Will The Youths save The Motor Company?
Harley-Davidson is having a rough time. The Motor Company’s retail sales slipped more than expected in this latest quarter. World-wide, sales of Harley-Davidson motorcycles are down eight percent.
Weak demand at home, and existing (as well as expected) tariffs abroad are to blame for this latest recalculation. Harley has responded to the news by scaling back its shipping plans, since demand for bikes is down, and has revised those numbers to 5,000 fewer units.
Thankfully, the company’s earnings didn’t slide nearly so much. Harley stock was in fact up two percent overnight. Year over year, sales of motorcycles, parts and branded merchandise is down six percent as compared to the same quarter of 2018, from $1.53 billion to $1.43 billion.
“The bottom line is that they continue [to] struggle with baby boomers and it’s not enough to offset the declines we’re seeing,” Edward Jones analyst Brian Yarborough told CNBC. “They need to see better growth with middle-aged and young people and their smaller bikes. They need to offset their 600cc-plus declines.”
This isn’t a new development. Sales of Harley-Davidsons have been slipping in recent years, and it’s not a local phenomenon but a global one. All over the world, riders are buying fewer Harley-Davidsons. In India, which is Harley’s largest market, sales fell 21.6 percent between 2016 and today.
All this said, the company’s total revenue is still $1.63 billion dollars, so they certainly have some time and cushion to let their new sales initiatives take effect. They’re working on rider training, ramping up production in Thailand, smaller motorcycles, and diving into the electric market. Sales to younger riders—that is, people in the 18-to-34 year old age groups—were up 2.7 percent in the same quarter.
We’ve watched Harley scramble to connect to the younger market, dump money into new bike development, and even acquire a company that makes bikes for toddlers. Will all of these efforts pan out in time, or will sales of those big road-going cruisers, baggers, and tourers decline until the company has to make massive changes just to stay afloat? Is Harley-Davidson rearranging the deck chairs on a sinking ship, or are all their efforts on the brink of turning the company around? Time will tell!