Aside from business, schools, and local communities, the COVID-19 health crisis has also disrupted global supply chains. Due to the unpredictable circumstances, shipping and raw materials prices have jumped during the pandemic. However, manufacturers typically eat those inflation costs long before passing them on to the customer.
Unfortunately for Harley-Davidson and its customers, the current situation is forcing the Motor Company to add a 2-percent surcharge to specific models throughout the rest of 2021. In a post-earnings conference call with analysts, Harley officials cited freight costs and the rising price of aluminum, steel, and lumber as driving factors.
“The supply chain remains very fragile, not only for our business but for every global manufacturer,” admitted Harley-Davidson CFO Gina Goetter. “Our team has continued to do a great job managing through the unprecedented challenges, and to date, we've had no sustained downtime in our factories.”
While the brand endured the inflation costs in Q2 2021, they forecast the same issues extending into Q3 and Q4.
“We have continued to see inflation across all modes of freight as well as within raw materials, and we are forecasting this to continue throughout the fiscal year,” added Goetter. “To help offset, we implemented an average 2% pricing surcharge on select models in the U.S. effective July 1st for the remainder of model-year '21.”
Most recently, Harley reported a 24-percent growth through Q2 2021. Of course, improving sales figures are encouraging news for the brand, but operating expenses have also increased as the Bar and Shield invests in its Hardwire strategy and readies its 2022 fleet for the market.
Goetter summed up the situation by saying, “the 2% surcharge will not completely offset what we're seeing come at us, but it will do a good part in offsetting much of that.”
Stuck between shareholders and consumers, Harley-Davidson is doing what it can to negate the current market conditions. Hopefully, prices for all parties will return to sustainable levels in 2022.