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[CVOStreetglide]

http://www.reuters.com/article/us-harley-davidson-results-idUSKBN1A3126

[charles05663]

I like this quote for what ever it means:

"We are downgrading Harley-Davidson to 'market-perform' based on increased conviction that motorcycle demand in the United States is in the throes of secular erosion," Bernstein analyst David Beckel said.

Secular erosion???

Why don't they just speak plainly:
We can't sell our overpriced motorcycles because our base is dying off and the younger folks don't have the money.

 

[ultrarider123]

I like this quote for what ever it means:

"We are downgrading Harley-Davidson to 'market-perform' based on increased conviction that motorcycle demand in the United States is in the throes of secular erosion," Bernstein analyst David Beckel said.

Secular erosion

Why don't they just speak plainly:
We can't sell our overpriced motorcycles because our base is dying off and the younger folks don't have the money.

 

Charles, I like your description much better.  Where do the "analysts" come up with some of their speak?

[CVODON]

Bet they survive, may have a downturn but they are a 100 + year company that been thru World Wars, the Depression & an economy that goes up & down. I support them, just like I do Sears. My life would change in a not good way if we loose either one as both are part of & have been part of my whole life. I accept change but these two are important to me and hopefully to everyone else in this forum.

[Grizzly]

https://www.bloomberg.com/news/articles/2017-07-18/harley-davidson-is-losing-its-cool

as share price drops

https://www.bloomberg.com/news/articles/2017-07-18/harley-davidson-cuts-bike-sales-forecast-seeing-deep-u-s-slump

[pvanwagner]

Down 17%?  Time to buy HD stock.  That just makes it a good deal.  Bookmark this post and tell me in a year if I was right or wrong.

[pvanwagner]

Down 17%?  Time to buy HD stock.  That just makes it a good deal.  Bookmark this post and tell me in a year if I was right or wrong.

[iski]

Harley cannot afford to "skip" a generation. Millennials be picky. Baby boomers were a great market for HD.  1990's to early 2000's meant long waits for new bikes.  Harley can maintain business with no growth for a time.  At some point no growth then shrinking sales means a factory closes or a company sells out.  Hope Harley figures it out, they always have in the past, even though the Great Depression.

[Road Dad]

Nobody will invest in a company that does not grow - shareholder sells of - stock price goes down - hostile takeover - foreign owned. Most likely Chinese.

Unfortunately not unlikely.

[mark]

Down 17%?  Time to buy HD stock.  That just makes it a good deal.  Bookmark this post and tell me in a year if I was right or wrong.

With the customer base dying off, and no generation taking the baby boomers' place in HD showrooms, I'd wouldn't jump on HD stock.  They've had several reporting periods of poor numbers, talk of being bought out by KKR, and they had their hand slapped about a year ago by the financial mags for "creative" reporting of their numbers. 

[muddypaws]

Harley-Davidson Spirals Down, Announces U.S. Layoffs, Builds Factory In Thailand
Jul.19.17 | About: Harley-Davidson, Inc. (HOG)
Wolf Richter
Wolf Richter
Long/short equity, special situations, contrarian, debt
WOLF STREET
(1,417 followers)

Trying to manage a structural decline in a terrible industry.

Shares of Harley-Davidson (NYSE:HOG) dropped 10% on Tuesday 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 the company said bravely that it is "targeting significantly lower year-end US dealer inventory."

H-D has at least three fundamental problems. One is relatively new, and two have been with it for a few years and it cannot seem to escape them:

    More of its customers are getting financially distressed, hence there are rising delinquencies and losses on its loan book. This issue has also raised its ugly head once again for automakers and other consumer lenders.
    A Hog is the iconic motorcycle for baby boomers, but they don't make baby boomers anymore. The younger generations have other things to spend their money on. H-D has come out with lighter and less expensive models to appeal to the younger crowd, with some success, but not with enough success to make up for the baby boomers who're approaching the end of their riding years in ever larger numbers.
    H-D is selling motorcycles. Motorcycle sales in the US have been a nightmare since the peak in 2005, when the industry sold nearly 1.1 million bikes of all sizes. By 2006, sales were falling. In 2008, sales plunged, bottoming out in 2010, down 60% from the peak. But unlike auto sales, motorcycles never recovered from the Great Recession.

[bad00serg]

I agree with Mark - I think this will be a continuous decrease in HD demand and therefore share price.  I think they will survive, but we have seen HD at their peak for shipments and stock price I do believe.

[ultrafxr]

I agree with Mark - I think this will be a continuous decrease in HD demand and therefore share price.  I think they will survive, but we have seen HD at their peak for shipments and stock price I do believe.

I also agree and I'm worried about the staying power of some dealers who invested in those mega stores.


Sent from my iPhone using Tapatalk

[RonandJanet]

Harley will have challenges but so will the other motorcycle manufactures. If the US would embrace bikes as Europe has then the demand will be back.  Most kids (mine included) are not car (or mechanical) lovers.  They look at them as a way to get from point A to point B period and even that is going away.  Now they can easily use uber etc.  Of my kids and immediate family all my boys had bikes and then left them (need something to get to work and dates). I have a nephew that loves bikes and we are close. He is getting his first Harley this week.  He is rare that he likes bikes that much and enjoys tinkering with them.  The kids he hangs with all have the crotch rockets but he just loves to cruise. I do encourage this direction he is going but also make sure he really wants the Harley.  He will call and we will work though problems with his car, bike or whatever which I enjoy. It is great to have a family member that is young and loves to ride like I do!   

[smkymtnboy]

Down 17%?  Time to buy HD stock.  That just makes it a good deal.  Bookmark this post and tell me in a year if I was right or wrong.

bookmarked!! 12 months is a very short time for a turn around with a market that is already overvalued. 

[scottt]

Rode with a large group of folks starting in 1989. Most of us purchased new HD'S on a regular basis. Today the vast majority have either passed on, moved on, generally stopped buying bikes and/or stopped riding. Nothing Harley can do about this, things happen when people age.

If I were in charge of HD, I would go all out with upgrading product. Make the 114" eight valve the standard big twin. Would cost very little to make this upgrade. Advertise "Largest most powerful standard V-TWIN Available". Next I would make sure everything built was of the highest quality. Third I would reduce production to one less bike than demand.

The last step would be to increase the R&D budget. Make sure Harley is building the best bike available for it's segment.

This would be the secret to success. When Harley buyers felt lucky to secure a new bike the company and dealers did well. Now the dealers are more like a car dealership. Trying anything to sell you a bike.

Just my humble opinion.

[CVOStreetglide]

Rode with a large group of folks starting in 1989. Most of us purchased new HD'S on a regular basis. Today the vast majority have either passed on, moved on, generally stopped buying bikes and/or stopped riding. Nothing Harley can do about this, things happen when people age.

If I were in charge of HD, I would go all out with upgrading product. Make the 114" eight valve the standard big twin. Would cost very little to make this upgrade. Advertise "Largest most powerful standard V-TWIN Available". Next I would make sure everything built was of the highest quality. Third I would reduce production to one less bike than demand.

The last step would be to increase the R&D budget. Make sure Harley is building the best bike available for it's segment.

This would be the secret to success. When Harley buyers felt lucky to secure a new bike the company and dealers did well. Now the dealers are more like a car dealership. Trying anything to sell you a bike.

Just my humble opinion.

.......and DOUBLE THE WARRANTY PERIOD. 

If you make good products and stand behind them the customers wiil come!

-- Make the M8 117" the standard motor platform for large and sport bikes.

-- Drop all of the Sportster Motors and replace with a M8 base motor. 

-- Provide the ability to order the largest SE upgraded motor direct from the factory with all of the necessary clutch and tuning components required already installed.

-- Provide the ability to order a bike online right after new model rollout and have it delivered to your residence within 30 days after order.  This will significantly improve the HD supply chain and inventory issues. Customers can continue to go to their local dealer as an option.

-- Provide the ability to lease new bikes like cars.

[Para Bellum]

-- Provide the ability to order a bike online right after new model rollout and have it delivered to your residence within 30 days after order.  This will significantly improve the HD supply chain and inventory issues. Cutomers can continue to go to their local dealer as an option.

Lots of good ideas in your post, but HD would be cutting their own throat if they cut-out the dealers...eventually dealers would go out of business, and lots of people wouldn't want a bike with no support system.

I especially like the idea of specifying the options to get what you want straight from the factory, instead of paying for two sets of handlebars, two engines, two seats, etc. (plus the labor cost!).  And I would jump on a lease program.

[moscooter]

What do ya mean..........we're dying off.......

[VaEagle]

Being a sort of long term member of this site I find it interesting how the same ideas keep coming up over the years and in general very little changes.
Just my own repetitive .02 worth but in order for Harley to survive in America they need to be ingrained into the younger generations psyche through loving memories with older relatives such as young rides with their father, mother, aunt or uncle etc. So that is more our burden to create the good times with younger people. Then younger people need to be unburdened by things like huge student loans so they can afford" life toys" like a motorcycle. Then Harley's burden is to make a reputation for making a turn key dependable bike that is affordable and no need to spend hundreds or thousands of dollars to get them to run right.
Several years ago before H-D started the build your own type of programs with Sportsters I and others suggested that since the CVO program was on the assembly line vs. separate builds that they should offer a dealer program to like mentioned above and have the factory build a truly one of kind CVO bike from info at a dealership. That way if you didn't want flames or skulls you didn't have to settle what someone else wanted you to have. I don't think the deliver to your house direct from factory system would work since there is more to setting up a new bike then just removing a cardboard box and removing from a pallet. It would require each delivery to be done by a mechanic with proper tools and fluids.
I bet the dealerships would hate a build your own on computer program since they would loose money on part sales and installation but I bet they would do better in the long run by not tying up the mechanics on parts installs but they could increase work on maintenance customers. How many times have you called a dealer for a tuneup and are told it would be a week or two before they could schedule you in for work? Think again of the new young biker, how welcome do they feel if they come by for a tuneup and are told to come back later?
With the aging of the typical US rider I wonder if H-D has sort of given up and looking at the global market instead and if they can get a strong market in India and China etc they can survive due to the smaller 500 and 750 size bikes?

[mark]

Being a sort of long term member of this site I find it interesting how the same ideas keep coming up over the years and in general very little changes.
Just my own repetitive .02 worth but in order for Harley to survive in America they need to be ingrained into the younger generations psyche through loving memories with older relatives such as young rides with their father, mother, aunt or uncle etc. So that is more our burden to create the good times with younger people. Then younger people need to be unburdened by things like huge student loans so they can afford" life toys" like a motorcycle. Then Harley's burden is to make a reputation for making a turn key dependable bike that is affordable and no need to spend hundreds or thousands of dollars to get them to run right.
Several years ago before H-D started the build your own type of programs with Sportsters I and others suggested that since the CVO program was on the assembly line vs. separate builds that they should offer a dealer program to like mentioned above and have the factory build a truly one of kind CVO bike from info at a dealership. That way if you didn't want flames or skulls you didn't have to settle what someone else wanted you to have. I don't think the deliver to your house direct from factory system would work since there is more to setting up a new bike then just removing a cardboard box and removing from a pallet. It would require each delivery to be done by a mechanic with proper tools and fluids.
I bet the dealerships would hate a build your own on computer program since they would loose money on part sales and installation but I bet they would do better in the long run by not tying up the mechanics on parts installs but they could increase work on maintenance customers. How many times have you called a dealer for a tuneup and are told it would be a week or two before they could schedule you in for work? Think again of the new young biker, how welcome do they feel if they come by for a tuneup and are told to come back later?
With the aging of the typical US rider I wonder if H-D has sort of given up and looking at the global market instead and if they can get a strong market in India and China etc they can survive due to the smaller 500 and 750 size bikes?

I think HD realizes (and has known for some time) the only way to make up for declining baby boomer sales is to sell more overseas and to attract women riders.  They have tried to draw more Gen X and Y riders to HD, with tepid results.  The MoCo is facing a "new normal" that will result in the sliming down of their company, product line, and the closing of some dealerships.         

[Road Dad]

Copy BMWs strategy. It works. HD is dead RIP

[Twolanerider]

Copy BMWs strategy. It works. HD is dead RIP

So it is ok to to share one's insights and offer commentary on the MoCo?  Good to know.

[Para Bellum]

So it is ok to to share one's insights and offer commentary on the MoCo?  Good to know.

Irony is lost on him.  The rest of us got it, though.   

[iski]

Irony is lost on him.  The rest of us got it, though.   

Yep. The vin diagrams help.   

[Toofast_28]

Copy BMW... So HD should start building cars to support their motorcycle business?   

[FlaHeatWave]

Copy BMW... So HD should start building cars to support their motorcycle business?   

It worked for Honda

[moscooter]

It worked for Honda

We all know that is not gonna happen, but any new manufactoring of any type,  (like BMW, Mercedes, etc.) should indeed be way South to negate the potential for (Union) related labor.  Labor unions are much like Hoovers/Electroluxs,  meaning they SUCK.  The extreme pricing we have all paid for H.D.s for so many years have largely been due to the enflated demands of (union labor)...................