Harley-Davidson cuts forecast after motorcycle sales slump
Harley-Davidson warned that its bike sales this year could drop more than previously expected, as it grapples with tariff troubles and slack demand from millennials.
The Milwaukee-based motorcycle maker — which got into a tussle with President Trump last summer over its plans to move some of its manufacturing overseas — expects to ship 212,000 to 217,000 bikes worldwide this year.
That range is 5,000 lower than the company’s previous forecast — and well short of last year’s total of 228,051. If Harley’s downbeat outlook holds, it will be the fifth straight year of declines for the company, whose sales peaked at 267,999 bikes in 2014.
The iconic motorcycle maker has been struggling to lure younger riders, even as its core baby-boomer demographic gets increasingly old to be wrestling with its famously big, heavy and pricey motorcycles.
Harley’s “sweet spot” historically had been getting riders in their mid-40s — after they’ve done their child-rearing. More recently, sales have sputtered as newer generations are starting families later, Chief Executive Matt Levatich said on a Tuesday call with analysts.
Harley has tried to win over younger customers through its “More Roads” plan, which is revamping marketing worldwide and producing smaller bikes to woo riders in Asia.
In September, Harley plans to launch its first electric motorcycle, the LiveWire — although some have balked at its $30,000 price tag.
“The decisions and investments we’re making, within a highly dynamic and competitive global marketplace, demonstrate our intense focus to build the next generation of riders and maximize shareholder value,” Levatich said in a statement.
Global sales fell 8.4 percent in the second quarter, compared to the year-ago quarter with the US showing an 8 percent drop in sales.
Harley was hit harder in Europe, where sales plunged 12.5 percent, as the company faced a lag in obtaining approvals to ship its European-destined bikes from Thailand to avoid harsher tariff treatment.
Last year the European Union implemented tariffs of 31 percent on imported motorcycles in retaliation for tariffs the US levied on steel and aluminum.
Tariffs cost Harley $34.4 million in the second quarter. The company said in January that it expects tariffs to cost as much as $120 million for the full year.
Harley projects its operating margins to come in between 6 percent and 7 percent for the year, down from previous guidance of 8 percent to 9 percent due to weaker expected sales and tariff costs.
Shares plunged as much as 4 percent in pre-market trades on the weak results, but traders appeared comforted by management saying it expects sales in the US improve in the second half of the year, thanks in part to increased marketing efforts in the second quarter.
Harley’s stock was up 5.3 percent, at $36.10, at 1:33 p.m. EDT.
Second-quarter revenue came in at $1.43 billion — in line with analyst forecasts — but down 6 percent from last year. Earnings per share stood at $1.23, down 15 percent from last year.