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Europe Again Offers Silver Lining as Harley Releases Gloomy Q2 2018 Report

US sales continue multi-year drop as European sales lift

Once again, the international market – the EMEA in particular – has provided the silver lining to an otherwise downbeat quarterly report from Harley-Davidson. The company on Tuesday announced that worldwide sales had decreased 3.6 percent in the second quarter of 2018 (compared with the same time period in 2017), driven primarily by a 6.4-percent drop in US retail sales.

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Overall international sales, however, were up 0.7 percent. Affected negatively by a dip in Asia Pacific sales, the international numbers stayed in the black thanks to a 3.6-percent increase in EMEA sales. The EMEA is Harley-Davidson’s second largest market (the US is No. 1, of course) and its continued success here can perhaps be seen as an endorsement of the positive changes the company has made in recent years.

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Harley, meanwhile, has stressed that none of this news comes as a surprise. It had expected challenging conditions, even before US President Donald Trump decided to threaten American jobs via a trade war.

PREVIOUSLY: Harley-Davidson US Sales Drop in 2018 Q1, Europe Provides Silver Lining

“Our results in the second quarter reflect business performance that is in line with our expectations,” said Harley-Davidson President and CEO Matt Levatich. “With the focus of every employee and dealer, we are making progress building the next generation of Harley-Davidson riders in line with our long-term objectives. Our manufacturing optimization, demand-driving investments, and commitment to manage supply in line with demand remain on target and continue to strengthen our business.”

However, the company has promised investors that it will later this month share details on plans to accelerate that progress.

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“Leveraging core strengths in the business, brand and dealer network, the company intends to invest in opportunities that inspire increased ridership sooner and deliver sustainable growth for the future,” said a statement issued by the Milwaukee-based company.

It said the strategy will focus on delivering new products, “broader access,” and “stronger dealers.” Your guess is as good as mine in terms of how all that will be applied. I know I’ve said in the past they’d never do this, but maybe maybe maybe it would be a good idea to consider reducing the asking price of bikes. As mentioned in my most recent Street Bob journal, the company makes solidly good motorcycles these days, with their cost being my only real lament.

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Whatever its plans – which we’ll find out about on 30 July – Harley says its strategy will continue to support the 10-year plan it announced last year of creating 2 million new riders in the United States, growing its international business to make up 50 percent of annual volume, and launch 100 new “high impact” motorcycles by 2027.

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“We will take bold actions that better leverage our vast capabilities and competitive firepower – excellence in product development, manufacturing, brand and our great dealer network. We will motivate our existing loyal riders and inspire future riders who are not even thinking about two-wheeled freedom,” stated Levatich. “We are tapping into the spirit that drove our founders back in 1903. Our plan will redefine existing boundaries of our brand – reaching more customers through new types of products and channels and doing so in a way that reinforces all we stand for as a brand and as a company. We’re out to secure the legacy of Harley-Davidson freedom for the next generations of riders.”

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Meanwhile, the company has begun the process of shutting down its Kansas City, Missouri, plat and consolidating operations into its York, Pennsylvania plant. The company expects to incur restructuring and other consolidation costs of US $170-200 million and capital investment of approximately $75 million through 2019. The move is expected to deliver an ongoing annual cash savings of $65-75 million after 2020.

In terms of actual bikes, Harley-Davidson sold some 78,428 units worldwide in the second quarter of 2018. That’s down from the 81,388 motos it sold in the same time period last year but still more than either Triumph or Ducati manage to shift in an entire year. Of those 78,428 motorcycles, the sales breakdown by country is as follows:

  • United States: 46,490
  • EMEA: 17,844
  • Asia Pacific 7,718
  • Canada 3,807
  • Latin America 2,569

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Harley-Davidson stresses that the overall market for bikes with a displacement larger than 600cc was down 6.3 percent in the United States. It retains a stunning 48.4 percent share of the market.

To read the full financial report, check out Harley-Davidson’s investor relations website.