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[JCZ]

(Reuters) - U.S. motorcycle maker Harley-Davidson Inc kept its 2017 outlook unchanged despite first-quarter shipments hitting the high end of the company's forecast.

Milwaukee-based Harley's shares were down 4 percent at $57.00 in premarket trading on Tuesday.

The company, which commands about half the U.S. big-bike market, said motorcycle shipments fell 14.7 percent to 70,831 units in the quarter ended March 26, compared with its forecast of 66,000-71,000 units.

Harley said it continues to expect full-year shipments to be flat to down modestly.

Harley's first quarter shipments were helped by warmer-than-usual weather that led to an early start to the annual riding season, probably resulting in a pull-forward in demand from the second quarter, analysts have said.

Harley also took the rare step of offering rebates on its 2016 motorcycles to U.S. dealers as an incentive for them to shift a backlog that had restricted sales of its latest models.

Demand for Harley's motorcycles continues to be slow as its loyal baby boomer demographic ages and rivals such as the Indian brand bike maker Polaris Industries Inc and Japan's Honda Motor Co Ltd offer competitive discounts.

Revenue per motorcycle fell about $342 to $15,526 in the first quarter, Harley said.

The company's net income fell 25.6 percent to $186.37 million, $1.05 per share, in the quarter, from a year earlier.

Revenue from motorcycles and related products fell 15.7 percent to $1.33 billion.

Analysts on average had expected earnings of $1.02 per share, according to Thomson Reuters I/B/E/S. (Reporting by Rachit Vats in Bengaluru; Editing by Maju Samuel)

[Cat Eye]

i'm not surprised. With the release of the M8 motor,  i'm sure that a lot of would be buyers have decided to wait and see how solid the it is.  Plus, this also has dampened the sales of the other bikes that still come with the T/C motor because surely in a few years all models will have the M8.

Also with the rumors of new chassis design in the touring bikes doesn't help either.

Then finally, with Harley's new policy on exhaust modification on new bikes voiding motor warranty, is also giving buyer reason to wait to see what this really means.

[ultrarider123]

Since the articled you posted did mention Indian, JC, I did notice this past weekend that the K'ville Indian/Triumph dealer had lots of outside activities (cookout, demo rides, etc) and quite a bit of traffic compared to the HD dealer next door (same family owns both).  There were actually folks parking in the HD lot and walking up to the Indian shop.  Not much traffic at the HD dealer.

I know it's basically new, returning brand (Indian) so folks are more interested presently but you would think that new M8 motor would bring folks into the HD shop with both K'ville HD dealers having a decent selection of 2017 M8 bikes.  We noticed it at Sturgis, too.  The Indian tent hopping with the MoCo tent so-so attendance wise.

I'm also very interested in how the MoCo plans to "introduce 50 new models in the next 5 years".  Repackaging of the same thing doesn't fool people like they think it does and at some point (now?), it will catch up to them.

[coloradotom]

One easy thing Harley can do is to stop hiding horsepower numbers. I can go to the Indian site look at a bike and see HP & torque. How can someone make a comparison on bikes? They're not the only game in town anymore so they need to change their ways of thinking on a few things, and that's a very easy one.

[Texas 103]

One easy thing Harley can do is to stop hiding horsepower numbers. I can go to the Indian site look at a bike and see HP & torque. How can someone make a comparison on bikes? They're not the only game in town anymore so they need to change their ways of thinking on a few things, and that's a very easy one.

they are friggin embarrased

[muddypaws]

Motorcycle maker Harley-Davidson Inc (HOG.N) said on Thursday it will lay off 118 workers at its York, Pennsylvania, plant and shift employment to Kansas City, Missouri.

The company said it told employees in November 2015 of plans to shift production of Harley-Davidson Cruisers from the Pennsylvania plant to Kansas City starting in the 2018 model year. Harley-Davidson told employees on Thursday it will cut about 118 positions in York and add 118 positions in its Kansas City plant, spokeswoman Katie Whitmore said.

Harley-Davidson on Tuesday reported a 25.6 percent fall in quarterly profit, hurt by a drop in shipments. The Milwaukee-based company's net income fell to $186.37 million, or $1.05 per share, in the first quarter ended March 26, from $250.49 million, or $1.36 per share, a year earlier.

Demand for Harley's motorcycles in the United States has slowed as its loyal baby boomer demographic ages and rivals such as Indian motorcycle-maker Polaris Industries Inc (PII.N) and Japan's Honda Motor Co Ltd (7267.T) offer competitive discounts.

[sadunbar]

i'm not surprised. With the release of the M8 motor,  i'm sure that a lot of would be buyers have decided to wait and see how solid the it is.  Plus, this also has dampened the sales of the other bikes that still come with the T/C motor because surely in a few years all models will have the M8.

Also with the rumors of new chassis design in the touring bikes doesn't help either.

Then finally, with Harley's new policy on exhaust modification on new bikes voiding motor warranty, is also giving buyer reason to wait to see what this really means.

Astute observation.  Harley has such a horrible track record introducing new features that long term repeat customers have been burned far to often to trust the new M8 engine in its first year of production.  It seems likely this has impacted this years bike sales...

[muddypaws]

My 2017 is going in for it's 3rd repair...I know why sales are down..

[iski]

Many causes for HD sales drop.  Some HD owners are holding on to older bikes with no reason to trade - yet.

Indian sales plus the blowout of remaining Victory models (heard dealers sold them quickly in this area after the announcement) have also added to this decline. 

Harley buyers are older & they have targeted - successfully - Baby Boomers.  Boomers are getting older, and fewer are riding.  Know of several who have sold their bikes and no longer ride.  Unless HD can attract "the next generations" of riders, sales will continue to decline.

[sperl]

I just don't think there are as many people in to the enjoyment of riding and seeing this awesome country by motorcycle anymore.  Traditions seem to be a thing of past. Put what do I know I'm 60 years old.

[kojak]

I just don't think there are as many people in to the enjoyment of riding and seeing this awesome country by motorcycle anymore.  Traditions seem to be a thing of past. Put what do I know I'm 60 years old.

To me Harley was always something you aspired to when you fell in love with riding and could only afford metric rat bikes. Here are some interesting facts from the Bureau of Transportation. They only have data through 2008 so its a little old.
Vehicle Registrations and Sales
 Motorcycle registrations in the United States have grown each of the past 10 years, from 3,826,373 in 1997 to 6,678,958 in 2006-a 75 percent increase overall.2 Sales of new street-legal motorcycles grew even more sharply over the same period, from 260,000 in 1997 to 892,000 in 2006 (a 243 percent increase), but declined slightly to 885,000 in 2007
Motorcycle engine sizes and motorcycle weights are increasing in the United States. While new sales of motorcycles with engines of 750cc or more increased 54.0 percent in 2003 compared to 1998, and those with midsized engines of 450-749cc increased 16.6 percent, sales of motorcycles with smaller engine sizes decreased during the same period, especially in the midsized 350-449cc category, which declined 60.1 percent .
Between 2005 and 2007, sales of sport bikes (including supersport bikes) increased from 16 to 19 percent of all motorcycle sales (including off-road bikes, which are not distinguished from on-road motorcycles in the available total sales data); sales of touring bikes increased from 13 to 15 percent; sales of dual-purpose bikes increased from 3 to 4 percent, while sales of off-highway bikes decreased from 27 to 22 percent of total motorcycle sales.
During the first three quarters of 2008, total new on-highway (i.e., street-legal) motorcycle sales (excluding dual purpose motorcycles and scooters) declined 2.1 percent from the corresponding period in 2007, with reported sales of 548,747 in 2008 compared to 560,529 in 2007. Dual purpose motorcycle sales increased 29.4 percent, with sales of 39,805 units during the first three quarters of 2008 compared to 30,759 units during the same period of 2007.
Motorcycle Owner Demographics
Survey data from the Motorcycle Industry Council on motorcycle owner demographics for the 1985 to 2003 period reveals a shift towards older owners. The median age of owners increased from 27.1 years in 1985 to 41.0 years in 2003. From 1985 to 2003, the percentage of owners 40-49 years old increased from 13.2 to 27.9 percent, and the percentage of owners 50+ years old increased from 8.1 to 25.1 percent (table 4). Also, survey results for 2003 indicated that 90 percent of owners were male, while survey results for 1998 indicated that 92 percent of owners were male, a slight-but probably not statistically significant-trend consistent with growing female ownership.

[JCZ]

The MoCo never listened to their rider/owners....they felt and acted like they didn't have to.  They always lagged far behind other mfgs. in technology.  Now that their market is older and wiser.....we're not so quick to go for the okie-doke.

ABS brakes is just one example....Honda, BMW and other mfgs. had abs long before the MoCo and for no other reason than the MoCo felt like they didn't have to compete on the same level.  Now they're paying the price....no surprise. 

[mark]

Seems we're seeing a downward trek each quarter.  I'm sure this is the results of a combination of things:  declining "baby boomer" customer base, Indian Motorcycle, HD reliability issues, economy, etc.

[JCZ]

NEWS FLASH....You heard it here first!

In The Next 5 Years Harley Davidson will introduce 100 new bikes.   


Hey, I read it on the net, it must be true.....   

By Brian Sozzi on The Street:

Harley-Davidson (HOG) delivered more for investors to consider than a first quarter earnings beat.

The legendary bike maker reported first quarter earnings Tuesday of $1.05 a share, surpassing Wall Street forecasts for $1.02 a share. Revenue came in at $1.33 billion, slightly missing analyst projections for $1.35 billion.

Shares fell 4.1% to $56.91 in the trading session as Harley-Davidson only reaffirmed its shipment guidance for the year of flat to down modestly. Considering Harley shares up about 30% over the past year, outperforming the S&P 500's 12% gain, and host of recent upbeat analyst notes Wall Street was likely looking for stronger shipment guidance from the company.

"Dealers also continue to note that the new models are driving foot traffic and sales, and that increased customer familiarity with the new features (e.g., the Milwaukee-Eight engine) has generated more interest going into the Spring selling season," Goldman Sachs analysts wrote ahead of Harley's earnings.

Even still, Harley revealed two big longer term goals for investors to consider. By the year 2027, Harley says it plans to add two million new riders in the U.S. while also introducing 100 new bikes. President and CEO Matt Levatich told TheStreet in February that the company has a 50 new bikes in development for release over the next five years.

TheStreet caught up again with Levatich on Tuesday to discuss the quarter and the company's overall plans. What follows is a condensed and edited version of our conversation.

Q: Your stock has run-up pretty significantly, what do you think an investor should take away from the quarter?

Levatich: We feel really good about the market share position in the United States. The U.S. basically unfolded exactly as we expected, which seems to be a lot different than the analysts expected through their channel checks. I feel really good about our ability to read the market and deliver what we expected. I also feel good about maintaining market share, it's still a very competitive market and one that had the Victory [brand] liquidation built into it. That's particularly important considering the fact we withheld probably the hottest product we have had in years in the Milwaukee Eight power touring bikes to allow dealers to sell down the 2016 inventory they had leftover. We feel really good about our inventory position ahead of the spring selling season.

One thing that was not as we expected was sales in Asia-Pacific, which were softer. There are a few reasons for that, it's in a few key markets. Market share in those markets are holding strong, but for various reasons industry growth in India because of the devaluation [was soft] and in Japan sales were more anemic than we expected. We expect those Asian markets to return to growth in the back half of the year.

[JCZ]

CONTINUED......


All in all, I think the quarter was actually quite strong. Is this reflected in the stock price, I don't know, it takes a long time for people to digest these things. We are setting out on a long-term plan, and our investors -- the buy-side -- really appreciate that view. I think it's harder for sell-side analysts to wrap their minds around ten year objectives.

Q: Being a sell-side analyst years ago, I remember thinking like that. Have to build those spreadsheets.

Levatich: I think a 115-year old company isn't built in one quarter, and we aren't running quarter to quarter. We have put out what we call the next chapter in our company, which will take us to the eve of our 125th year. We feel the objective is not only appropriate, but also inspiring and motivating for employees and dealers. We can all get our minds around building riders as the fundamental strength of the business.

Q: When we talked in February, you mentioned launching 50 new bikes by 2022. Now you revealed a plan to release 100 new bikes by 2027. What do these other 50 new bikes look like?

Levatich: Lots of people like to fixate on the number, but it's just a number. What's important is the impact these bikes have and how they make a difference for an existing rider or inspire a potential rider. The two examples out of the 100 that we can speak to were launched in the first quarter: the Road King Special, which has been incredibly inspiring to existing riders, and the Street Rod, which is heavily tuned up from power, torque and handling perspectives. It's a product that is more inspiring to the urban population around the world, and people that are looking to enter the sport.

Q: The Trump administration's focus on products made in America, how do you see that influencing Harley-Davidson over the next several years? Harley is a U.S. manufacturer.

Levatich: I think a lot of what the administration talks about we have always been about. The visit to the White House was a recognition of companies like Harley-Davidson doing things the way the adminstration would like more companies to do. We have never wavered on that strategy. The strategy comes from what our customers value in Harley-Davidson, and not just the U.S. customer, but also around the world. They value the American qualities of a Harley-Davidson. I think that is unchanged and not going to vary significantly in the future.

I don't think our international customers will feel any differently about Harley in the scenario you mention. But, our U.S. customers may actually have a newfound appreciation for what we have always done. I think they are pretty well aware. We have factory tours, you can walk into our factories and see the degree of work we do and also the amount of supply from companies that often are right down the street from our plants.

People are proud of that when they see that. To hear the sentiment turn to the value of real manufacturing jobs in America, Harley is a great example of doing it the way it should be done.

Q: One of our hottest stories this week is on Harley-Davidson recently offering rebates on bikes. But, Harley has notoriously not given discounts on bikes. Can you explain this decision?

Levatich: We put a set of conditions together to help our dealers sell down the 2016 inventory. So we had some financing things that expired in February. We held back the supply of new motorcycles to help, which is a big step. There was an incentive at wholesale for the dealers to address certain 2016 model years so we had a clean position ahead of the spring selling season.

Q: So offering rebates is not a strategy going forward?

Levatich: Absolutely not. We are a abundantly clear that the situation we got into with carryover inventory last July was a big problem we had to work through and to make sure we never repeat it. We got into it because the second half of 2016 radically shifted, and we couldn't switch off the amount of product fast enough.

[ultrarider123]

The two examples out of the 100 that we can speak to were launched in the first quarter: the Road King Special, which has been incredibly inspiring to existing riders, and the Street Rod, which is heavily tuned up from power, torque and handling perspectives. It's a product that is more inspiring to the urban population around the world, and people that are looking to enter the sport.

So, just as some have suspected, they really aren't "new" models but repackaged current models.  Taking the definition game of a world leader from a few years ago, I'm guessing it's what your definition of "new" is....

[grc]

Harley has always taken the approach of taking existing tired models and doing minor styling stuff to create "a new model".  Willy G used that approach to death, even going so far as to change the paint and call that a "new model".

If Harley plans to release 100 new models over the next ten years, I'm sure they are counting all those small bikes they plan to build and sell in India and China.  To get to 100, I'd assume they are continuing the Willy G method and will call every tiny cosmetic variation a separate model.  When corporate suits spew this stuff, it's directed more at investors who know nothing about the actual products versus real consumers of their products.

In the US, they desperately need to replace the Dyna and Softail models with new from the ground up products.  Changing the bars, installing wider tires, and changing paint and graphics doesn't cut it anymore.  They also need to decide what to do with the V-Rod platform.  Either support it with design changes or kill it off.

JMHO - Jerry

[mark]

Isn't the V-Rod already dead...thought this was the last year? 

[Road Dad]

V-rod is still in the 2017 line up.

[laylonlor]

sold all my HD stock friday, there all rip offs

[Road Dad]

If you don't need the money for something imidiatly, HD stock is probably better to hold for now.

sold all my HD stock friday, there all rip offs

[SDCVO]

If you don't need the money for something imidiatly, HD stock is probably better to hold for now.

X2

[TN]

https://www.nytimes.com/2017/05/23/business/harley-davidson-thailand-factory-manufacturing.html?_r=0

[FLSTFI Dave]

When the Street was released in the USA, built in the USA Harley said it would also be building it overseas for the overseas market.  That makes sense given the high tariffs, and that the street was the only bike suppose to be built overseas.

I can not tell from the article if that is the case or not.

I know when I worked for Denso, a Japanese company, a Japanese Manager in the USA for 5 years to help start the plant bought a New Harley.  Rode it here for 3 years.  Took it apart and shipped all the parts home to Japan over the course of two years.  He put it together when he was transferred home.  He save over 20K in taxes doing that.