(graphics taken from a slide deck provided by Harley-Davidson)
In a public call for investors, analysts and the public on 2 February 2021, Harley-Davidson announced its sales and revenue figures for Q4 and all of 2020.
Worldwide retail sales compared to 2019 were down 14% for Q4 and 17% for the entire year. Latin America saw the hardest hits (51%/39%), followed by North America (15%/18%), EMEA (2%/16%) and Asia Pacific (10%/8%). Q4 sales only being down 2% compared to Q4 in 2019 in EMEA (Europe, Middle East & Africa) is significant, as it reflects an overall trend that saw the market improve, especially in Europe, late in 2020.
Harley claimed just a 7% drop in US market share, to 42.1%, for 2020, still well down from their over-50% market share heyday of the past few decades. Aggressive inventory management and changes in how Harley handles its global markets showed a drop in excess inventory, which is often heavily discounted by dealers as they start to receive new model year motorcycles. New retail motorcycle year-end inventory was just 24,000 motorcycles (13,000 in the US), down from 59,000 (37,000 US) at the end of 2019.
When it came to shipments and revenue, the numbers were also down compared to 2019. Harley shipped 32% fewer motorcycles in 2020, and revenue was down 29%, with motorcycles taking the biggest hit. In 2020, Harley shipped about as many touring bikes as they did cruisers (which includes CVO, Softail and LiveWire), with slightly fewer shipments of their Street and Sportster models. Harley recently announced the end of the Street line and a large curtailment of Sportster models going forward.
Harley’s best results for 2020 came in their Financial Services division, where they saw just under $3 billion in new loan originations, a 67.6% market share. Delinquencies were down significantly due to extensions provided due to the pandemic.
After announcing the numbers, the majority of the call focused on Harley’s new five-year plan, HARDWIRE. While the discussion was enthusiastic and upbeat, it’s hard not to wonder what is going on behind the scenes. The focus on branding was keen, with numerous mentions of community and especially desirability. CEO Jochen Zeitz mentioned several times his plan to “invest in the products that fuel the company.” This aligns with his statements about Harley no longer overpromising and underdelivering, a criticism leveled at previous leadership and the REWIRE plan. Zeitz reinforced his intention not to discuss new products until they’re ready to launch.
Harley officials talked up the upcoming Pan America a good bit, mentioning their intention to focus on markets in which they feel Harley can not only earn money, but take a leadership role. Certainly a lot will be hinging on the Pan America’s release; find out more on this topic by listening to Episode 105 of Chasing the Horizon, in which the MOA’s Digital Media Editor Wes Fleming discusses the Pan America at length with WebBikeWorld writer Jim Pruner. (Chasing the Horizon is sponsored by the BMW MOA.)
Zeitz announced three important things everybody in the motorcycle industry should pay attention to. First, Harley will be splitting its electric motorcycles off into a separate division, with separate leadership. Zeitz said this will allow the EV division to function more like a tech start-up, agile and reactive. It will also allow EVs to function less on a traditional model year process and more on a technology-based release schedule. He did not offer any details, saying only more information will be provided later in 2021 and that the company is “fully committed to electric.” It is a significant move for Harley to set up a separate division for electric motorcycles, but Zeitz was insistent it is the right move given the business model EVs present.
Second, Zeitz announced a plan to reinvent Harley’s presence in the middleweight cruiser segment, promising more details later this month. Third, Zeitz announced Harley will again pursue a plan for low-displacement motorcycles reliant on partnerships. He did not discuss what partnerships might emerge, nor what motorcycles might be in the works, but partnerships with Indian, Malaysian or Chinese companies would not be beyond the imagination.
Harley’s long-term planning is conservative, in line with Zeitz’s plan to get away from overpromising and underdelivering, as Harley has been criticized for doing in the past several years. They will focus on right-sizing their supply pipeline, or better matching inventory to demand. This will serve to end discount and incentive programs and allow dealers to increase their margins on new bikes, as well as driving up prices on used bikes. Coupled with Harley’s robust certified pre-owned motorcycle program, said to encompass 1/3 of used bikes currently available from dealers and representing a body of product less than five years old and with fewer than 25,000 miles on them.
For more information, visit the Harley-Davidson website.