Whatever happened to the brand being on death’s doorstep?
It’s funny how in October of 2020 as news broke that Harley-Davidson was pulling out of the Indian market, plenty of journalists and analysts lined up to predict the final death of the long-running American motorcycle brand. I was one of the few at the time to realize even though India is the largest bike market in the world, Harley didn’t need to be in it. In fact, I predicted it could be just the kind of break the company needed.
I was vindicated in July of last year when Harley-Davidson sales in North America surged 43 percent for Q2. Some thought it a fluke and still predicted the sky was falling on Milwaukee, yet here we are with the company reporting a 40 percent revenue increase for Q4 of last year, beating the prediction that it would post a loss instead. When the dust settled, the company sold $816 million in product for the quarter, a truly impressive feat.
With this news, stock prices for Harley-Davidson immediately rose over 15 percent. Now Harley is looking for a 5 to 10 percent increase in revenue for 2022, despite supply chain issues which have kept the company from really churning out motorcycles.
The chairman, president, and CEO of Harley-Davidson told the media recently he expects the supply chain issues should “intensify going into the year.” We’ve seen this with not only motorcycles and cars, but consumer electronics and countless other products as supply chains around the globe have failed.
Despite the supply chain issues, sales in North America were up 8 percent in Q4 of 2021 versus the same period in 2020. In other words, if the company could make more motorcycles, they would likely sell with ease.
Harley’s performance for 2021 is even more impressive. The company saw revenue increase 32 percent for the year. Sales were up 8 percent worldwide for the year, with a 22 percent bump in North America. The company’s financial services division reported a record $415 million in operating income. All in all, it was a strong finish for the year, with the momentum hopefully carrying well into 2022 and beyond.
What doesn’t hurt Harley-Davidson is the fact the European Union finally agreed to drop its ridiculous 31 percent tariff on US-made motorcycles. This happened just last October, allowing the company to better compete against other brands in that key market.
Another thing helping Harley to stay profitable despite a supply crunch has been a concentration on the higher-end models. This was exactly what I thought the company should have done back when it pulled out of India. Harley-Davidson is a luxury brand and it should play to that strength. As it has cut the dead weight, eliminating about 40 percent of the model lineup, there’s less confusion among shoppers about what Harley is all about.
This strategy means Harley-Davidson is concentrating on regions where people can afford a luxury motorcycle, like North America and Europe. We’ll see what this year brings for the brand.
Keyword: Motorcycle Monday: Harley Davidson Sales Surge Again