USA TODAY International Edition
Harley, other motorcycle makers face big challenges as sales sputter
MILWAUKEE — Harley-Davidson and other motorcycle makers are trying to find a way to throttle up sales this year, but the road is rutted with obstacles.
Harley is scheduled to release its fourth-quarter 2017 financial results Jan. 30, closing out what was a difficult 12 months for the Milwaukee-based company.
Harley and other makers of cruiser and touring motorcycles have seen their sales remain flat or fall as the economy has slipped in some states and interest in motorcycling, overall, hasn’t been as strong.
The world’s largest manufacturer of heavyweight bikes saw a 40% drop in its third-quarter 2017 profit, to $68.2 million from $114.1 million in the same period a year earlier.
In the U.S., Harley and other motorcycle manufacturers are caught between two customer demographic trends: Millennials who aren’t widely embracing the motorcycling lifestyle and Boomers who think they are getting too old to keep riding. They’ve also seen sales decline in some states, including Texas.
“The motorcycle market has been soft,” said analyst Craig Kennison with Milwaukee-based Robert W. Baird & Co. Still, there are encouraging signs.
❚ Building ridership: “Used motorcycles have been stronger. Our analysis shows used bike prices are rising, which is good news for riders looking to trade up. Harley has embraced the used market as part of its strategy to build ridership,” Kennison said.
Harley-Davidson dealerships say they remain optimistic even with sluggish national sales trends and the normal seasonal slowdown. In December, they sold a lot of motorcycling clothing, parts and accessories as holiday gifts.
More potential customers are getting serious about buying a bike for the spring.
“We are starting to see activity for sure, especially on Saturdays,” said Todd Berlin, sales manager of Suburban Harley-Davidson in Thiensville, Wis.
❚ Trimming back inventory: Still, motorcycle industry analysts will be watching sales closely to see that manufacturers aren’t producing more bikes than the marketplace can handle.
“Harley has been working to significantly lower U.S. inventory,” analyst Robin Farley with UBS Investment Research said in a recent note to clients.
There could be pressure on Harley CEO Matt Levatich, too, if the company’s financial performance doesn’t improve soon.
❚ Recruiting the next generation of rider: The median age of motorcycle owners has increased from 32 to 47 since 1990, the Motorcycle Industry
Council says.
“Retention of Boomers will continue to be a significant mission for the industry in the next decade, despite the fact that they are aging out,” said a recently published report from a group of motorcycle industry officials calling themselves Give a Shift.
The report said there never has been a more compelling time to ride, with a wide variety of motorcycles across all brands, but the negative or flat trends have persisted since 2009.
Harley-Davidson said it isn’t part of the “Give a Shift” group, started by a former Polaris Industries executive, but that it shares some of the group’s goals.
Harley’s 10-year strategy is to train 2 million new U.S. riders, grow international business to 50% of sales and launch 100 new “high-impact” motorcycles. The company has challenged the motorcycle industry to build the next generation of riders for the good of everyone in the industry, Harley spokesman Michael Pflughoeft said.