Harley-Davidson released its third-quarter earnings this week, and for a company desperately trying to turn itself around as its customer base ages, there were pockets of good news. Revenue fell, but by less than analysts thought it would. Shares rose. The numbers come after Harley signaled it knows its future largely isn’t here.
First, let’s have a look at those numbers, via The Wall Street Journal.
The Milwaukee-based company, which has struggled to expand its ridership base globally, said its third-quarter revenue fell to $1.07 billion from $1.12 billion a year earlier. Analysts surveyed by FactSet had expected $1.04 billion of revenue in the quarter.
Shares of the company rose about 7% during premarket trading.
[…]
Motorcycle sales at retailers world-wide grew 2.7% compared with the same period a year earlier. Retail motorcycle sales in the U.S. declined 3.6% in the quarter and are down nearly 6% for the first nine months of the year.
Shipments of motorcycles fell 5.8% from a year earlier to around 46,000.
Overall, the company reported a profit of $86.6 million, or 55 cents a share, compared with $113.9 million, or 68 a share, a year ago.
For a normal company, those numbers might not be all that distressing—Harley is still profitable, after all—but for Harley the numbers are the continuation of a long-term downward trend for the company. The company’s position in the market has also been affected by the Trump administration, whose trade war led the European Union to slap tariffs on American-made Harleys, forcing the company to recalibrate its strategy.
That latter issue Harley will sidestep by making motorcycles for the European market in Thailand, but its core business in the U.S. is still deteriorating. There are some three million Harley riders in America, a number that Harley wanted to push to five million as part of its More Roads campaign. But last month, in a press release, the company said that it was adjusting its target to one million new riders, or four million total by 2027.
Somewhat obscured in that press release was another significant revision. Instead of aiming for its international business to be half of motorcycle volume, Harley would now aim for it to be half of its revenue, instead. Volume is currently tilted about 60/40 in favor of U.S. sales. Harley said they were revising that goal to account for various electric bikes and apparel they sell overseas, but it was hard to also not see it as an acknowledgment that its business is going elsewhere.
And getting 50 percent of its revenue from overseas may be inevitable anyway, as the U.S. market for heavy motorcycles dries up. And while Harley has been making a lot of noise about the LiveWire—back in production after some battery problems halted things—the early signals are that it won’t sell in great numbers, or at least numbers that will change the conversation about what Harley is and who it is for.
Harley opened its new production facility in Thailand last year, joining its plants in Australia, India, and Brazil. And with motorcycles for Asia and Europe that were once made here being made elsewhere, you can see where this is going. Harley, like many a company before it, is simply going where the market is.
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