Harley-Davidson Spirals Down, Announces US Layoffs, Builds Factory in Thailand

Wolf Street ^ | 18 July 2017 | Wolf Richter

[Lorianne]

Shares of Harley-Davidson (HOG) dropped 10% in the morning after the company reported second-quarter earnings and were down nearly 6% at the end of the day. Almost everything was bad.

Retail sales by its dealers in the US fell 9.3% in Q2, compared to a year ago, to 49,668 motorcycles. They were “down more than we anticipated,” the company said. And with “soft sales across most markets,” sales by its dealers globally fell 6.7%.

“Industry new motorcycle sales deterioration continued,” the company said in its presentation, lamenting “weak industry sales on soft used bike prices.”

In addition to the industry woes, its market share in Q2 in the US dropped 1 percentage point to 48.5%. Shipments in the quarter fell 7.2% to 81,807 and are down 10.8% year to date.

The 30-day delinquency rate on its $7.5 billion in motorcycle loans outstanding rose to 3.25%, from 3.16% a year ago, and from 2.7% in Q2 2015. The annualized loss experience on those loans reached 1.71%, the highest for any second quarter since 2010.

Total revenues fell 5.6% to $1.58 billion. Net income fell 7.7% to $258.9 million. And despite blowing $163.2 million on share buybacks in the quarter to lower the share count and thus prop up earnings per share, earnings per share fell 4.5% to $1.48.

Its dealer inventory is bloated, so it offered incentives on its 2016 bikes to clear them out, and that didn’t help its 2017 models, but it said bravely that it is “targeting significantly lower year-end US dealer inventory.”

[Dalberg-Acton]

The new M8 engine has the same design flaw that HD will probably never change. Look at where the piston rods attach to the crankshaft and how they try to address the inherent balance problem:

[AAABEST]

Young people don't want cars or bikes, they want little silent bubbles of autonomously-guided safe space where they can stay uplinked to the nearest source of social media.

Haha!

[onona]

I’d say some of the problem, maybe most of it, for Harley-Davidson is the success of Polaris with Indian. The rest of the industry may be in a slump, but Indian isn’t, they’re gorgeous, they’re stepping on Harley’s stock in trade while being more reliable.

Ditto that re: Indian

[Deplorable American1776]

I wish Harley would make small off ride models. I don’t ride on the streets here (both cyclists and drivers are lousy), but I love off road motorcycling in the woods. Me, I grew up with Honda and I have a 250 Honda for playing in the woods.

[TheTimeOfMan]

You haven’t been to China or Japan recently have you?

[JDoutrider]

...

[Dalberg-Acton]

Harley partnered with Europeans in the 1960’s and 1970’s and sold those bikes. My brother had a HD 250 cc 2-stroke.

[DungeonMaster]

Finally, people who are inclined to buy new are waiting for the M8 motor on the 2018 HDs.

Now that's interesting!

[Sequoyah101]

I have to laugh at you and that is about all the consideration I can give.

[Billthedrill]

Thailand?

[Sequoyah101]

And that is why I didn’t buy a bike when I retired. Oh I wanted to but see no reason to put my wife through all of this kind of mess. The thing about a bike is not that you can’t be too careful but that you can’t be careful enough.

[minnesota_bound]

Tim Allen out walking his motorcycle
http://lazzara.ch/wp-content/uploads/2016/01/born-to-be-wild.jpg

[zeugma]

Their own fault, they have priced themselves right out of business. 20,000 Dollars could buy 20 acres of land in a rural area or go a long ways towards a down payment on a home.

You obviously haven't priced Harleys recently. You can easily pay 40k for a cruiser, like a Road Glide or Street Glide. I've seen the trikes for almost 50k. Personally, I like HD bikes, though I now ride a Gold Wing. I'm looking at getting a (used) Sportster again though for local rides. Can't beat the Gold Wing when you're 8 hours into a road trip though.

[Sequoyah101]

Two best days of a boat owner’s life are the day he buys one and the day he sells it.

If something Floats, Flys or F____; rent it. Its cheaper in the long run for most people. There are other things that fall into that category.

Problem is that there is no adventure or recklessness in following this rule.

[Sequoyah101]

I can tell you for sure it isn’t a HD!

[Seruzawa]

Part of the problem is that the biggest bike buying demographic group is the Boomers and they are dying off.

Harleys have had high proportions of foreign sourced parts for a long time. They try to keep that fact quiet. And the dentists and lawyers who buy Harleys and put maybe 500 miles a year on one also overlook it. But moving overseas would be disastrous. Harley banks on sales to people who want to appear patriotic without actually having to DO anything or suffer any personal inconvenience over it. Moving to Thailand would defeat that.

[Leep]

I’ve been seeing more on/off road bikes in the past several years..?

[Geronimo]

I love my 2009 Triumph Bonneville and the best thing about it after three years was having something few Harley Davidson owner’s had with their bikes...the Title!

[Seruzawa]

I own a Tiger also. Love the 500lb wet weight and the comfort is better than a Gold Wing. My wife loves the back seat, also better than the GW. I’m so used to the agility and power now that I can’t ever see going back to a big twin or other touring gunboat.

I don’t hate Harleys at all. I sometimes think about restoring an old ironhead Sportster. But I couldn’t go back to HD for a daily rider or tourer.

[Seruzawa]

My wife has the same problem she gave up trying to find a motorcycle that will fit and so I keep her in scooters. Right now she’s riding a Kymco. Sucks but what can you do. Even if the bike is low enough they are too wide for her.