The Bleeding Has Slowed
Harley-Davidson reported a further decline in sales today for the first quarter of 2019. Despite the drop in the U.S. of 4.2 percent, the decline in Europe of 2.1 percent, and a drop of 6.7 percent worldwide compared to the same time the previous year, some are seeing it as a win for the company. It marks a slowing in the decline in sales. Estimates for the sales decline were far higher, meaning Harley did better than many analysts expected.
The company’s net income dropped around 27 percent. That’s not an insignificant number. With that kind of decrease in income, the company has to be a bit worried about the future. Harley cited European tariffs as a big contributing factor for the continued decline in sales.
“The big impact for us is European Union tariffs,” said Harley chief executive Matt Levatich, according to Forbes. Despite the drop in sales abroad and the European tariffs, Levatich said the company will still be moving forward with global plans.
“We’re pursuing our strategy to get to the European marketplace through our international manufacturing footprint. Clearly, this is an imperative for us as a business and we’ll continue to execute that strategy unless or until circumstances change,” he said.
The sales results from Harley and the impact of the tariffs imposed by the EU elicited a response from President Donald Trump. Trump tweeted that the tariffs were unfair and that the U.S. would “reciprocate” but didn’t elaborate on how. The EU put those tariffs in place after similar tariffs were set by the U.S. It will be interesting to see how further tariffs impact the situation.
Interesting that the street 750 & 500 lines were not factored in since they’re a big part of Harley’s international sales effort. Could the utter failure of the brakes and total stoppage of manufacturing have anything to do with this? For me that’s a big indication that Harley has a lot more ground to cover when it comes to penetrating markets like India and the far East. Not a lot of people would feel comfortable taking an 800+ lb bike down Indian streets.
Harley’s fundamental problem is that they concentrated all their efforts into making products appealing to, pretty much, a single market demographic: older Baby Boomers with a nostalgia kick. As the Boomers age out of riding (and, hopefully soon, just completely *out*), Harley’s failure to attract younger buyers, or simply buyers with different tastes, have come back to haunt them.
Big time.
So now they have no choice but to make products with an appeal beyond simple nostalgia for some fictional “past” where everything was great…except it wasn’t. The Street line and the Livewire are their answers to this. The concern is whether those younger buyers, after feeling left out of Harley’s radar for so long, are willing to come back and give them a chance, especially since those alternative buyers happily bought, and fell in love with, other brands.