Harley-Davidson Cuts Forecasts on U.S. Sales Slump

[mconlogue]

http://www.bloomberg.com/apps/news?pid=20601103&sid=aOlOYmOTjIlU&refer=news

Sept. 7 (Bloomberg) -- Harley-Davidson Inc., the biggest U.S. motorcycle maker, slashed its forecast for profit and third-quarter shipments after U.S. sales dropped last month. The shares fell the most in more than two years in New York trading.

Full-year earnings will decline 4 percent to 6 percent, instead of rising, and there may be a ``modest'' drop in revenue, the Milwaukee-based company said today in a statement. The outlook trails analysts' estimates by as much as 10 percent.

The company said it expects next year ``will continue to be challenging'' because of a sluggish U.S. economy. Consumers face rising interest rates and declining property values, cooling demand for Harley cruisers that can sell for as much as $35,000.

``The concern has been domestic growth,'' said Kevin Tynan, a New York-based analyst at Argus Research Corp. who rates Harley shares ``buy.'' ``There is some market penetration in other regions, but that has been slower growing.''

Harley said it will earn $3.69 to $3.77 a share this year, trailing the $4.12 average estimate of 18 analysts surveyed by Bloomberg. The maker of the Sportster and Softail models said it expects to ship 86,000 to 88,000 Harley motorcycles in the third quarter, compared with a previous forecast of as many as 95,000.

``Our U.S. dealers' retail sales have fallen sharply during August,'' Chief Executive Officer Jim Ziemer said in the statement. ``Against the current economic background, we no longer expect worldwide dealer retail sales to increase during the second half of 2007.''

Wholesale Deliveries

Full-year deliveries will total 328,000 to 332,000 motorcycles, Harley said, a decline of as much as 6.1 percent from last year's 349,196.

The shares fell $4.86, or 9 percent, to $49.23 at 9:31 a.m. in New York Stock Exchange composite trading, the biggest decline since April 2005.

The motorcycle maker said weak spending by U.S. consumers was hurting demand. U.S. Labor Department figures show the number of Americans receiving unemployment benefits in the week ended Aug. 25 at the highest since February, and U.S. manufacturing in August expanded at the slowest pace in five months, according to the Institute for Supply Management.

The company forecast July 19 that earnings per share for the second half would rise by 4 percent to 6 percent following 6.8 percent growth in the first half. Harley-Davidson started the year with a 2007 earnings-per-share growth forecast of 11 percent to 17 percent, though it cut that outlook Feb. 27 following a strike at its York, Pennsylvania, plant.

The motorcycle maker said today that 2008 earnings per share will rise by between 4 percent and 7 percent and that it's dropping any forecast for 2009.

To contact the reporter on this story: Tom Lavell in Frankfurt at tlavell@bloomberg.net .

Last Updated: September 7, 2007 09:35 EDT

[CalLT]

Not surprising. Their buyers are aging, and young riders these days are strictly into sportbikes. There are even sportbike clubs gangs, instead of Harley biker gangs.

Too bad, really. They had the chance to use their huge cashflow to branch into new demographic segments. Unless they do something radical they will continue to decline. Maybe the new water-cooled Buell engine can help rescue 'em.

[hallzee]

I really think that their market is saturated. Almost anyone that wants a Harley, has one. You don't need to buy one every few years either, if it's just parked all the time. They cashed in for years on the posers, and all the posers have purchased. There aren't enough hard-core true riders to keep their market growth alive with their current line-up of products.

They'll still have a huge and faithful following, and many of those people are real riders, that rack up some serious miles of course.

You could actually see this starting a couple of years ago, when the dealers had to start abandoning the "added markup" on their retail price.

[K1200LTryder]

"You could actually see this starting a couple of years ago, when the dealers had to start abandoning the "added markup" on their retail price"


Do you mean they are going to be selling them for what they are really worth ?

The R&D imbedded costs must be at least 50 Bucks ( per thousand bikes, of course)

Novel idea, purchase your Harley by the pound...... :histerica

[sheinzer]

All my Harley comrades tell me that the best deal in Minnesota is ONLY $600 over retail. Wow, I wonder why sales has dipped. Can it be people are tired of paying sticker plus for a product? Yes, it was sagging when the market was strong.

I rode HD for many years and would like an "08 but never at these prices.

[k1200ltrider]

[QUOTE=K1200LTryder
Novel idea, purchase your Harley by the pound...... :histerica[/QUOTE]

That could cost you more than you think, as some weigh more than LT's.....

[UncleRock]

Well since the Neocons have bilked the American people out of every cent they can, there in no money to buy bikes.
Team B= Rumsfeld + Chenny, under the Ford amin.
hit me (http://www.commondreams.org/views04/1207-26.htm)
My Bush bird flu is acting up, gotta go
Rock

[CaptRich]

That's part of the story.Here in Paducah,Ky we can't get enough bikes.We've bought about 50 bikes from other dealers around the country.We also sell strictly at msrp.HD has a vendor problem right now and is shipping almost no bikes.We're currently about 50 bikes behind what we should have gotten by now.Rockers have been backed up to Nov. and allocation is cut in half.I sure would like to know which supplier is unable to ship parts to HD,kinda got a hunch it's Delphi,since that's the only one I can think of that would affect all models.Gotta remember US market is only part of the picture,European sales are up 26%,Aussie even more.We bought 6 07 Ultras from a dealer last week and only have 2 left,and yes we are selling them a bit under msrp.

[calyrider]

They had the chance to use their huge cashflow to branch into new demographic segments.

They've tried, but it was not successful. Ever heard of a V-Rod? Liked by the general MC market, but scoffed-at by the HD crowd, didn't have the Potato-Potato sound, engine had a "German Heritage" etc., etc.

Harley is in a situation where they cannot branch-out too much because they will alienate their main-stream users. And yes, their demographic is getting older, and the younger crowd is not adopting them. They will likely go another 10 years and then make a huge leap away from their existing products and start making good motorcycles that can hold-up in a competitive road test, and not have to rely on "American Made" and "Potato Potato"

[K1200LTryder]

Well since the Neocons have bilked the American people out of every cent they can, there in no money to buy bikes.
Team B= Rumsfeld + Chenny, under the Ford amin.
hit me (http://www.commondreams.org/views04/1207-26.htm)
My Bush bird flu is acting up, gotta go
Rock



Now I've heard everything. A communist blaming poor HD sales on the President.

Walmart selling tainted Koolade ?


Eat paint as a kid ?


jeeeeez

[UncleRock]

Now I've heard everything. A communist blaming poor HD sales on the President.

Walmart selling tainted Koolade ?


Eat paint as a kid ?


jeeeeez
Who is a communist?
Did I eat paint?
If your to stupid to read and make decisions for your self thats fine
Did you come from a brother/sister mating?
Rock

[gerryrenstrom]

You guys must be kidding. Harley Davidson will never have a problem selling bikes. I know a lot of guys of all ages who would love to own a Harley. They all want to belong and don't care that the bike isn't state of the art. You know, made in America and all that crap. There all saving up and hoping for an OK from the wife. Cost is what's holding them up.

[K1200LTryder]

Who is a communist?
Did I eat paint?
If your to stupid to read and make decisions for your self thats fine
Did you come from a brother/sister mating?
Rock


I may be dumb, but I aint stupid.
Jokes on my siblings can be taken with stride, just dont mention my mother.


Semper Fidelis


(to doesnt have the same meaning a 'too'...but you're a writer and should know that....I guess it's just the bleeding heart liberal that seeped out like slime before you could proof read your own post........try some more veggies or something, obviously you are really plugged up.)

[zippy_gg]

There all saving up and hoping for an OK from the wife. Cost is what's holding them up.Is it coast? Or is it the wife?:rolleyes: :D

[zippy_gg]

(to doesnt have the same meaning a 'too'...but you're a writer and should know that....I guess it's just the bleeding heart liberal that seeped out like slime before you could proof read your own post........try some more veggies or something, obviously you are really plugged up.)If you want to go that route "doesnt" is not a word either, try "doesn't" instead, and make sure you NEVER forget to proof-read your own statements, both for spelling and for content.
Also "liberal" is not the same as "communist" and nor is "anti-Bush".

[switz]

H-D sales are down..... As I rode through El Paso,TX in the spring, I stopped at the big H-D dealer there (supposedly the largest dealer in the nation). I asked the uninterested sales manager what the price was on a pretty Custom Vehicle Operations Screaming Eagle Fatboy. She quoted $5,000 over MSRP. I commented that I thought that was excessive. She commented to the effect, "If you want it, you pay the price. If you don't buy it, the next guy will."

The dealer in Santa Fe does the same thing of list plus. That store is owned by a large automotive group out of Phoenix and they overcharge in that market, too.

The local dealer in Apache Junction had a big "party" yesterday to hype sales and appeared to sell lots of t-shirts and low dollar accessories. I feel sorry for the owner, going into a economic down turn, for building the largest store front in Arizona (about 44,000 sqft) and opening it last fall. They have over 80 employees and a huge airconditioning bill. They sell everything at MSRP. All I can say is the owner's husband has certainly looked "serious" and "tight lipped" the last few months

Meanwhile, back at the BMW dealer in Scottsdale, they are running out of bikes until the 2008 models start in late October. They have their last RT on the floor and a few of the GS models. They are one of the largest sales volumne dealers in the states. I was offered a price under MSRP for a cash deal. I always see a few customers in that store. Of course their life's blood comes from servicing nearly 15 different local law enforcement agencies with mounted units using BMW RTp bikes. The shop is swamped.

The BMW dealer in Santa Fe offered a similar discount for an identical RT they had in stock. They had a lot of bikes and sales were "slow". They have a very modest shop (2 or 3 mechanics on the bikes and a dozen on cars).

As mentioned earlier in this post, when all the non-service industry jobs are moved off shore, there is no basis for our economy in hard goods. As an example, we are unable at this point to fabricate the necessary armor plate for the vehicles going to Iraq. So all those folks that had $18 to $25 per hour jobs are suddenly not out buying motorcycles when their pay is minimum wage.

Demograhics play a role, but the large increases in consumer interest rates is applying severe braking to the motor industry. Several news letters are pointing to the possible demise of Ford by 2010 or sooner. The bad economic news is causing many households to consider necessities versus toys.

If Harley is to survive long term and meet emissions standards, they will have to convince potential customers that the V-Rod engine is the way to go. The old air cooled V-twin engine design will join the air cooled VW Beetle engine in the dust bin of history. At that point, there will be little differentiation between the Japanese products and the Harleys. Folks will shift spending patterns to the less expensive metrics for the same look and feel.

I have purchased my last Harley. While this year's bikes are now available with ABS, the motors have less power and torque that the 2005 models, even if one spends the bucks for the 110 cu in conversion.

[KMC1]

Blah, blah, blah....
Another thread spawned by peni.. I mean motorcycle envy???
Gees, it's like every two weeks another of these jealousy ridden threads pops up, predicting the demise of the most prominent motorcycle maker in the world.

*Yaaawn*

[Florian]

I 'get' the HD thing. What I dont get is why HD's dealers still think their shit doesnt stink.... There are so many HDs available (used) that youd think the guys trying to sell bikes off the showroom floor would be a bit more accomodating. In this economy, you gotta adjust to the market...that HD chick in El Paso sounds like the typical sales pitch you get....too bad.

F

[ahpd1992]

I think its all the supply v demand equation anyway. If HD cut production thier stock price would tumble, but it would give the dealers a chance to rid themselves of inventory. I know some areas of the country they cant get enough bikes, but here in Chicagoland there are plenty of bikes to go around as well as dealer competition. Most, not all, of the dealers sell at MSRP and some like Chicago HD gives 20% off on parts n accessories if you ask for the discount or bought your bike from them (the same goes for Chicago BMW, owned by the same guy). Sales have been slow for years on some models (V-rod), but get away from the touring bikes and softail family and you have bikes collecting dust on the showroom floor. I will give the dealers this much, they all stick together and keep the used and new prices up. Woodstock HD is down the street from me and the prices they charge for used bikes is appalling, but they dont seem in a hurry to lower them so it must be working. Its the non HD dealers that know the secret. There is and independant dealer I know of who gets Harleys in all the time. You see the true street value of the bikes on his showroom floor. I would buy from him if I was in the market again, as I know I would be paying close to what the bike is really worth.

I also get "the HD thing" even more than I get "the BMW thing" but I get frustrated with the economics of it all. At least with a BMW I know Im getting high tech, high quality, but low resale value, and sometimes dodgy corporate policies

[jsciullo]

There is a huge difference between wanting a bike and paying for it. The housing market issues that gave away money to people who clearly could not afford their desired house also effects the total loan $$$ pool. Harley's issue is not a lower demand for their bikes... they know that they can no longer get loans for many of the people that need to finance these bikes. They can brag all day long about all the rich people that ride Harleys (docs, layers, etc...) - the reality is that many Harley riders are avg Joe's that couldnt afford that bike unless the loan compaies look the other way. Those days are over.

Jim

[tkramer]

Harley is in a situation where they cannot branch-out too much because they will alienate their main-stream users.

Users?!

Isn't that what drug pushers call their customers? :rotf:

[UncleRock]

I may be dumb, but I aint stupid.
Jokes on my siblings can be taken with stride, just dont mention my mother.


Semper Fidelis

I guess it's just the bleeding, seeped out like slime
I also did some Editin:D
Your the one that brought up the leaking slime thing :cool:
Semper Fi
Rock