The Harley-Davidson Barometer

Measuring the Industry.

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Harley-Davidson Pan America 1250cc Adventure

Harley-Davidson announced a showroom full of new bikes in July. None of these vehicles will be available for purchase for at least another year, so why all the commotion? Thanks to market share, the Motor Company has been a barometer for the U.S. motorcycle industry since it became a publicly traded company in 1986.

Recently, a somewhat unpredictable series of events caused mainstream press to collectively cry foul. In the first half of 2018, H-D received an effective 10-percent tax cut; announced shuttering a plant in Kansas City, Missouri; opened a new plant in Thailand; and became a centerpiece of discussion around international trade wars and American manufacturing.

In Harley’s defense, the plant opening in Thailand was announced more than a year ago, as part of an ongoing effort to increase motorcycle sales in developing counties. H-D is wisely and specifically targeting India and China, like every other company, as these two countries are home to half the global population. The Missouri factory primarily built the Dyna platform, which was discontinued. The remaining jobs are all being moved to the York, Pennsylvania, plant. And, lastly, tax cuts and trade wars were instigated by the presidential administration, so Harley was caught in a media crossfire.

The Bar and Shield isn’t only a lifestyle and media magnet, it’s also a very profitable business. Looking at its most recent quarterly report, we can see H-D is currently holding nearly $1 billion cash in its war chest. The company has also generated $100 million more in cash year-to-date than in 2017, increased its dividend and repurchased 2.3 million shares of its common stock, with 23.2 million additional shares remaining on repurchase authorization.

Year-to-date, Harley has sold $125 million in general merchandise (apparel and collectibles), $366 million in financial services (bike loans), $400 million in parts and accessories, and $2.3 billion in motorcycles. That is not a failing company.

When the press is having a field day, and the stock chart looks like a nail punctured your inner tube, it’s best to pull out the big guns. Normally, Harley-Davidson reserves its new model reveals for the annual dealer show, which happens in August. This year, they let the hog out of the bag early. Very early.

The Future Custom looks like a typical, liquid-cooled Harley cruiser. We’ve seen it before, it was called the VRSC V-Rod. The Pan America (pictured above) is an industrial-looking stab at adventure touring. We’ve also seen it before, it was called a Buell Ulysses XB12X. They even announced a Streetfighter, based on the same platform. You guessed it, Buell Lightning XB9SX. Nothing new under the sun.

Yet, before any of those liquid-cooled, internal combustion Harleys hit the market in 2020, we expect to see the LiveWire, late next year. This electric bike is the most likely to have an impact on our industry. Unlike all the others, nobody else is doing volume electrics, and nobody anticipated it was anything more than a marketing exercise when originally announced, way back in 2014.

Instead, LiveWire gives instant credibility to Zero, Alta, Energica, Lightning and every e-bike coming out of Asia. It’s not Honda or BMW, with their huge automotive resources, or a Chinese or Korean brand, with their inexpensive electronics manufacturing. It’s an all-new, electric motorcycle coming from a dyed-in-the-wool, century-old, American automotive manufacturing company.

The biggest challenges will be American consumers and the dealer network. The traditional Harley buyer has proven that they won’t buy anything other than a traditional Harley cruiser. The traditional Harley dealership has proven it won’t sell anything other than a traditional Harley cruiser to a traditional Harley buyer. No Buells. No V-Rods. Not even a Sportster XR1200.

Stalemate.

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