The tariffs ruckus between the European Union ( EU ) and Harley has proven to be a most unwelcome distraction to the posting of what , in the context of recent years , is a milestone set of Quarterly Fiscals . Namely , results that show a return to unit growth , a return to revenue growth and , above all , a return to profits . Of course , it is hard to make ' level playing field comparisons ' with 2020 , or even with 2019 - in part because of the pandemic . However , the possible eventual ( June 19 ) escalation of these additional tariffs arise from a two-year old decision ; they are not in effect a new decision . The start-point for the brouhaha remains the spat between the United States and the EU over perceived Boeing and Airbus subsidies - an impasse that goes back nearly two decades and one that the Biden administration and relatively new EU presidency theoretically drew a line under with a four-month suspension of rival tariff impositions in early March . Revocation of the Binding Order Information ( BOI ) exemptions ( five of them ) that allowed Harley to continue to supply EU markets at a 6 % tariff mean that the original decision to impose an additional 25 % tariff now comes into force . Worse , the ' Stage II ' imposition of a further 25 % contained in the original 2019 decision and slated for June 2021 could now also become enacted , which is how the headline figure adds to 56 %. However , as Jochen Zeitz confirmed on June 20 , the company will be able to continue selling to Europe at 6 % while the appeal makes its way through the bureaucracy in Europe . On March 5th this year , the US administration described the moratorium as a " fresh start " to US-EU trade relations . European Commission Executive Vice-President and Trade Commissioner Valdis Dombrovskis called it a " reset " for a relationship which had soured under the previous administration . " Removing these tariffs is a winwin for both sides ," he said . " This suspension will help restore confidence and trust , and therefore give us the space to come to a comprehensive and long-lasting negotiated solution ." So , it would appear that in the period between March 5th and April 19 , a wheel has come off in Europe . That being the case , it is to be hoped that the efforts that Harley is pursuing in Europe ( and Washington D . C .) will result in a speedy and comprehensive return to pre-2019 trade sanity . It would appear that someone , somewhere in Europe , needs to have their head extracted from their ass by bureaucrats with a rather more rational grasp of how 21st century Capitalism is supposed to work . Meanwhile , back at the day job , congratulations to Harley-Davidson ' s new management and employees at all levels for getting their financial wheels back on and turning again . In the webcast that followed the release of the Q1 results ( April 20 ), Harley , in the shape of newly minted CFO Gina Goetter , put a number on the dealer network reduction that has been taking place - stating that it is down by around 160 stores worldwide , but with maybe another 30 - 60 still likely to be ' let go '; internationally the number is down by some 30 %. She also confirmed that worldwide inventory was down by -48 % in Q1 versus the year-ago quarter , but was + 60 % compared to Q4 of 2020 . Along with MSRP
extract head from ass
increases and better price-point realization , inventory management has been the primary driver of the managed decline in Harley ' s addressable market opportunity - reversing the More Roads ' push ' principle of driving growth with unit volume . The ' push principle was simply a variation on the discredited ' Channel Stuffing ' that left Italy with nowhere to hide when the financial crisis hit them in 2008 . Zeitz says that dealer profitability is " up significantly ", saying that he has been hearing " nothing but positive dealer feedback ." Asked if he felt the inventory drawdown had been over-done , Zeitz is unrepentant . " Demand has strengthened ," he said . " We are running at maximum production capacity in Q2 and are looking at ways to increase further for the second half of the year ; MY2022 production will start in Q4 ." In truth , production capacity is itself way lower , of course . While total worldwide Q1 retail unit sales were up by + 9 %, international was down heavily , as Harley began pulling back from its less profitable markets . Asia Pacific was essentially flat (+ 1 %) on 5,800 units , with Latin America off by -58 % ( just 700 units sold ) and EMEA -36 % on 4,900 units ( down from 7,700 in Q1 2020 ), and as much to do with compliance issues as anything else . In a rare remark about Harley ' s relationship with QJ in China , Zeitz said that the partnership is still going ahead and while he wasn ' t in the market to discuss details , the implication is that reports surrounding at least one additional model there for this year appear likely to be true . In further new model terms , Zeitz confirmed that April 26th will see the first of what Harley is calling its new " Icons Collection " with the Electra Glide ' Revival '. Describing them as being " extraordinary adaptations of production motorcycles , which look to our storied past and bright future ," they will be produced only once , with each model limited to a serialized production run of 1,500 bikes . A new " Icons Collection " model will be released within each model year , with no more than two models being released in any given year . " Production will be enough to fill an allocation of approximately one per dealer globally , making each ' Icon ' a rare and highly coveted model for our riders , while increasing the overall desirability of our brand and drive the legacy of Harley-Davidson in our core segments ." The ' Hardwire ' program of focussed , " Selective Expansion " into profitable segments will continue in 2021 with further leveraging of the ' RevMax ' platform that will " redefine the premium middleweight Cruiser segment . We intend to increase the profitability of our offerings overall in the small to mid-sized Cruiser segment and change the competitive landscape ." After years of unmitigated bad news where Harley ' s share price is concerned , it is a pleasure to be able to report a 16 % bounce in the 48 hours following the release of these results and a near 30 % bounce in total since the start of the year . Hurrah !
Robin Bradley Co-owner / Editor-in-Chief robin @ dealer-world . com