Inventory slump hurting Harley's turnaround

The motorcycle maker's long-term strategy is running afoul with some dealers and constraining inventories of some pricier models.

By Trefis Nov 29, 2011 5:54PM
Harley Davidson (HOG), the biggest U.S. motorcycle maker, has seen shares drop by more than 12% in the last week.

CEO Keith Wandell, hoping to use Ford (F) as a template in Harley's turnaround, is streamlining production, cutting labor costs, pushing Harley into emerging markets and improving stores and customer service.

This will help Harley improve a U.S. market share that stood at 58% in the third quarter over Polaris Industries (PII), Honda (HMC), Yamaha, Suzuki, Kawasaki, BMW and other peers.

See our full analysis for Harley


Harley Davidson US Market ShareBut Wandell's long-term strategy for Harley is running afoul with some dealers and constraining inventories for some of its pricier models, such as the Touring. One Minnesota dealer, St. Paul Harley-Davidson, has sued Harley for restricting international sales and third-party sales on portals such as eBay (EBAY) and Amazon (AMZN).


Moreover, extensive restructuring of one of its largest manufacturing facilities in York is limiting production of some of the company's more expensive and most profitable models, leading to overall margin decline. (See our previous article: Harley-Davidson Q3 margins squeezed by plant restructuring.)


Harley Davidson US Gross Profit Margin
A recent new dealership survey by the investment firm Robert W. Baird confirmed that the inventory of new Harley motorcycles is at its lowest point in 10 years, which will result in lost sales in the near-medium term as the York facility restructuring is expected to continue until 2013.


We currently have a price estimate of $40 for Harley Davison's stock, which is more than 15% above current market price.


Tags: AMZNFHOG
84Comments
Nov 30, 2011 2:35AM
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Doubting-Skeptic is a flat out liar. In order to make an ear bleed from sound you would have to be way past 125 Decibels, something a Harley with open pipes is incapable of delivering unless your ear is within 3 inches of the exhaust.

D-S then advocates serious violence against any HD rider. I doubt D-S has the cajones to say that to anyone's face, let alone actually do it. It must suck to be you Doubting-Skeptic. You are pathetic.

Nov 29, 2011 9:33PM
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Buy American, your job might depend on it.

Nov 29, 2011 11:23PM
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My wife picked up a piece of metal with her rear tire on Bighorn Pass in Wyoming last summer. One phonecall to HOG, Harley Owners Group, got her picked up and hauled 150 miles to the Sheridan, Wyoming Harley Davidson where she got her new tire and a "glad we could help" send off. Try to find that kind of help from an import bike company.
Nov 30, 2011 10:25AM
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When are all you people gonna realize,its not about what you ride,it's about the ride itself.
Nov 30, 2011 2:28AM
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Harley's are made in the U.S.A. For example, all of the Sportster, Dyna, and V-Rod models are currently built in the Kansas City factory.  When you take the factory tour, you see everything from stamping metal for the fenders to building the frames to the final assembly line where the bike you order is put together.  
Nov 30, 2011 12:24PM
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If you can afford a Harley, buy a Harley! If you can't afford a Harley ......Save for a Harley. If you don't want a Harley, go test drive a Harley. If you're a real biker.....form your own opinion!! Either way rember this...... Only a biker understands why a dog hang it's head out a car window at 65 miles an hour. Enjoy the ride and take in the adventure and beauty on whatever you ride!!
Nov 30, 2011 1:08AM
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@ doubting skeptic

 

Yes, I will give you the fact that there are those individuals who rev their engines to make as much noise as possible. I see them in jap cars with megaphone exhaust pipes more than I see them on a harley. If anyone buys your story about the bleeding ears part then you are a great story teller. I'm sorry she has hearing issues but it could have been due to an ear infection. Yes, there are more and more noise ordinances being invoked regarding motorcyle exhausts. Funny, the rice burners arent included nor the audio systems in some cars. Don't blame all bikers because of a few inconsderate individuals who cant control themselves. Maybe we should have some fat ordinances? Limit clothing sizes so fat people cant wear anything other than a tent. How about car or truck sizes? You have to love this blame a biker attitude. A biker takes a parking place and you are pissed that this 50 plus mile per gallon is taking up a whole parking place. Or that they can split lanes and cruise by your traffic jammed car and pass you up. My guess is you would be the guy to open up your door to cause them to wreck.

 

Think about this, you are in a cage. We are outside of that cage and you simply cant stand that fact.

Nov 30, 2011 1:23AM
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Hey doubt, get a life. Seems there is plenty of doctors and engineers that own a HD. I fall under the engineer class. And the new bike do have a Cat on there exhaust. Not to mension fuel injection and the pipes are 85 dB rating from the factory. Have been for many years. Don't know what you are talking about either with them being made in Mexico? Pretty sure I have been the the plants here in the US. And how exactly does my bike getting 40-50 MPG polute more then your SUV getting 13 mpg? I also know of many other brands that are just as loud or louder on cycles and cars and trucks. Keep saying your lies to all as I keep driving my HD.
Nov 30, 2011 11:38AM
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I have purchased four Harley's.  My current is a 2010 Heritage.  The best one was a 2002 Heritage which I still have.  
I am not happy with Harley.  I think their engineering department needs help.  By the way I am an engineer.  What I do not like about the new one is the small cheap star bolts, the tie wrap spark plug wire holders (who is the moron that came up with that?), the fact that a fatboy (softail model) and a heritage (softail model) parts are no longer interchangeable (why does the fatboy have a wide tire and the heritage does not?).  I could go on and on but I will stop here.  I think I have bought my last Harley.  All I can say is Harley needs to quit listening to the bean counters.
Nov 30, 2011 1:32AM
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@ doubting skeptic

Let me guess, you drive a camary, wear a tent, have had your driverside mirror broken more than once, have a handicap sign hanging from your rearview mirror, have a walker, diabeties, high blood pressure and troll the boards looking to stir up trouble...

Nov 30, 2011 10:11AM
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i ride a roadking and i had a 2005 1200 sportser and the part that gets me is there is nothing wrong with the jap bikes i just don,t want one. they don,t sound good to me and they don,t have the (feel) you get on a harley and sound and best of all history of being a american icon plenty of metal and real chrome (not plastic) to me touring models are great but not everybody shares the same interest.
Nov 30, 2011 1:29PM
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I looked at Harley, and then at a Yamaha V-Star 1300, the difference in price was nearly 10 Grand. (The Yamaha was on sale for $8,999). I asked the Harley Salesman what I got for the extra money and he told me I got the "Image". I told him I had enough "Image" already and didn't need the brand of bike I ride to define who I was. I saved the money and 4 years on my 1300 is still purring like new. And I'm not a lousy fairweather rider. it's not a toy, it's not a piece of sporting goods, it's a vehicle and I commute to work on in every day,in Seattle, which means rain, shine, even snow a couple of times. I have nothing bad to say about Harley's, they seem like nice bikes, pricey or not. But I refuse to join a segment of the population that thinks the bike they ride makes them a different sort of person. I served in the Army Infantry and I see pretenders and wannabe's of all sorts. I will not be one myself. I made an honest decision that was good for me and my "Image" is my own.
Nov 30, 2011 9:51AM
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i have owned Harleys since 78 and admit to being lured by "the lifestyle" at the age of 18. at 50 after wrenching on my 77 once too many times i was looking for a good dependable bike and was willing to consider all makes and models.I ended up choosing an entry level harley. the dyna superglide cause of the 96 cubic in. motor and fuel injection and most of all price. so i got the same engine and trans as the 20k bikes.. got a lot of bike for 11,900 even when compared to other makes.yes, i have gotten weird looks from other h.d. riders cuz i left everything stock, but its my commuter scooter and want it to be dependable.just passed my 20,000 mile mark and in two years have had no trouble at all . i feel the company puts out a great product that is dependable .i still got my old bike but havent ridden it for awhile .so i guess i look like kind of a dork on my stock, kinda quiet harley but thats ok .anyways, thats why i go by "harley nerd" now.
Nov 30, 2011 12:17AM
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If you would rather buy 2 jap bikes than one harley you probably drive a toyota too! No wonder our economy and jobs are in the dump!!!

Nov 30, 2011 1:18PM
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first..it is simple. if you don't like or want or cannot afford a harley...dont buy one!

second..in case you havent noticed EVERY vehicle has parts made in different countries. there is a label that states what percentage of that vehicle was made and what country it was made in. then you would see it was assembled in the U.S. this is called a world economy.

third..no reason to call someone riding a different brand of motorcycle names. as long as it has two wheels it is ok by me.

fourth..harley changed the engine case design from vertical to horizontal split so no more oil leaks.

fifth..i dont understand the mentality of some of those riding the 'rice rockets'. it is not the bike but the a****hole riding it. splitting lanes, zig-zagging in traffic trying to go 20mph faster than traffic is moving, passing on the shoulder, all are good recipes to get dead instead of where you want to go.

i have been riding since 1970, rode japanese, british, german etc..now ride a harley. 2006 street glide(flhxi), 20,000 miles no problems. i will ride in winter if weather and road conditions permit here in n.j.. its comfortable, starts no problem, change oil, replace tires and brakes...thats it.

get on two wheels, enjoy the ride BUT ride safely and sanely. have a good time. ride safe.

 

Nov 29, 2011 10:09PM
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Anyone who doesn't understand what having a Harley means will never understand. It's the same crowd that bombs around in their obnoxious Honda Civics with the big loud can muffler sticking out. They don't get what it means to have American style.

Go to the Smithsonian in Washington and see what Japanese manufacturer made the engines that went in the Kamikaze's planes that killed Americans in Pearl Harbor. I wouldn't be too proud to be straddling one of those machines and then knocking Harleys!

 

Nov 29, 2011 10:22PM
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To all the Harley haters. Every time you spend a beautiful Saturday afternoon on your bike winding your way along the Mississippi River, down the Coast Highway in California, or through the Rocky Mountains, what is the name on more than 75% of the bikes you see? What makes you right and all those others wrong? One guy said he could get two Kawasakies for one Harley. He probably will need to. I've got one hundred and eleven thousand on my Heritage Softail and it's never been opened up. Tires, oil and brakes. That's it.
Nov 30, 2011 10:32AM
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The truth is HD is overpriced, it is still the best bad of your buck. I have ridden bikes for 40 someyears, i have had a little of all of them. From Vespas to Harleys , I have 2 in the yard now. Both run and get riden regular, spend very little on them. American bikes hold up great!
Nov 30, 2011 10:35AM
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Never what one rides but that you ride-bike rallies all over the world teach us that-interestingly one can believe he or she has a "one of a kind" bike customized, any brand any model any configuration--always someone that threw more money at the same bike configuration with hopes of separation, love the ride, the feel, the passion--skip al the judgement
Nov 29, 2011 9:58PM
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After you have had your POS rice burner for three or four yrs how much is it worth? NOTHING , I ride a Harley and am proud of it.
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