American Motorcycle Dealer AMD 189 April 2015 | Page 4

Harley share price trend means a
Mark II Rushmore initiative is needed
AST month I wrote about the top management hand-over at
Harley-Davidson, with Keith Wandell retiring after five years as
"company doctor", and Matt Levatich taking the helm.
I generally try and avoid returning to the same or similar subject in two
consecutive editions, but two things have happened since I wrote last month's
piece to make some of my remarks appear more relevant than even I could have
anticipated.
The first concerns the findings of the latest AMD/Baird
Harley-Davidson authorized dealer quarterly survey.
Undertaken in January and February, one of the alarming
outcomes was to find that the softening of Harley new
model sales seen in the final quarter of 2014 does appear
to have continued into this year.
At least up to the end of February , which was the timing
of the survey, Baird themselves are quite rightly quick to
point out that with 50 percent of first quarter new model
sales always being in March, and with weather having been
a big issue from mid-November through to at least midFebruary, it may well be that Harley's next quarterly fiscals reveal a return to growth
in the United States when they are released in April.
However, whatever the reason, and regardless of how this continues to play
out, at a time when we are told that the domestic US economy is growing healthily,
when overall on-highway motorcycle sales in the US are growing (if still slowly),
and when Harley's primary cruiser and related sector rivals are also growing (not
least Polaris), then it is clearly a situation that we must all eye with some
apprehension.
Indeed, is it possible that some of Harley's missing sales are now sat in garages
across America wearing an Indian logo? Could we already be seeing the first blood
in renewed hostilities between two traditional American brands, whose historic
rivalry did much to characterize the first 50 years of the motorcycle industry in
America in the 20th century?
olaris have had some supply issues, so maybe it is too soon to start talking
about them taking sales from Milwaukee, but it is going to start happening at
some stage, and if Project Rushmore was designed to have long term impacts,
then surely winter 2014/15 is certainly too soon for it to be running out of legs?
The second factor, and one that I have been referencing several times in the
past 6 months, is the performance of Harley-Davidson's share price. At the time
of the reaction to Harley's full 2014 annual results, observers waited with baited
breath to see how the share price would respond. To the extent that this is a viable
and important litmus test for just how good those results were, then it is a test
that Harley has not passed.
At the time of writing (end of March 2015), Harleys' share price has been
hovering in the range of $59 to $61, with a three month low of $58.80, and a
high dating from before the 2014 fiscals were released of $66.
Given the nature of investor sentiment and mindsets, the share price

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performance since it neared $74 at the end of April last year is not the kind of
trend that sets Wall Street pulses racing.
OK, so the dividends remain strong, and thanks to Keith Wandell's "tough
love", the fundamentals are a lot more righteous than they were. Nonetheless,
while balance sheet strength is admirable, the return of an engineering based CEO
to the top job at Harley-Davidson has probably already come a year or 18 months
too late.
iven the nature of production lead times it is to be
hoped that when this summer's MY2016
announcement is made, one of Keith Wandell's parting
gifts will have been a strong offer that addresses moribund
Softail and (above all) Dyna demand, and injects further
new vigor into a Sportster offer that remains a triumph of
paint over power.
I can remember some 15 years ago pointing to Harley's
then modest Tourer sales as meaning that the FLs were
their 'Cinderella'. We even published one of our Pro-Guide
subject specific special editions in an attempt to bring
attention to the nascent aftermarket offerings for the Touring platform.
The rest is history, but having seen the entire industry lament the passing of the
FXR platform ever since Harley dropped it in favor of the Dyna back in 1993, maybe
the need to inject fresh excitement should see Harley bring back something that
fills the FXR void - at the very least Dyna sales numbers make the existing platform
look outdated.
If Harley think that the Street models are going to reinvent their entry level offer
in the US, then while they maybe good "outreach" wheels, in the long run they
will no more cut the mustard in terms of serious volumes than the V-Rods have
done.
While Harley-Davidson engineers, along with those from other manufacturers
and the aftermarket, have acknowledged that air cooled engines can still have a
future in a landscape characterized by ever-tightening emissions controls, maybe
the one big legacy and the biggest single long-term