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Harley dealers find pre-owned a hit in Q2

By Dave McMahon

New unit sales reported as ‘strong’ by 25 percent of dealers

An online survey of Harley-Davidson dealerships in the U.S. and Canada revealed that 58 percent described their business performance in Q2 as “below plan.” Another 25 percent said they were “on plan,” with just 17 percent reporting “above plan.”

Those were among the results compiled from the inaugural Powersports Business/BMO Capital Markets Q2 Harley-Davidson Dealer Survey of H-D dealer principals and general managers.

A total of 42 percent of respondents had single-store operations, with another 33 percent owning 2 or 3 locations. A total of 58 percent of the dealerships that replied generate between $5 million and $20 million in annual revenue.

Source: Q2 2017 Powersports Business/BMO Capital Markets

When asked to rate business conditions, 36 percent of Harley-Davidson dealers described Q2 overall business conditions as “average.” Another 36 said conditions were either “somewhat strong” or “very strong.” A total of 42 percent of dealers described new unit sales as “somewhat weak,” although none of them replied “very weak.” One-third of dealers said new unit sales were average, and 25 percent called them either “somewhat strong” or “very strong.” 

Pre-owned unit sales, meanwhile, were reported as either “very strong” or “somewhat strong” by a total of 72 percent of the dealers who took the survey. Another 28 percent said used unit sales were “average.” No dealers who took the survey described pre-owned bike sales as either “weak” or “somewhat weak.” PG&A sales in Q2 were described as “average” by 50 percent of the dealers. Another one-third said sales were “somewhat weak,” with only 17 percent saying they were “somewhat strong.” Service department business was rated as “somewhat strong” by 59 percent of the dealers, with another 33 percent reporting the service department as “average.” F&I remained average for half of the dealers who took the survey, with 1 in 4 reporting F&I as “very strong.”

Harley-Davidson Motor Co.’s May announcement that it has formed an exclusive alliance with motorcycle rental operator EagleRider was among the Q2 business transactions that got the thumbs down from Harley-Davidson dealers. EagleRider will exclusively offer current model year Harley-Davidson motorcycle fleets in the touring and large cruiser motorcycle segments, and Harley-Davidson will work exclusively with EagleRider to provide rental, travel and tour experiences from its U.S. dealership network.

Source: Q2 2017 Powersports Business/BMO Capital Markets

Dealers reported growing interest from younger riders in the Street 750, but economic conditions and pricing are combining to decrease sales to that customer.

Source: Q2 2017 Powersports Business/BMO Capital Markets

Even so, dealers at a rate of 67 percent expect unit sales growth to be flat-to-5 percent in the next 12 months. No dealers expect to see unit sales decline by more than 5 percent over the next 12 months. Driving that outlook are positive comments from dealers who took the survey about a variety of models, including Road Glide, baggers with the all-new 107 cubic inch Milwaukee-Eight engine and Street Glide Specials, among others.

The most disappointing models, according to dealers who completed the survey? Street and Softail made their way to the top most often.

Dealers also appear to be in a good spot with inventory, as 75 percent reported new unit inventory as “about right.” One in three dealers who took the survey said their dealership profit margin was “somewhat worse” than it was a year ago, with half calling their profit margin “about the same” in that period.

As for those rumblings about Harley-Davidson Motor Co. buying Ducati? When asked if Harley-Davidson should acquire Ducati, 55 percent of the responding dealers said “yes,” and 45 percent replied “no.”

It’s the only independent survey of its kind. Dealers interested in taking the Q3 survey should send an email to PSB editor in chief Dave McMahon at dmcmahon@powersportsbusiness.com. Five Harley-Davidson dealers who complete the survey will be randomly selected to receive a $100 Visa gift card. 

 

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