Research Question: Will Harley-Davidson experience a bounce-back year in 2016 despite rising competition?
Report Available: Jan. 20, 2016
Blueshift’s initial research shows that despite HOG’s struggle to maintain market share in the face of competition from PII’s motorcycle brands and others, dealers are more optimistic about the company’s three-to-five year outlook, inventory appears in line, and the brand is taking steps to engage millennials to prevent more share erosion. At the same time, HOGs are selling below MSRP and there is deserved concern about HOG’s state of affairs.
- HOG has struggled so far in 2015, selling 72,178 new motorcycles in its Q3, over a thousand less than a year ago as softness in the U.S. market dragged down overall sales. HOG’s net income fell 6.5% to $140 million. HOG admitted competitive pressures were eating into its share but planned to increase investment in product development and marketing without sacrificing the brand’s premium positioning. HOG’s market share dropped 390 basis points year-to-year to 52.4% in Q3.
- HOG’s focus is to protect share by improving quality and marketing, and it will lower prices as well.Lower pricing may attract former and new younger generationbuyers. A recent dealer sentiment survey found dealers were becoming more optimistic about HOG’s three-to-five year outlook. Only 17% of dealers reported showroom inventory as too high at summer’s end.
- A channel check found newer-used HOG’s selling at a 13% discount,closing in on 2009 (recession) pricing. The falling used prices were putting pressure on new HOG sales. An inventory imbalance that resulted in some dealers with too much inventory and others too little caused causing HOG to freeze shipments of its 2016 models to much of its dealer base until January. HOG buyers have noted that wait lists to buy new HOGs were no longer the norm. Former HOG riders have cited HOG’s superiority complex and inflexible pricing pushed them to buy from a competitor, including Triumph or PII’s Victory and Indian.
Are HOG dealers seeing any improvement in customer interest and sales? Will lowering prices win back some of HOG’s once loyal base? How does inventory look at dealerships? To gain insight into HOG and the motorcycle market, Blueshift will gather data and issue a market research report from independent sources in the following areas: HOG dealers, Independent dealers, Competitor dealers, Supply chain, and Industry specialists
Companies: Harley-Davidson (HOG), Polaris (PII), Honda Motor Co (HMC), Bayerische Motoren Werke (BMW), Yamaha Motor Co (TYO:7272), Suzuki Motor (TYO:7269), Kawasaki Heavy Industries (TYO:7012)