Nov. 10, 2008 – Harley’s U.S. sales fall in 3Q

Competitors’ aggressive financing rates and increase in noncurrent unit sales combined to play a part in Harley-Davidson’s reduced U.S. retail sales in its third quarter.
Harley-Davidson reported a 15.5 percent drop in U.S. new motorcycle sales for its quarter, which ended Sept. 28. The U.S. heavyweight bike category it competes in, however, was off just 3.1 percent.
Tom Bergmann, Harley-Davidson’s chief financial officer, said in a conference call that the percentage of noncurrent model-year motorcycles sold by Japanese OEMs this quarter was up considerably compared to a year ago. He also said, without specifying which manufacturer, that 50 percent of one Japanese manufacturer’s sales during the quarter were prior-year models.
Financing moves also impacted third-quarter sales. Bergmann said Japanese OEMs implemented lower finance offers than Harley this year and had more “promotional extremes” this year than last year. Plus, Bergmann noted Harley at this time last year ran a successful “Stick it to the man” finance campaign that elevated sales in 2007.
While Harley’s U.S. motorcycle sales slumped, international sales continued to rise. International sales were up 11.3 percent compared to the year-ago period. Sales were up in Canada (12.4 percent), the Asia Pacific Region (17.5 percent), Europe (2.9 percent) and the Latin American Region (41.6 percent).
However, Harley-Davidson’s worldwide bike sales still fell 9.6 percent compared to a year ago. Also, Harley-Davidson’s overall revenue of $1.42 billion for the quarter dropped 7.7 percent. Net income fell even more, down 37.1 percent from a year ago.
Bergmann did note that dealer inventory “is in line with expectations.”
“The decision we made back in April to reduce shipment is playing out very well and has proven to be the right course of action,” he said.
Harley-Davidson has reduced its expected shipments to 303,500-306,000 for the full year. Shipments of Buell bikes are up slightly over last year, at 2,760, a 4 percent rise. psb