Harley Davidson 2nd Quarter 2023 Projections
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- เผยแพร่เมื่อ 29 ก.ย. 2024
- There is a lot going on with Harley Davidson Motor Company that will have a big impact on how good their 2nd Quarter 2023 will be when reported at the end of July 2023.
I outline the key issues and provide some comparisons with recent key fundamentals to provide a more complete financial picture.
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I believe Harley, as we know it, is on it's way out. It is already in business with a company in India. They may sell the name to another manufacturer. We will see in the next few years.
Thank you for your comments. Yes, I would agree with you that they are likely to sell to someone else in the next few years. They have about $5 Billion in debt and with declining sales they might not be able to generate enough cash to stay afloat. Warren Buffet and an associate loaned Harley $600 million in 2009 to help them survive the last recession. I don't see anyone making such a loan to them this time around but as you say, we shall see!
I think they’re trying to reach an equilibrium with prices and production. They don’t mind making fewer bikes if profitability remains the same. The way companies are run now is a game of short term gains and perceptions of profitability. It’s not about offering value to end customers or growth in sales. The pandemic taught the dark triad execs to make more money with fewer sales. They liked it because they cut fixed costs too, like HD closing a plant and doing more overseas stuff. Understanding the psychology of executives and leaders explains their behavior and gives context beyond tribal BS, if one is willing to pay attention and step out of their comfort zone.
@@my.motorrad I am thinking that that equilibrium for HD will be a total annual production under 150,000 units. I think they are counting the days as to when they can close the York plant and have all production and assembly done overseas. Just like your previous comment about Apple where Harley's are "designed" in the U.S. but made elsewhere.
They are the 2 wheel equivalent of the big three automakers (past tense). Not enough foresight and too much looking backward. They have a lot to overcome. The overhead some of their dealers are carrying has to be scary and the inability to expand their customer base is even scarier. An entry level model would've been a better investment than a 30k electric bike. They want to be like Porsche but if they keep this up they'll be like Saab, a company with a loyal customer base that just wasn’t big enough to keep them in business.
Those are great points, especially the comparison to Saab. I haven't heard that name of awhile. HD has been too geared towards short term gain and it will likely catch up to them. I think it will be just a matter of time before the sub 500 bikes that are badged as Harleys that are made in China and India will be offered for sale in the U.S. but we shall see.
In another news, Harley unveiled their Hero Motor Corp built 440X in another world - india - at a fairly attractive price (aimed to take on Royal Enfield’s 350 CC models)..
But there is much more buzz about yet another entry level model(s) - Triumph 400 twins, also built in India, by Bajaj. Formal launch will be tomorrow, along with price reveal.
Irrespective of rumored premium pricing of the Triumph models, I’ll pick one of these models if I’m in the market for a motorcycle in this segment !
Thanks Sathish. I hadn't heard about the 400 cc Triumphs. I will have to do some research on this. I'll bet HD will offer their Hero built bikes in other markets (particularly Europe) soon.
@@cycletron Note that Triumph’s was an international unveiling (happened in London) and these Bajaj built 400 twins will be available in international markets even though India is the first country to have them available (for obvious reasons)..
@@sathishrao7926 Thanks Sathish!
@@cycletron Triumph nailed it with the pricing of Speed 400 - Just around $3500 for a motorcycle with Liquid cooling, ride by wire, Traction control, Slipper clutch, Dual channel ABS, USD forks etc.. with no compromise on fit & finish..
I, who wasn’t in the market for a motorcycle in this segment couldn’t resist the temptation of entering into the market and booked one !!!!
If all goes well, then I’ll be having a baby Speed Twin in a few weeks as an ‘impulse buy’ !!
@@sathishrao7926 Congratulations Sathish! I think Triumph has a huge hit on their hands with this bike and it looks like it will be offered for sale in the U.S. I will do a a video on this bike. It has 40 hp versus 28 hp for the HD 440X.
When HD used to release their new models at the end of summer, their dealers could dicker on leftovers. If that remains the case, we may not see discounts on '23s until January. Somehow, they still seem to be selling around me. They have a lot of inventory too, and it seems to move faster from some dealers than others. But they're all moving some even at these crazy prices and interest rates. HD riders have always been more of the Carpe Diem, YOLO types. I'm more of a wait for a good sale type.
Yes that is a good point. I suppose sales are still strong in some locations. I think the deals will be coming soon. Maybe a late December sale before dealers have to pay taxes on a lot of inventory?
What costs $2 to build cost $100 an hour to fix.
I think Fortnine was right about Harley and their stock manipulation. They need cash and if they borrow cash the interest will be high. So if they reduce interest to sell bikes they cannot pay their debt and make a profit for shareholders. I think making motorcycles when demand is low is a recipe for bankruptcy. Polaris only makes vehicles when they are ordered and keeps a very low inventory on the floor unless the dealer decides to keep a lot of inventory. I have been hearing in order to get an Indian from the build web sight it takes up to six months. I don't know if that's true or not but seems to make sense in a low demand market. On a side note FJB for killing Harley. He wants them all made in a China.
I think that is an interesting idea to have HD limit their production for awhile to bikes that are made based on customer orders. It sounds like a smart move to me.
I have to wonder if the shutdown is to keep prices up. GM did that and admitted it. If HD admitted that it would cause more derision. Understand car prices were unnaturally high/inflated due to the pandemic. I guess some companies like the added profit.
I haven’t seen rates that low at HD, but then I haven’t paid close attention. BMW has some good rates, but what’s approved credit and what are the rates if you’re not at that level? Dealers like to add on points. I’ve heard some HD dealers add4-5 points which is confiscatory.
Hi Jim, Happy 4th. I am skeptical that Harley's plant shut down is about the reason they state but my guess is that they well sell a lot fewer bikes this year.
I am sure those low rates are for top tier credit and others will have much higher rates.
Simply Wall St said last Friday that HOG's estimated fair value is $32.37 and the stock was trading at $35.21 suggesting HD is trading over fair value. They're also concerned about the dividend ($.66 / 1.9%) which is lower than industry peers and stated they didn't believe their cash flow was strong enough to increase the dividend without risk. So bottom line - HD stock is dead money unless you're a day trader and catch catch the pops and dips. However, Yahoo Finance has a 1st year target of $45.38 and a 2.2 favoring a strong hold recommendation. The new CFO may paint a rosy picture as production is one leg of the revenue stool. My dealer has 19 new bikes in the showroom and usually they keep an inventory of 10. One thing I noticed is the majority of bikes are not the most popular colors which may detract from their sales. Also the majority are touring bikes. They have 2 "Sport", 1 "Cruiser", 1 PA, and 1 trike, all the rest are touring bikes. If I'm a dealer this likely isn't the inventory mix I want in this economy. Foot traffic appears normal and Saturday's "HOG Hot Dog Day" is well attended and folks are buying apparel, parts, and service is booming. Their new rider training is booked through July and the HOG group rides are so well attended they have to break the ride up into smaller groups to prevent traffic issues. So it seems a mixed bag for HD but its a mix bag for auto dealers too. My Ford dealer has a row of F-150's and Bronco's not moving and the Chevy dealers lot is full. The big "deal" is "we sell at MSRP and never add adjustments" but they make it up on a bait and switch. The advertise MSRP price based on you financing with them otherwise the cash price is much inflated. The entire industry needs a mindset change before customers regain any trust in dealers.
Yes, the car dealers are the canary in the coal mine for motorcycle dealers and inventory is stacking up in a big way. That is for everyone except Toyota who seem to still be hobbled by supply chain issues. It is interesting to hear that the general interest for HD seems to be strong and broad. Another suggested in the comments that HD just make bikes to order for awhile which sounds like a smart idea to me.
The car industry is going through similar things as Casey stated HD is. Maybe worse. If you watch Kevin hunter or your auto advocate, the stuff dealers do to play the profit game is almost criminal. In some cases it is. Cash buyers are a losing deal, hence higher prices. They want long term income in points and rolling over addendums and additional dealer profit into those loans. Average profit on a new car went from something like 1700 before the pandemic to almost 5k now. People aren’t educated enough and united enough to change it, but then we see this in politics as well and it’s not getting better. We’re an increasingly ignorant population that’s easily manipulated by one’s beliefs that most don’t understand about themselves and experience cognitive dissonance if called into question. It has some similarities to cult behavior, but I digress.
I have nothing at stake with HD, no dog in that hunt. I like the bikes, but when I go to HD dealers, I feel like an atheist at a Pentecostal revival and that’s before I talk with sales staff who look at me like I have 5 foreheads when I tell them my expectations of sale’s experience.
I have always gotten my moneysworth when I bought my Hondas.Relable and dependable for years.
Same with Yamaha for me. So far so good on my Suzukis.
The dealers we used put tires on backwards, took multiple times to fix anything, and didn't open until 10am.
Combine that with dealerships not dealing, surcharges, lack of stock, and indifference from the sales staff.
Anyone know why Harley Davidson's market share is in the toilet? Me either....
Those are all accurate points. I wonder how low can they go on marketshare before they wink out of existence and how long will the take.
The golfers that run the Co. should cease production of the CVO. Remember the Electra-Glide Standard? A basic affordable vehicle as an attempt to reignite the niche of the once-loyal ridership could save the Co. Less greed, less HD Gold-wings, and more bang-for-the-buck basic motorcycles will save the Co, again. F Jochen.
Yes, those big touring bikes will be clogging up showrooms for awhile. $30k touring bikes are great when times are good but not so much in this current economy.
@@cycletron There shouldn't be a $30k touring bike. Their best days were when a dresser cost $15k. Before they turned upscale.
‘Dealers stocked out with unsold bikes”. I ordered a Tri glide ultra on feb 24th 2023 here in Uk…..still have no delivery information other than MAY be mid to late august shipping….I’m very very annoyed and upset …..
Wow, that stinks to miss a lot of the summer riding season. Hopefully your Triglide will arrive soon.
@@cycletron thank you for replying….. Harley are not even keeping the dealer updated…the dealership has to keep sending messages trying to get a shipping date….it’s atrocious customer service from Harley…..the excitement of this major purchase is wearing thin…I’m 75 and I wonder wether it will turn up before I pop my clogs! Ha!Ha!
With what they're producing these days combined with what they expect the customer to pay I wouldn't even consider a brand new Harley. I don't find these new Harleys very likable and the prices are the last nail in the coffin.
I honestly couldn't tell you what the inventory looks like at the dealer. I used to love to browse the dealer and look at the bikes even if I wasn't shopping for one of the time. Now I don't even want to go inside a Harley dealership.
Yes, HD and their dealers have aliented a large swath of their customer base unfortunately.
Doesn’t sound like you have realistic data with dealers who have unsold motorcycles. To say “my local dealer” has unsold inventory doesn’t speak about the entire dealer network and the true percentages. My dealer is selling everything off the truck. I would say it depends on city and location to track that not just the health of Harley-Davidson.
No. The only data I have is Harley's announced growing inventory at their quarterly earnings call and my observations that dealers near me have new bikes piling up. That is why I was curious to learn what others are seeing at their dealerships. No doubt some dealers are still going strong.
That's likely a good observation. As the cost of these bikes goes up, the overall cost of ownership in the Snow belt regions becomes unjustifiable based on the length of riding season and mileage. Perhaps Polaris is a better option given the cost of a CVO, buy an Indian and snowmobile or ATV or just cross country skis, especially way up there in Minnesota, which I actually thought was part of Canada. Canadian Goose jackets for Xmass!!!
@@geneclarke2205 That is funny you say that Gene. My 2 boys who still live at home were both floating the idea of buying snow mobiles (or snow machines as I guess they call them here)! They tried to tell me that they were actually safer than the street bikes that they ride.
Interest rates are stupid right now which is killing powersports, and hurting even necessities like automotive. Most are just waiting it out. Livewire is a waste and they need to kill that company before it bankrupts them. No one want an electric motorcycle, period.
I agree with you about LiveWire. HD went in too hard and too soon on EVs. It will be interesting to see if they will be much demand in Europe where they just started selling them.
@@cycletron they will probably do better in Europe. The range really relegates them to "around town" bikes which is not what most enthusiasts are looking for. Everyone I ride with likes to get out on the back road Twisties and do 100 plus mile rides which is basically impossible on electric right now. Plus I would miss the sound of the engine and shifting.
@@Stevel_I agree with you. My Katana has a fuel range of 130 miles which is on the low side but it is still better than any electric out there!
What should a Harley cost?
Has anyone ever felt that they got their money's worth when buying ANY new motorcycle, other than a Chinese brand?
Yeah. Royal Enfield for 6k.
@@Stevel_ After the $1,000 USD factory price cut, RE were still almost 8K OTD when the Dealers did their 'fees'. I wasn't the only one that noticed it.
Congrats on getting one for 6K!
Thinking about selling my Electra Glide and GoldWing GL1800 and buying a new Triumph T-120. (Looking…. 13k out the door)
The last good deal I got on a Harley was in 2017 when I bought a 2018 SGS. I ended up getting it for $1,500 below MSRP. Those days may return when you can actually negotiate off sticker but that hasn't been the case with any dealer really over the last 2 plus years.
@@cycletron … Now the dealers charge MSRP plus a dealer surcharge
Harley to me as a non-american seems like such a strange type of motorcycle, I can see why they have difficulties finding new buyers. It's very interesting following your content on them nevertheless, and I wish them good luck.
Rough guess but it seems to me that 80% + bikes on the American roads are Harley-Davidson. I ride one. I also ride a Honda GoldWing GL-1800. And yes, I do see many young Harley owners.
Thank you, I appreciate it!
Look at American car manufacturers. There are some foreign car brands that are more American than American brands. It’s been a long time coming. I’ve been using Macs since 1987. At one time they said made in Cupertino, then the US, then assembled in the US and now “designed” in Cupertino. As long as the user/customer has the same experience, they don’t seem to care.
As european ( so less used bikes and overpriced oldies too ) the problem is no more entry level option. Also with 14k you could buy a 103 with stage one and accessories, or a 107 street bob...but nothing of the 2023 models
HD will likely address that soon with the India and China made motorcycles with Harley badging that are going into production.