Motorcycles Harley-Davidson Sales Finally Hit Paydirt Again
Harley Cuts Breakout, Deluxe, and FXDR From 2021 Lineup
Rewire strategy affects other Softail, Sportster, and Street models too.There’s more trimming than just the aforementioned models, so let’s take a closer look.
Harley-Davidson (NYSE: HOG) finally turned in a good quarterly earnings report Monday as first-quarter U.S. motorcycle sales jumped to their highest level in four years and earnings per share nearly quadrupled.
The gains follow a change in when the bike maker introduces its new models, from late summer to early in the calendar year, to coincide with when bike riders are most interested in buying, and suggests the "Rewire" roadmap CEO Jochen Zeitz has laid out for turning the company around is gaining traction.
A broad-based recovery
Revenue of $1.4 billion in the first quarter was up 10% year over year as motorcycle segment revenue rose 12% from 2020 on the back of strong demand for Harley's touring bikes. That's also without the full benefit of the introduction of its first, the Pan America 1250, which was unveiled in February.
Harley-Davidson’s First Adventure Bike, the Pan America 1250, Is Its Most Important Model in Decades
The 118-year-old manufacturer hopes to blaze a new trail in market share and perception.Chalk one up to delayed gratification, as the first adventure bike from Harley-Davidson is finally here, the Pan America 1250. This motorcycle is, quite simply, the 118-year-old manufacturer’s most important model release in recent memory, as it signals a shift in both its philosophy and demographic.
Zeitz has a vision for Harley as a somewhat smaller, more focused motorcycle company aligned with its dealer interests that also caters to its core customer while exploring new markets with growth potential. The LiveWire electric motorcycle is one such market, adventure touring another.
But former CEO Matt Levatich's plan to all but abandon the U.S. market in favor of international growth has been thrown overboard. International growth is still important, but the number of markets the company will have a presence in has been narrowed, with the least profitable ones rejected.
That change showed up in Harley's results as shipments to foreign markets were down precipitously, but they were much more profitable. The commitment to the U.S. is paying off, too, as Harley sold over 7,250 more motorcycles this quarter than a year ago, a 31% increase from last year.
Harley-Davidson Has Missed the Mark in Electric Transportation
The company can't get over its past success.Despite all of these challenges, Harley-Davidson stock is up 82% over the past year, and investors seem optimistic about a turnaround. But there's good reason to think that won't happen for this leisure stock.
Pointing to the realignment of Harley's priorities, which include making sure its incentives are on the same page as its dealers, Zeitz said, "We can see the initial signs of consumer excitement and optimism returning and I am confident Harley-Davidson in 2021 is a significantly leaner, faster, and more efficient organization."
Trade war redux
Unfortunately a wrench was thrown into the machinery after European regulators announced Harley motorcycles will suffer fromthat were a result of the trade war that began in 2018.
The EU's Economic Ministry in Belgium notified the bike maker it will have to pay a 56% total tariff on its motorcycles regardless of where they're built beginning June 1. Previously, only bikes imported from the U.S. were subject to a stiff tariff (31%), which raised the cost of each bike by about $2,200, while motorcycles from Harley's other global plants only had to pay 6%. Harley had been able to avoid some of the pain associated with the trade spat byfor the European market to its plants in Brazil, India, Australia, and Thailand.
Harley borrows Detroit's used-car playbook to pursue younger riders
Harley borrows Detroit's used-car playbook to pursue younger ridersCHICAGO (Reuters) - Harley-Davidson Inc has decided the best way to get younger customers to buy a new motorcycle is to sell them a used one first.
Now the trade ministers have determined all of Harley's motorcycles will be covered by a new, higher tariff.
The bike maker is appealing the ruling, but bike sales in Europe, which had been its second-biggest market before the pandemic, could very well plummet further.
Conversely, the global coronavirus outbreak showed Harley how it can live without Europe for the most part. First-quarter sales amounted to just 4,900 bikes, a 36% year-over-year decline, and 15% fewer than the 5,800 it sold in the Asia Pacific region.
Time will tell
Despite the overall good numbers, Harley-Davidson still needs to prove this isn't a one-off effort, as there was an obvious benefit from the stimulus checks that hit bank accounts in March, which the bike maker ran promotions around.
It needs to show the demand for itsremains when consumers don't have the benefit of being artificially incentivized to spend. Second-quarter results will begin to hint at whether the turnaround is real, but it's a welcome reprieve that Harley is once again reporting real growth.
EU Hits Harley-Davidson Hard With 56% Tariffs on All Bike Imports
The tariffs used to be on U.S.-made bikes only, but now rates have been hiked across the board.While the trade war between the U.S. and much of the rest of the world hasn't been forgotten, it was pushed to the rear burner in the wake of the global pandemic. EU trade ministers have now brought it back to a full boil.
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Harley-Davidson Has 22% Upside as Sales Start to Heat Up, Says Analyst .
Growth is accelerating as the quarter progresses.Wedbush analyst James Hardiman tells investors in a research note that his channel checks show Harley-Davidson is gaining traction among motorcycle buyers again. April sales were running 5% to 7% above the levels they hit in 2019 while May sales were sprinting higher by low double-digit rates.