is an alternative for
transportation and is increasingly considered part of being a basic necessity
item. They are substitutes for other means of transportation, which has
influenced sales to grow year after year.

Another factor that affects are the substitute products, today there is a
wide variety of brands and models that try to match the motorcycles
manufactured by Harley Davidson, the so-called chopper motorcycles which
give a feeling of freedom and rebellion, which today in day many are
searching. Therefore, there is a strong entry of Chinese brands with a
dramatically lower cost and with series of motorcycles with the Harley
style, which for people who do not have access to Harley motorcycles
makes them opt for substitutes.

Substitute products, a wide variety of imitations to gain ground in the

market.

The rise in gasoline prices is making motorcycles an economic alternative for

transportation, which translates into greater sales of motorcycles and
scooters, therefore, greater demand for technical service for these vehicles.

A negative factor compared to the great interest in this market are the costs
associated with taxes and mandatory insurance, which compared to that of
vehicles can be 20% more expensive.
- The increase in gasoline is making motorcycles become an economical
alternative for transportation.

-They are a substitute for other means of transportation, which influences

sales to increase each year.

- factor that affects are substitute products, strong entry of Chinese brands
with a dramatically lower cost and with series of motorcycles with the
Harley style.

-Costs of new equipment to adapt to new technologies

- There are financing facilities from banking entities (loans).

Social Factor

Chilean society is becoming aware of more economical options. Now

motorcycles are not only seen as an alternative for walking or for “rebels
without a cause”, but as a concrete, fast and economical option for work.
Another interesting factor that has been occurring since 2009 is the entry of
women into this industry (mainly scooters). All this movement is undoubtedly
enhanced by the terrible service provided by the current Transantiago
mobilization system, which has made possible the increase in sales in this
sector.

Another important factor is the issue of mobilization at rush hour, as

everyone knows in Chile and around the world at “rush” hours, driving by
car is true chaos, all the streets full, impossibility of getting somewhere on
time. . Therefore, motorcycles have become an easier and more
comfortable mobility to get to places and also that on the highways,
motorcycles to this day do not pay for the "TAG" automatic collection
service, which saves in terms of mobilization. .

Ease of transit during peak hours.

It does not pay TAG, because the system for motorcycles has not yet been
implemented.
-Access to purchase a Harley Davidson carries a connotation of social status.

-Nowadays, motorcycles are no longer an alternative for walking, nor for rebels
without a cause, but rather a concrete, fast and economical option for transportation.

-Greater awareness of the environment and ecology

Technological Factor

As a result of the new decontamination plan in the Metropolitan Region,

each time the new motorcycles add more advanced technology elements,
which comply with Chilean regulations as well as international standards. For
example, with the new regulations for the Santiago Decontamination Plan,
motorcycles will soon have to have additional elements such as catalyst,
electronic injection, air induction and oxygen sensor, in order to mitigate the
toxic gases emitted during combustion.

- Each time new motorcycles add more advanced technology elements that
comply with international standards. Example: In the case of Chile
decontamination plan.

-Technologies that can replace or significantly change the concept of

today's automobile: hybrid, electric, solar cars...

Bold Part Ignacio Casacuberta

Red Part Paulina Camus