Although I haven't done any real due diligence on the subject, Harley really jacked up their unit sales maybe early 90's. I remember that Harleys were always the least represented marque in the want ads when I was young, then that seemed to reverse quite fairly suddenly. Not sure if their 'lifestyle' marketing came before or after that time but they grew a lot in need/ability in both manufacturing bikes and creating/licensing all the lifestyle stuff. Maybe they got too big too fast as now everybody (relatively) has one, especially in the midwest/south and are not at all exclusive or unique and the used market is flooded. IMO 2 forces are at issue, their demographics/income levels of their buyers are broad therefore economic fluctuations having a greater impact and that they may be seeing a plateau of buyers who will plunk down that much cash for bikes that, while good at what they do, are pretty singular in style and technology (and use - no scooter/sportbikes/sport tour, etc . . .)
Harley cuts outlook, to slash output
Thursday April 17, 9:29 am ET
By James B. Kelleher
CHICAGO (Reuters) - Harley-Davidson Inc (NYSE:HOG - News) said on Thursday it would report full-year earnings well below its forecast, slash production and lay off hundreds of workers as the U.S. economic slowdown crimps demand for its iconic motorcycles.
The company, whose shares fell more than 7 percent in pre-market trading, expects earnings to fall 15 percent to 20 percent in 2008, resulting in earnings of $3.00 to $3.18 per share. It previously forecast growth of 4 percent to 7 percent in 2008, which translated into $3.89 to $4.00 per share.
Robin Farley, an analyst at UBS, characterized the forecast revision as a "massive guidance cut."
The company blamed the shortfall on economic difficulties in the United States, its biggest and most important market, where a housing market slump and a related tightening in credit markets have forced U.S. consumers to rein in spending.
"With growing weakness in the economy, U.S. retail sales of Harley-Davidson motorcycles were down 12.8 percent in the first quarter," said Jim Ziemer, the company's chief executive, in a statement.
As a result, Harley expects to ship 23,000 to 27,000 fewer bikes in 2008 than it did in 2007 and would temporarily shut down some plants in the coming months. It said 370 unionized employees and 360 non-factory employees would lose their jobs.
The news came as Harley reported a first-quarter net profit of $187.6 million compared with $192.3 million last year. Earnings per share rose to 79 cents a share from 74 cents a share, due to a lower outstanding share count. Sales during the quarter rose 10.8 percent to $1.31 billion.
Harley's results were also pulled down by its in-house financing arm, where operating income plunged nearly 41 percent because the turmoil in credit markets reduced income from the loans the unit securitizes.
A 3.3-percent decline in parts and accessories revenue also weighed on the company earnings.
Dealers have reported that the company's finance arm, in an effort to tighten up credit standards and ease concerns on Wall Street, has lowered the amount of money it will lend buyers to just 100 percent of the cost of a new bike.
In the past, it was willing to give loans that were 130 percent of the cost of the bike, which gave customers money to customize their bikes with saddlebags, extra chrome and other high-margin add-ons.
Outside the United States, sales continued to grow, rising 7.8 percent in Europe, 19.5 percent in Asia, 31.1 percent in Canada and 53.3 percent in Latin America.
Harley shares were trading down $2.79, or about 7 percent, at $34.50 ahead of the opening bell.
(Reporting by James B. Kelleher; Editing by Derek Caney)
April 17, 2008, 7:25 am Hefty cutbacks at Harley-Davidson
A weak economy has Harley-Davidson (HOG) cutting back again. The Milwaukee-based motorcycle manufacturer said Thursday it will cut 730 jobs as it trims output to adjust for a downturn in demand. The company also slashed its 2008 earnings forecast, saying it expects to ship some 25,000 fewer bikes this year than it did last year.
“With growing weakness in the economy, U.S. retail sales of Harley-Davidson motorcycles were down 12.8% in the first quarter,” said CEO Jim Ziemer. “Although these retail results are disappointing, Harley-Davidson’s U.S. dealers outperformed the heavyweight motorcycle industry, which was down 14%.”
For the first quarter, Harley was able to weather the storm. Harley made $188 million, or 79 cents a share, for the quarter ended March 31, compared with the year-ago $192 million, or 74 cents a share. Revenue rose 11% from a year ago to $1.31 billion. Those numbers beat the expectations of Wall Street analysts, who were looking for a 77-cent profit on revenue of $1.23 billion.
But the company said it now expects earnings for 2008 to fall to $3 to $3.18 a share from last year’s $3.74 a share. Back in January, Harley had forecast 4% to 7% growth. Shares fell 50 cents to $36.29 in pre-market trading.
Hi....my name is Scott and i'm a middle age Ducati poser.........
Hey Scott....nice bike.
At least the Ducati guys wave back at you on the street. The Harley guys don't. I guess if I just paid 3 times more for a bike than it was worth, I might be a little jaded also.
At least the Ducati guys wave back at you on the street. The Harley guys don't.
Yeah, that irks me too. I'll wave at anybody on two wheels--in fact, one of my favorites is to occasionally wave at a kid on a scooter, just to see the look of disbelief before they grin and wave back. But most of the time, the Harley guys just ride on by and ignore my display of rider solidarity. It's like there's this air of superiority or something. I can't tell you how sick I am of having some Harley rider--and you can tell he's a Harley rider because he's dressed head to toe in black and orange, a logo on everything including the sunglasses (no helmet ever)--ask me "when are you gonna get a REAL bike"? Like if you don't ride a Harley, you don't ride a real motorcycle. I say to each their own, ride what you ride, but don't act like you're superior to anyone else for your own personal choice.
Hey dude, cut those posers some slack.....what kinda mood would YOU be in if you spent $25,000 on a POS!
-Rocky-
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ROCKYMT
Far better it is to dare mighty things, to win glorious triumphs, even though checkered by failure, than to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows not victory nor defeat."
My two (now worthless due to the impending doom of a global economic catastrophe) pennies:
Fearmongering in the economy is nothing new. They've been talking trash about the economy in the US / North America for years now, but really it's just the usual hot air that you hear whenever things are going south in some other respect (war? what war? Don't want to get political here, because us Canuckistanies are in our own sinking ship in Kandahar). I just like to live my life sensibly and screw what the economists tell me. I don't have any stocks anymore nor am I squirreling money away into a shaky retirement fund, and the property values are going up where I live, so I'm the last one to worry.
Market fluctuation is normal. Woopdeedoo, Harley had a few slow months. Other manufacturers are having record highs, or no change at all. Doesn't mean anything in the grand scheme of things. If Harley said "Oh sweet Jebus our sales dropped 75% and we're on the rocks, please help us!" then I'd worry, at this point we are just reading too much into a slight market ripple.
That being said, I'd be happy if Harley got off it's collective fatass and realized that it can't churn out bloated and antiquated machinery with a few useless new doodads tacked on each model year (whoa, it's 1950s Detroit all over again!). If model 2008 is pretty much model 2005 with a couple of minor tweaks, odds are people are going to start catching wise, and you'd have to be pretty damn stupid to buy the same bike new twice in a row just because of a model year change. That's pretty standard in a 2-3 year product cycle, but when your products have more in common with 1980s models than with 21st century machines, it's going to get increasingly difficult to sell the same old thing to a saturated market. What I mean here is that Harley needs to start aiming at new buyers, and for existing owners actually making it worthwhile to replace your old bike with a newer one. The V-Rod was an attempt that failed, and they haven't really made an effort to retry a crack at the wider market since then. Stagnation can be maintained for a while by perpetrating a traditionalist image, but it's not infinitely sustainable, unless you are Ural or Royal Enfield.
Ducati is a good case study in the "backwards but forwards" model. They've been churning out pantah-rubber band head engines since the late 70s with no sign of stopping. But each product cycle brings marked improvements, and the models are constantly updated and refined despite their antiquated underpinnings (in the engine). If it ain't broke, don't fix it - but you can always improve it. You get a fresh product lineup every couple of years that appeals to new buyers as well as upgrading owners. Then they have enough money from their bread and butter models to develop flagship stuff like the SBK and D16RR lines, which keeps them firmly in the present and competitive against bigger manufacturers, albeit at a price, which is offset by the brand cachet and small manufacturer status.
I find it funny that so many people dream of owning an HD , an archaic design for loping along the road . Sure the Porsche V-Rod is relatively modern but it still lacks ground clearance , weighs over 600lbs. , and costs approximately twice as much as a Japanese alternative if you factor in the usual huge discount your friendly neighborhood multi-line dealer will give you . For many years now , Harley has had the resources to change the cruiser landscape by offering something innovative and truly revolutionary , but they play it safe and just rehash the same old chit . Why not a V-Four or even a V-8 ? Why not offer a Superbike and race it in AMA and WSB ? They should have gone to liquid cooling on all their bikes years ago . Instead , they herald the "traditional" like a fu$%ing religion . Yes , this attitude and corporate focus has resulted in record sales , and this tremendous success may seem hard to argue against , but a great motorcycle company should take chances by attempting difficult challenges in order to celebrate this amazing sport of ours . I have no respect for HD and would never buy one...Honda all the way ! And yes , Harley riders seldom wave ; I guess b/c they're too tough .
I like their absolute hatred of even thinking about a helmet. That's why they all have that stowic look on their face while riding......."I paid 25 large for a dinosaur of a bike, and I have to chew on these bugs so I look cool to the ladies"
Harley riders seldom wave ; I guess b/c they're too tough .
No, actually, they have to grip on the ape bars for all they are worth because of the cement mixer vibration of that oh-so-cool pre-WWII engine. Hardley does NOT sell motorcycles, they sell image to the Tim Allen-wannabes. That is a virtual goldmine to the Hardley dealers....sell bikes to non-bikers who can not perform the simplest maintenance procedure on a bike that needs a high degree of maintenance.....dealers make tons more money on simple things like oil changes and parts than selling bikes.....especially, cement mixers that cast off parts like ticks on a coon hound.
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Only one left not in captivity.
My understanding that there will be layoffs soon ~350 hourly/~350 salary&contract. I don't think H-D has had layoffs since the early 80's, don't think that they even laid folks off during the great depression. Financial guys run the show now, and the road to hell is paved one quarter at a time.
H-D had the opportunity to change the game for themselves a few years ago, in launching a pretty cool crotch-rocket. This would have brought a lot of new customers to the company. Now they think they're 'capturing' that market with Buell. I'm thinking ah, not so much...
Msrp
Like if you don't ride a Harley, you don't ride a real motorcycle.
I say to each their own, ride what you ride, but don't act like you're superior to anyone else for your own personal choice.
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