Harley Davidson Sales Still in a Slump – Lethal Threat

Harley Davidson Sales Still in a Slump – Lethal Threat

Harley Davidson’s fourth quarter profit dropped from a year earlier.  A number of factors affected the decline according to CEO, Matthew Levatich.  Large restructuring expenses, European increased tariffs on USA produced Harleys, lower sales in the motorcycle segment and a decline in shipments all contributed to the ongoing slide down of Harley Davidson sales.  Motorcycles sales fell 13.3 percent in the US for the final quarter compared to last year.  Global sales down 7.8 percent.

The company has struggled to gain traction with younger riders in recent years.  The core baby boomer demographic is aging out of riding motorcycles or being lured away for lighter motor bikes.  CEO, Levatich acknowledges this is a very challenging time in the history of Harley Davidson.   A growth plan was announced last July that includes an expanded lineup of lighter motorcycles, smaller urban retail stores, a new digital strategy and an international push as U.S. sales fall.

Many in the motorcycle aftermarket are skeptical of the direction Harley is taking.  There are already well established motorcycle brands who offer smaller, faster, and reliable motorcycles at a considerably lower price than Harley Davidson’s base Sportster model.  The other big hurdle is getting younger riders.  This generation does not have the same love for motorcycles as the baby boomers before them had.  If a millennial is going to buy a motorcycle they are more likely to buy a used one or a cheaper brand than Harley Davidson. 

For older riders, Hogs have fallen out of favor with riders, who are trading them in for Indian motorcycles, another heritage motorcycle brand owned by Polaris, and one of Harley’s main competitors.

Harley for the last decade has not been innovative in introducing too many new bikes. They have new bells and whistles to their existing line but nothing really changed.  The V-Rod was the one offering that did not follow the standard Harley look.  They have been relying on their legacy to sell motorcycles.  Five years ago Harley announced they would explore the idea of an all-electric Harley Davidson motorcycle, which was greeted with excitement in the motorcycle market.  Harley known as a company to move slow, wasted a lot of time touring the country and worrying about people’s opinion of the idea.  The idea had lost momentum.  Then in 2018, a new electric bike called, Live Wire would be introduced for 2019. The cost of Live Wire would be $29,799, more in other parts of the world.  So much for trying to get younger, environment conscious millennials to buy the Live Wire.   

It would be a sad day to see Harley Davidson close its doors, and I hope that day never comes in my life time.   A business is like a shark always moving in different directions and never stopping to take a bite at new opportunities.