2007 Financials Spell Hard Times for Harley
It's been a Harley-heavy news week here at About.com, but today we cap it off with some somber financial information about the biggest U.S. motorcycle builder: Harley-Davidson's 2007 sales dropped 7.7% to $1.39 billion.
I know lots of y'all are avid Harley fans, and I also know there are plenty of haters as well, but please don't say you didn't see this coming.
The numbers mark the company's first losses since 1993, representing the first falter in a remarkable financial run. Incidentally, I recently interviewed Ty van Hooydonk of Discover Today's Motorcycling about the general state of the industry, and he told me that 2007's overall bike sales numbers are not yet available, "...but with the subprime mortgage crisis, what isn't down these days?"
Photo © Harley-Davidson Archives
Comments
I’m only too happy to know i’m contributing to this. I’m currently filing a lemon law claim against the rotten scoudrels… Scottie, please check my spelling…
Basem…be careful now…someone is going to accuse you of owning H-D stocks….
harleys suck
Troy,
Harleys don’t suck, but their marketing stranglehold on the boomers has certainly created a divide in the biking community. Yes, Harleys are expensive and like many other cruisers/tourers don’t offer the power, handling, and value of most sport bikes, but no reason to be a hater.
I’m also a cyclist, and there is a rift there too. I ride a carbon fiber bike, while others claim “steel is real”, and many agree that aluminum is awful and titanium is over. In the end, we’re just people out on the road to enjoy the sights and get a little exercise.
So call me an enigma - while I await affordable magnesium bicycle frames (the next hi-tech wave in bicycling), I still love cruiser motorcycles, including Harleys.
Let’s all just agree to keep our two tires firmly on the pavement.
Scottie speaks the truth.
And why is it that Harley-Davidson consistently manages to inspire and enrage? Whether you like ‘em or not, there’s something to be said for the passion they ignite…
Basem
As do you speak the truth…in addition to being the consummate diplomat.
:-)
I’m not really surprised to hear the news. People don’t have the money to pay the money Harley is asking for it’s motorcycles. Cost of living is going up, but salaries aren’t.
Are the other motorcycle companies feeling the hit as well?
Carrie,
Official 2007 numbers won’t be published by the Motorcycle Industry council until summer, but the entire motorcycle industry is feeling the pinch, and Harley has been been harder hit than most.
Basem
Can’t say I’m the least bit surprised at this news. I’ve talked to several dealerships (various manufacturers) over the past few months, and they’re all saying the same thing, that it was a horrible season for new bike sales. Just look at dealer websites and see how many leftover 2007 bikes there are.
But HD is a bit of a different story, because their bikes are overpriced in general. Even at the beginning of the year, they were offering financing for 10 yrs (120 mos.), but @ about 18% apr! That’s outrageous, but as the salesman told me, they’re trying to make sure that “Anyone Can Own A Harley” (as the poster read). No wonder their stock and their profits are tanking.
If they simply offered the product at a more reasonable price, they wouldn’t see dramatic fluctuations in business like this. If they lowered the price on every model in the lineup by $2,500, Harley-Davidsons would be the best-selling bike of 2008, guaranteed.
In 1954 while stationed at Eglin Field I drove my great 1951 Hudson Commodore 8 with overdrive up to Birmingham & traded even for a 1951 Harley 61 Cu.in. with hand shift, foot clutch in a fit of desire for a motorcyle. Learned to ride it on way back to base.
Sold it in a couple yrs after leaving service. Later had several other makes, best were Yamaha 77 750 3 Cyl & a 1981 Yamaha 1100. Last was the 750 which I used the most. After a hard rear ender in my van by a 19 yr old girl I wouldn’t care to ride any in these days of distracted drivers.
Just saw a 2007 Softail Deluxe w/5,000 miles, windshield, bags, engine guard, luggage rack and sreaming eagle pipes sell on ebay for $15,100. Most sellers think theirs would be worth $20k+.
Maybe things are softening in the used market too.
I feel like,in a way,Harley Davidson cut their own throats. for most of Harley’s time,they weren’t a high volume,high profit business,but they were fairly consistent. It seems to me that from the 70’s on,they alienated the very people who kept them in business by trying to force the “old Harley” riders to buy new by no longer offering replacement parts for Shovelheads,Panheads,Knucks and flatheads,but even then they wouldn’t accept the old Harleys as trade ins. I never really understood what was up with that,but I know what it LOOKS like. They cast aside the riders who remained loyal through Harley’s good and hard times,and their having to re-learn motorcycle building when AMF decided to release all the “old-timers”,who took with them their skills and knowledge,and welcomed the new breed who bought their bikes as toys,rode them on weekend short hops,and put them up for sale when their buddies got interested in the next toys of choice. (Granted,not all modern Harley owners are like that,but look at the classifieds and see how many newer Harleys you see for sale,and how many 70’s or older ones you see. Big difference,huh? Know why? It ISN’T because of a shortage of old Harleys! It’s because the owners of older Harleys are far lees willing to sell their bikes when times are tough,and they never get bored with their bikes,or have need for a “new thrill”.
I’m sure building bikes that can’t be worked on by the owner,don’t require adjustments,don’t leak a drop of oil and don’t have a kick starter is a good thing for upping their profits,now ANYONE can buy a Harley,but how many actually KEEP them? With all the slightly used ones on the market,what’s the draw for a new one? Warranty? Maybe…Certainly not price,and they can’t offer much more for the “bells and whistles” crowd,distinction and character are getting harder and harder to claim,so why should anyone buy a new one? Maybe it’s because the financing’s so danged easy to get. Then,all you have to do is let ‘em pull a hunk out of your paycheck every month for about a decade,unless you get bored…
Just my 2 cents worth
I am riding a 1998 Softail Custom. Bought it new, waited 16 months back then to get it, but paid list price. I have made some changes to it and it is the way I want it. Best thing is it has been payed for long ago. Thought about a new Harley for the last couple of years, but now am glad I have what I do.
Given the cost of a new stock Harley and the cost of accessories, and doing any engine modifications on the new fuel injected Harleys, I’ll keep my “old” non computerized 1998 carburated model. Might not be the latest of biggest or fastest, but it paid for and, I am 60 y.o., I bet it will still running when I am in a rocking chair.
I think Harley makes a very good product. I have ridden friends TwinCam 88 and 96 inch bikes. Nice and smooth. I know they are very durable, run for a long time, and are very reliable.
But, I think Harley has probably reached a price barrier. With the economy softening the way it is I think Harley is in for some lean times.
Look how automobile and pickup dealers are discounting their products. If they didn’t they wouldn’t sell. The average American is not rich and truth is that a lot of the people just don’t have the extra cash or credit anymore. So maybe Harley will have to lower prices, maybe not, but there are a lot of new bikes sitting on the showroom floors. When I bought mine in 1998 I waited 16 months to get it, now I can walk in a Harley dealers showroom and basiclly pick out any new bike you want. Times have changed.
Thanks
Well, it is not like H.D. didn`t see it coming. The BABY BOOMERS are getting older,as I am one. H.D. KNEW they were over priced and over rated–the writing was on the wall. The young riders want a sport bike–GO FAST BIKES—H.D. always had a problem with their bike breaking down. Maybe if they lower their prices and make a relible motorcycle they could pull out–WHY buy a dead horse stock—The U.S. auto makers are seeing some light now–IF the dumb ass factor don`t kick in. I had a H.D. and it was junk–sold it and bought a Yamaha Royal Star Venture–Great Bike—I had to fire or let go my ride behine mechanic–he found another H.D. rider. Well it looks like H.D. well go the big junk yard in the sky.
Its not a big surprise that 2007 was not a good year for Harley Davidson and probably a few other manufacturers as well. With the increased pressure from Metric Bikes like Star Motorcycles-the Raider, Kawasaki and Honda Harley Davidson would do better if they lowered their prices on their bikes and Parts too. Its all about competition and Look at Struggles with Ford and Chevy now since Toyota, Nissan and now the Koreans with Hundai and Kia.
Marketing is not always about the product, but how you sell it. Harley has been selling an image for years. We all know that mechanically they are antiquated machines; but the mystic has brought loads of dentists and accountants to their dealerships despite the overpricing of their bikes and accessories; and if you were selling them and people were dying to pay any price you ask, wouldn’t you?
People get harped on for hating Harley, but the other side of the coin I have received a lot of flak from Harley riders for owning a “rice rocket” and rarely do I get a return wave when I wave first (but oddly enough, when I ride around in my open Jeep, Harley riders will nod at me). I don’t the divide will ever be closed, much like Sunnis and Shia, they are two completely different cultures and mindsets, which is too bad as in Europe the catechism does not exist nearly as bad…
I don’t like HD, won’t lie, never have never will. Unfortunately I came in contact with a few HD rider attitudes before I came in contact with the HD. I want to ride, I don’t need a clan or a feeling of belonging.
I like the pricing of the “rice burners” but I’ve learned their value the hard way, trade/resale.
I supported Victory in 2007. I love my bike and the questions and comments I get. Especially “nice Harley” from HD owners. You should see their face not to mention their attitude when I say it’s a Victory. I got so much more out of the box than HD has to offer for alot less money. Riders Do have other American bike choices now.
Basem, I am curious to see all 2007 reports. I think we’ll see the motorcycle industry is down but I think we’ll see riders are still riding, buyers are still buying, they’re just buying elsewhere.
I don’t own a HD but I am very interested in the improvements to the 2008 Ultra Classic 105th Anniversary model. I almost bought one in Oct 07 but had to put off the purchase due to shoulder surgery. The local dealer was very anxious for me to put down my $500 deposit, claiming the Anniversary bikes were selling like hotcakes before arrival. I risked not getting the machine of choice if I dithered. Today, the dealer has 5 Ultra Classic Anniversary bikes — one on the floor and four in crates — plus a zillion other lighter weight models stacked up. I noticed during recent showroom walks that “asking” prices are inching down by hundreds of dollars since November. I don’t know if the big bikes are overpriced. The technology is comparatively old school, but you can’t beat the look and sound for biker image. If HD updates it’s technology and stabalizes MSRP prices I am sure the stock price will rebound.
I did not like Harleys when I was young but have had a new one every year since 90
US sales are down but you need to consider that the Aussie sales break their own benchmark each and every quarter same as the rest of the world.
Will we have a slow down maybe, but as some markets are maturing new emerging markets are coming online China and South East Asia.
Maybe now the dealers will start us treating us as we deserve … with less arrogance…
I’m encouraged about the H.D. turndown. I have always said, when there is a Harley in every garage in America then maybe I will be able to own one. I scratch my head when I see people purchasing a eight year old FLH with 80,000 mi for 13,000 big ones. It just doesn’t make any sense. I remember almost buying a panhead for 2,000. I payed 6,400 for my new FLT in ‘82. Had to sell to pay the hospital for my first born. I’m looking foward to prices getting down to a realistic level.
I bought a brand new 2006 Ultra. First ever bike for me. I am 42, paid cash and have accessorize over the first 31K miles. I do my own maintenance and hope to get at least 100K. I’ll be delighted if I get 125K. I can hardly wait until I get the next my Harley - but only when this wears out.
Ed,
I’m also curious to see 2007 sales figures for non-Harley brands.
I think Harleys are more of an extravagant purchase (ie, a luxury item) and therefore more susceptible to a downturn. 2007 looks like it will be the first in 15 years that overall motorcycle sales don’t grow.
You know what they say about what goes up…
Basem