Harley-Davidson used to sell about 1/3 rd of its production during the 3 months of spring. But this year it will not happen. UBS analysts state that in April & May retail sales were down about 35%. So, it’s quite impossible that June will let Harley catch up with the spring average. Worse, low volume of new motorcycle sales seems to feed itself due to the fact that the used market is extremely good.
Why to buy a brand new bike when you can get a slightly used one from a “subprime loan borrower” in big trouble and ready to accept a very low offer (here we receive a dozen of calls every week from individuals begging us to sell their bikes. And always after having exhausted the local newspaper ads and the bike nights…). Americans continue to love their bikes, but can’t keep them or don’t have enough money to buy new ones. Add to this the fact that most baby boomers (the youngest are 45 and the oldest 65) have reached (at an average of 46 years old) or passed their peak income and spending years, and you understand why Harley is having a horrible year. One year ago the share price was nearly $40. It is now trading around $16.
One point that most people don’t understand is that the less than 45 yo don’t have more money than the baby boomers. As a matter of fact, less. And the 25 to 35 starting their professional life and building a family have also to worry about paying back their college loans, their car loans and their first mortgage (if they not already foreclosed and lost in real estate their first savings). The solution for Harley is not “talking” to the youngs but offering cheaper bikes to everybody.
Excellent commenting by Bronco.
HD ….. Welcome to the real world!
Over & Out,
Jeff
Harley.Hitting the skids is one thing. Going wide on the road can be disastrous. Better off changing the way you think, build your bikes and talk and act with the biker community.
I have always been amazed at how out of touch Harley has been with thier customers, such as:
Refusing to service bikes HD didn’t customize…
Being unable to produce any decent looking factory custom…
The poor quality years thru the 70s…
That ridiculous waiting list crap a few years back…
Instead of embracing riders and major events for decades, they shunned them, and started thier own silly H.O.G. club, good grief…
Statistical data or demographic formulas won’t cut it, HD is struggling because they ignore our wants and needs, plain and simple. This ignoring gave rise to the aftermarket that swelled thru the 80s and 90s into the 21 century and just might be the undoing of the Harley brand. Here’s a nickel’s worth of free advice HD, try listening to the people that actually buy your product. Don’t turn the most brand loyal product in the world into another, hey I remember those.
Good to hear. The local Harley dealers in Southwest Florida still try to sell them for more than list price, it is time for HD and there dealers to wake uo.
Credit is changing forever. If not forever, long into our lives.
Regulations from the government are going to touch all lending institutions especially > manufactuers that have lending institutoins< IE Harley Davidson.
Word on the street today concerning HOG stock was not encouraging.
I get a little upset at times knowing that there had to be a cull-de-sac but HOG went forward at full throttle anyway.
Jarley is a bunch of Juppies and don’t understand the “real” ridars…….
Harley Davidson (HOG) Fell into a category [loop hole] industrial loan company [ILC] Firms that use these “captive” companies as a means of providing consumer financing.
That would be OK, but, they also collect deposits and qualify for FDIC insurance protection – and therein lies the problem
Harley Davidson Financial make loans and process financial transactions without facing as much scrutiny as traditional banks regulated by the U.S. government. Now you see the root of the situation. Just like the drop in the economy made the Ponzi Scammers surface, so did bad loans
Then the finger pointing started to HDF. When in reality all involved at Harley Davidson management, sparing no names, even the well known who people call on to save the Company as if they were Gods are to blame ALONG WITH THE OTHERS ! Harley operates under one umbrella
In response to FUJI – well – never mind – I can’t because i have no idea what the heck he said. I think it has something to do with the fact that loans to low-credit score people to buy motorcycles from Harley WAS A HARLEY CONSPIRACY (Don’t you love the all caps thing. Kind of gives it a spooky foreboding ring , don’t you think).
As for Mr. Blevins stating Harley was out of touch with their customers and complaining about the waiting list, it would seem that people would not stand in line if indeed the seller was “out of touch”. HOG being silly? Only over a million times silly. That would be over a million times where people that “don’t fell embraced” actually pay to be a part of HOG.
I had no idea Harley had “shunned” major events. They are always at Sturgis, Daytona, Myrtle Beach, the National Roundup – the list goes on. Are these not the major events you refer to?
I have a notion – maybe Harley is having a bad run because the country is in a severe recession. Credit is hard to come by, unemployment is soon to hit 10%, foreclosures on homes are continuing to accelerate. and we have an administration that with cap & trade is hell bent on running the last manufacturer out of America all the way to China. Ya think this might have something to do with it?
Lets not even get into the EPA turning every Harley into a a source of Global Warming with an ECM that makes the bike run volcano lean.
It was a lot of fun while it lasted.
In response to TPEvans,
My comments about Harley shunning major events, they did that for years until recent years, ask anybody that was around from about 1955 to 1985, they slowly started entering the scene but at that, usually on the opposite side of town from bikers.
And the waiting list thing is why the aftermarket gained such a firm grip, everyone was tired of Harley’s continuous “not getting it” and sought an alternative, everyone knows this.
It’s true the economy tanked, and trend followers have moved on to other things to toss thier money toward, but if Harley is in trouble after coming off the most fruitful years in its history, that can best be attributed to poor management and being very out of touch with thier customers. I will give them credit for selling a lot of nice clothes.
New bike sales are down for all the manufactures not just Harley. Maybe the Harley brand has lost a bit of it’s shine here in the States, but in the rest of the world, the consumers with money,still want to own a Harley. I’ve seen it at motorcycles shows in Germany, France, Australia, and Brazil. To own a Harley is still a status symbol. Like in the last posts, Harley hasn’t figured out how to capture the 20 something crowd. They need to offer a top bike at the same price Honda and Suzuki does, not an entry level sportster. Now with Harley buying the Italian Augusta sport bike company, look for them to try to enter into the sport bike market. The Buel was the first attempt at this market, not many Buel’s on the road. My company sells products to the motorcycle aftermarket, more and more companies I know that are heavy into Harley aftermarket parts are working on parts and products for the sport bike and Japanese cruiser market as opposed to designing more aftermarket parts for Harleys. This is a sure sign that confidence in Harley’s comeback is in doubt.
I have four bikes. Two are harleys, including a 2009 Street Glide. I have already done a fair amount of work to the street glide and frankly, I love it. I bought it after test riding the Victory touring model, which was also a very nice bike. I wanted music this year. Anyway, I am surprised at some of the comments about HD. I own a BMW automobile which cost much more than either Harley. Yet BMW did virtually nothing to follow-up on my purchase or try to make me feel part of any brand or family. When I bought my first harley some years ago — a night train — I was impressed by the amount of effort that the dealer (HD of Baltimore) and the company put into making me feel welcome.
Three ideas about the company on a for what its worth basis.
1. Parts take too long to be delivered. Even older guys like me (55) are tech savvy and order computer parts that arrive the next day — always! I think efficiency is under-rated. Were I the new CEO of Harley I would really work on that issue.
2. Maybe it is just me, but JP cycles sends me a catalogue every couple of months (or so it seems), but not so Harley.
3. The quality of the paraphernalia they sell is bad. If they could combine their logo with better garment manufacturers, it would make a difference. And, their graphic design is not current. (Compare HD to an artist like Cyril Huze for example).
I don’t comment often, but I love this site and love the comments too. Ride safe and have a great day.
In response to TJK. The problem HD has is very similar to the problem the US auto manufacturing industry is undergoing. Cost of production in the US is a problem. Employee benefits, insurance ,
Retirement, cost of living etc, etc , .Hard to be competitive against the japanese. To my recollection it is a $34 dollar per man hour difference between a company like Nissan and any of our Big Three.(total compensation and expenditure ) Big chunk of change! That is why Harley is now looking to outsourcing some its production overseas. Fact or fiction it is a direction that they may be forced to take.
TPevans hit the nail on the head. The EPA seems hellbent in destroying american small business with their out of touch board members,lets finish everybody off and send all manufacting to China.a Guy riding his motorcycle a few hours a weekend is not causing global warming.We have broken the circle,we must start returning manufacturing to America,protect our own,maybe take a cut in pay and pay a little more for American products,take pride in Made in America,build excellent productsagain.Years ago people made fun of the Ilalians for sticking by Fiat,they would buy them no matter what kind of car they were,whos laughing now. Harley needs to broaden their market attract entry level riders,women and thier old guard,dont put all thier eggs in one basket thats what happened to American car companys.I love this website
Harley Davidsons “Listen Up” Discount, Discount, Discount! Give it up. Take less! I know thats a Pill that is hard to Take! All those Years Making the Dealers Pay and Kiss your “Chrome” to get Bikes for Inventory. Creatingso Called Shortages on New Bikes! Then of course the Dealers “HAMMERING” the Public. Gouging the People with Huge Intrest rates like $5K wasn’t enough .The minimum on EVERY FRICKING BIKE PLUS, “$1500 must Buy Accessorie Program” I hope you Almost Go BROKE GIVING BIKES Away to the Public! I am waiting for Factory Direct Pricing! Why not You are nothing but, Whores wearing, Leather and Chrome! Give us $5,000 off on all models except Sportsters and 20% off all accessories and 25% while we are Purchasing a new Bike . Who cares about waisted Programs and Sponsorship, Give us “BIKES FOR LESS” ! It is about time 24 Years is a pretty BIG RUN! Give a little Back to the Clients you Gouged for all those Years. I know nobody put a Gun to anyones Head to buy a Bike! Just Think nobody is Putting a Gun to Corporate now either! But your Check Book is deteriorating!
Hey, plenty of thoughtful input here. Good forum Cyril.Here’s my 2 cents evaluation of Harley’s challenge.
1. Economy=25% of their problem.
Its in the tank. Lots of reasons here but bottom-line it sucks in the USA.
2. Product Price Points=25% of their problem
Pricing on the entire line of Harley products, including motorcycles, has gotten way off track and ignores today’s economic reality.I saw a $45 T-shirt at a dealer in SoCAL last week. I laughed out loud and had to ask the sales rep at the counter if the price tag was a mistake.My National HOG membership renewal came in at $45 bucks for a year. Unbelievable.
3.Flawed Marketing Strategy=25% of their problem
Time to clean house and regroup.Marketing has failed to capture the true needs and desires of their target market, missed the mark on the huge women market, and has struggled to figure out what to do with the 20 and 30 something marketand missed the “Harley” scooter market. Promotional activities have been weak. They chose to skip Laughlin this year for example.—where riders ride 12 months of the year and 90% of the participants ride Harleys.
4. Manufacuring Costs= The Final Blow = 25% of their problem
Simply out of whack with global competitiveness and will be forced off-shore if they are to thrive financially in the next positive economic cycle.As a proud and patriotic American I hurt even writing this but as a businessman/entrepreneur myself, I speak from experience here. Health care costs, pension liabilities, union demands,TAXES… the list goes on.Don’t expect Obama to visit Milwaukee headquarters anytime soon.
That’s my 2 cents Cyril.
Nothing spooky or foreboding. Just trying to express myself without getting anyone’s dander up.
Those of us who have rode or ride the brand are the company.
If it appears that either I or others are lashing out at the Co then don’t be misguided. What we are expressing is the concern over the actions of those who were put in place to tend to the company and are failing due to do because of mismanagement.
HDFS had the ability to over extend credit with every applicant good credit or bad. F & I with the direction of the company took the liberty to overextend almost every one with add-ons to make their accessory division flourish which = 25% of business.
Eventually these actions will catch up with you in time good economy or bad. When your client is over extended they are put in an upside down position for a longer period of time thus keeping them out of the repurchasing loop longer.
Let me say this with HD success over the last decade there should have been a cushion to fall back on.
I think if We all sit Back and think about it The Real Deal is “DEALS SELLS BIKES” that it right now! The Economy is 100% the reason. When you STOP doing Buisness or Buisness Slows Down, we all scurry to cut expenses and Find the magic Answers! What is the way to sell Harley Bikes? Sell Cheaper, Give a Deal that you Can’t Refuse! Harley needs to Reduce their Prices 25% across the Board.PERIOD…………………………….
Does this smell like GM and Chrysler to anyone? The U.S. Taxpayer will own H-D before long!!!
David
I deal with the small guys on repairs and service. Paying 100 bucks an hour and being told to sit in the coffee room or play pool is not my idea of customer satisfaction. I want to watch the wrench fix my bike at the prices I have to pay. The days of locking the customer up in some room to wait are over for me. Back to the old days , my friends.
The real issue is the credit problem which allowed thousands of newbs to come into the harley fold but then quickly bail. Meanwhile the MoCo struggled to keep up with the growing demand for anything branded with Harley. Bikes, shirts and dog collars. Now the new riders want little entry bikes, water cooled bikes, and reverse. Next they’ll want an automatic tranny.
There will always be a core market for Harley. But it may have to shrink back to the niche they owned back in the day before all the new riders became “bikers”. Folks forget that Harley almost went CH11 after the LBO from AMF. Their success was an incredible turn around and give them credit for the changes that brought it about. Changes like the EVO mill and the softail frame.
The Harley today is a better bike than any prior model generation. And customizing options are amazing compared to back in the day. Every business is struggling with the economic downturn. Harley’s products are high quality and there is no other brand that occupies their market niche with such dominance. There are clones out there but who buys them?
Harley’s business should be scalable and they will react with some downsizing and still be profitable. There will be a glut of bikes for awhile as the newbs and fashionistas bail out and sell bikes. The core will remain and come back to the showroom.
T1, I believe Citi Group made that loan avalaible back then, today it would not happen with the credit tightness and government tentacles reaching further into business and as most business entities rely on Industrial/business loans to conduct daily business, getting established, and financing future growth, etc. as you said no credit no business unless your of old money so no upstarts working out of sheds and garages with a dream in the 21st century.
Thus no Harley after 1982 and no or minimal at best Aftermarket/Custom growth industry growing out of their resurgence, oh that is right it would not have occured, nor the resulting MC world we enjoyed the last couple decades. Anybody remember the British MC industry after the 60’s?
This is not an HD issue it is an American Industry and personal livelihood Issue, failure to live within ones means issue, over extended issue, Freddy Mae/Mac and entitlements or earn what you burn issue. Poor business practice issue and last but not least an empowered power seeking governemtal congressional body!, serving lobbying special interest for financial and power gains padding the wealth of the so-called representatives of the people and the special interest.
Better get you a government job that you can idle thru life in if that is your comfort zone or we need a change, a real change back to what we once were and how we used to get there.
Free market, individual rights and small business efforts got us going, free market, etc. will get us back in gear, or end result no market or just a government run market/industry/America.
Anybody heard of the US Postal System or Amtrack. Can you spell red ink and tax payer waste.
In regards to loophole concerns, Industrialized Loan Companies concerns over 45 or so smaller banks owned by parent industry companies but not functioning completely as a bank as such mandated under all the same rules working out of business friendly states under friendler banking rules perceived as lesser regulated than the oversized too big to exist banks in Metro Mania, seemingly this concern dictating the need for more oversight and additional government controls, i.e.; Give me a break, If no one watches the hen house does not matter the number of regulators and rule books in the back of the packed government van sitting outside as so called guardians with all asleep at the wheel.
End result may well be tightened credit that now may just be beginning to loosen, Our Governmental wizards will throw more, (borrowed from China, Saudi, and Japan), money at bad.
Government Bureaucracy at its best, not; A new Fed group to watch the exisiting Fed Group to monitor the banks that are already supposed to be being monitored with rules already in place all watched over by a new Czar. The New Fed guy who is also the old New York Fed guy who used to work for/under the old US Gov. Fed guy; now hiring new regulators to watch over already paid regulators to enforce new rules and guidelines added on to the existing reams of paper stacked unreadable already in place.
Kinda like you hiring a new CPA to watch over your existing CPA to watch over your Inhouse Accountant and your good ole boy buddy acting as the Czar watching all or nothing, and you borrowing from the Chinese so you can pay for all the new layers. Businesses will rise and fall, so be it. Geeze when are we going to wake up.
HD got in trouble just like everyone else, subprime lending no matter the lending source, i.e., bad business decisions to sell upped production quantities to feed thirsty market that wanted but could not afford product not so much unlike custom bikes, boats, or homes, etc sold under same criteria. You make a bad decision you learn from it and go at it again, but no more free lunches, money is as money earned, loans available as thought out business plans, security and collateral dictates. Small goverment.
Noting the tax payers do not own GM or Chrysler, they only exist because of the US Treasury bonds in the hands of the Chinese,etc. kinda like you having the non negotiable title to same and paying thru the nose for life.
Peace
Grayhawk
Responding to GM. As a dealership owner I can tell you that our insurance company would have a great time cancelling our insurance if they knew we had our customers standing in the service department watching work being done ! second we are not running a school to teach our customers how to service , diagnose and repair their own bikes. Kind of defeating the purpose yah think! We have enough so called mechanics working out of their garages for ten dollars an hour and a case of beer . Our shop rate is $75 an hour which we feel is fair to everybody and covers the expenses. Our customers don’t mind waiting in the showroom enjoying refreshments or we offer a free shuttle to two of the area casinos ,calling them on their cell when the bike is finished and we pick them up. There is an average of 20 bikes in our service department all season being worked on so I think we have a successful formula for keeping our customers happy. A hundred an hour is rather steep but it is what it is .If the dealer needs a hundred an hour to meet his overhead anything less is defeating the purpose. Its all based on your overhead and what you need in gross profit margins to meet it.
One proposal being pushed by the White House takes aim at industrial loan companies, which are allowed under their state-issued charters to collect federally insured deposits, offer credit cards, make loans and process financial transactions without facing as much scrutiny as traditional banks regulated by the U.S. government
The proponents of these institutions claim that they had “nothing” to do with the meltdown, and in that they might be technically accurate but (what else is new) misleading.
The problem with these “captive” finance companies is the terms and cross-subsidies hidden from both consumers and regulators, and whether the presence of them really serves the public interest. Certainly, they serve the firms themselves; if they didn’t they won’t operate them!
But that’s not the test. These firms benefit from a federal safety net. Rather than depend on the sale of bonds into the market for funding, exposing them to market risk and carrying no federal regulatory risk, they instead use federally-insured deposits
WalMart (WMT) tried to get one of these charters a couple of years ago, generating howls of protest from various banking interests. In response, new ILC charters were suspended and WalMart withdrew its request.
But that begs the question, does it not? If WalMart or other big name co’s can’t have an ILC charter and offer federally-insured deposits under it, then who can ?
If you want access to a federal safety net of any sort you should have to comply with all federal capital and safety mandates – no exceptions. If you act like a bank you are a bank, and must be regulated as a bank.
.
Agree, No argument they are banks. Some obvious on who they are tied to some not so easy without research. Just no need for further reg’s just enforcement of ones in place without stacking layers of inept inefficients and no more sub-prime contract loans, limit leveraged risk levels. They still are all I believe based on Asset Based Securities. You may recognize some right off, you might do businees with some. H-D is I believe Eaglemark for instance. Also Target is there and I thought Walmart was inclusive but could be wrong there. See link maybe you can figure out who all involved. Any and all are culpable if entered into sub-prime, etc. But so are we who signed on the dotted line.
http://www.ibanknet.com/scripts/callreports/fiList.aspx?type=ilc
More blather… time will right everything. the strong will survive.
Bobber, you are so, so right. Thanks for the clean commentary.
As the economy gets worse and the government defaults because of debt the roads will keep getting worse. The Harleys must have nice roads or they will break down. Also as foreclosures increase, it will become a choice of having shelter, food, a vehicle to transport large items and the kidds in OR have a Harley. Most Americans with big toys such as atvs, snowmobiles, motorcycles and boats have a loan out on them. More will increasingly default on them and have the mortgage and food as a priority.
People buy a Harley if they want a quality motorcycle which holds its value. Now, ten years ago, and in ten years from now. When all of the other “bike builders” fall to the waste-side, Harley will still fix their bikes accourding to their world-wide specification and still have their parts. In ten years, most, if not all, of the other bike and chopper builders won’t even be a memory to anyone (except the people stupid enough to spend tens-of-thousand of dollars on these soon to be no-name, worthless motorcycles).
Remember, Harley Davidson, since 1903. I’m sure they’ve seen their share of ups and downs before. And they will be on top again one day.
I started noticing H-D’s in large numbers on the used market well before the economy tanked.
This is only my opinion, but I think riders in general are growing up. The last decade has really been fantastic for H-D but they’ve failed to recognize the new trends in bikes.
With the exception of a few of the Buells, H-D doesn’t really have a decent ‘standard’ bike. The new XR is a step in the right direction but it still bulky, overweight, and just not appealing to the 18-40 crowd in the way the MIJ bikes are. Plus, H-D prices are insulting.
The perception is that H-D is an old man’s bike. Now, not a cool badass old 1%er, but an old fat accountant or dentist. Part if this issue is image and the people who flocked to the brand in the late 90s and early 2000s. Plunk down 18K+ and you too can be a badass. . .with a H-D branded leather jacket to match your bike (and one for your dog too).
I am biased, but if H-D made a true version of the XR for street use, I mean a real 750 now, not an overweight led weight. . . you’d have every speed freak and gearhead put their CBRs and R1s on CL asap. I love flattrack so like I said, I’m biased.
I want Chris Carr’s bike so why can’t I get one? You want a bike like Spies or Lorenzo? Ok, no problem. Get your checkbook and head on down to the Yam dealer and you can have a true race bred bike. Same goes for Ducati. H-D used to be associated with performance, now what you would say they’re associated with? Loud pipes and chrome? Big whoop.