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Harley-Davidson is Even Worse Off Than You Might Think!

Of late, at Life Of a Rider, we’ve done several features about the motorcycling industry going into a tailspin. Sales are at dangerously low levels. 2006 saw US riders buy over 716,000 motorcycles. In 10 years, by 2016, the numbers were down to less than 372,000.

That’s right. Motorcycle sales have about halved in the past decade. And while the rest of the economy and the automobile industry is back to pre-recession levels, the motorcycle industry is yet to catch up.

And that’s how Harley managed to beat market expectations with this its third quarter results. The analysts had just set the bar way too low. It may have beaten expectations by a slight tinge, but it’s far from what corporate claims it will be. The company’s currently going through it’s worst post-recession period.

During the second quarter, Harley-Davidson said that it’ll ship as many as 40,000 units in the third quarter. The actual figure was less than 20,000! Corporate covered it by saying this was purposeful for dealers to clear their existing inventories.

In 2016, Harley shipped 42,400 motorcycles. And now the company is saying it’ll ship 51,700 motorcycles in the fourth quarter of 2017 alone. And that’s when the fourth quarter is usually the worst for the company. We’ll agree that the new 2018 lineup is going to mean a lot more sales. But, 5 times more? We really doubt!

In 2017 so far, Harley sales have been down by 6%. Some might say that Harley is now a truly global brand, and can count on its overseas markets to cover its domestic losses. However, that isn’t even half the truth.

The motorcycling industry is on a slow-down throughout the globe. Harley’s Europe sales in the third quarter have very marginally increased, while it has suffered a 15% YoY drop in Japan, and 11% in Japan.

Moreover, having a lion’s share in the US market, over 65% of Harley’s retail sales are domestic. Harley has a 53% share in the US market for motorcycles with engine capacity of 601cc or more. And the US sales have been down 8%. Given that the motorcycle industry in the US has been down 9%, Harley has performed better than the market, but that’s nearly not enough.

Harley has been showing a lot of ambition, but I doubt if there’s any ground to that. With over 100 new models in 10 years, the company claims to add 2 million Harley riders on the road in this short span.

While Indian motorcycles saw a growth, that isn’t something I’d really go by. The company’s gotten into the game of steep discounting, which Harley is still shying away from. Perhaps, that’s how the company managed a net income of $68.2mn, which by the way is still 40% lesser than what it was a year ago!


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