Harley-Davidson ships 70,831 units in first quarter, but retail sales down

2017 Electra Glide Ultra Classic (Image: Harley-Davidson)

MILWAUKEE, WI – Harley-Davidson shipped 70,831 units worldwide in first-quarter 2017, on track with its forecast that it would ship between 66,000 and 71,000 units, but maintains its 2017 full-year forecast that shipments will be “flat to down modestly.” U.S. and Canadian retail sales were down compared to this time last year, the company reported.

“First-quarter U.S. retail sales were in line with our projections, and we remain confident in our full-year plan, despite international retail sales being down in the first quarter,” said Matt Levatich, CEO, in a statement issued by H-D. “We are very pleased with our continued growth in U.S. market share and the progress our U.S. dealers made in reducing their inventory of 2016 motorcycles in the quarter.”

Worldwide, shipments were down 14.7 percent from this time last year, when it shipped 83,036 units. In the U.S. market, The Motor Co. shipped 45,784 units, down from 57,635 this time last year. U.S. shipments accounted for 64.6 percent of total units shipped in first quarter, down from 69.4 percent this time last year. However, Harley-Davidson said it remains on-target with the 2017 full-year plan.

Reuters earlier this week revealed that The Motor Co. was offering rebates on 2016 units to U.S. dealers, as an incentive for them to clear inventory in preparation for receiving 2017 model-year motorcycles. In its Tuesday earnings call, Harley-Davidson executives said U.S. dealer inventory levels are now “well positioned” for the selling season beginning in second quarter.

The Motor Co. said it expects to ship approximately 80,000 to 85,000 motorcycles worldwide in Q2.

Worldwide, Q1 retail sales fell 4.2 percent compared to the same period in 2016. U.S. sales were down 5.7 percent, Canadian sales dropped 4.4 percent, and international sales decreased 1.8 percent despite a bump in sales in the Latin American market. Still, the company added seven non-North American Dealers in first quarter and plans to add 150 to 200 new Dealers internationally by 2020.

Harley-Davidson said its U.S. market share for the first quarter was 51.3 percent for the 601cc-and-higher segment, an improvement from Q1 2016.

For first quarter, Harley-Davidson posted 1.5 billion in revenue (down 14.2 percent from Q1 2016) and 186.4 million in net income (down 25.6 percent from Q1 2016).

First quarter retail motorcycle sales (vs. Q1 2016)
  • United States: 33,316 (35,326, down 5.7 percent)
  • Canada: 2,361 (2,470; down 4.4 percent)
  • Latin America: 2,342 (1,886; up 24.2 percent)
  • Europe/Middle East/Africa (EMEA): 10,167 (10,210; down 0.4 percent)
  • Asia-Pacific: 6,863 (7,566; down 9.3 percent)
  • Worldwide: 55,049 (57,458; down 4.2 percent)

“As we expected, U.S. sales were adversely impacted by soft industry sales and the company’s decision to reduce shipments of model-year 2017 motorcycles,” Harley-Davidson reported. “This decision helped dealers focus on selling down their model year 2016 retail inventory.” Soft used-vehicle prices and weaknesses in oil-dependent regions of the country were cited as factors.

Worldwide, motorcycle revenue fell 16.5 percent vs. Q1 2016, P&A dropped 8 percent, and General Merchandise was down 20.9 percent. Financial Services revenue dropped slightly (by 0.1 percent) vs. the same period last year, but operating income was down 6.6 percent, due to a higher provision for credit losses, the company said.

Worldwide Segment Results (vs. Q1 2016)
  • Motorcycles: $1,099.7 billion ($1,317.6 billion, down 16.5 percent)
  • P&A: $169 million ($183.7 million, down 8 percent)
  • General Merchandise: $55.8 million ($70.6 million, down 20.9 percent)
  • Gross Margin: 35.9 percent (37.4 percent, down 1.5 points)
  • Operating Income: $238.8 million ($332.5 million, down 28.2 percent)
  • Operating Margin: 18 percent (21.1 percent, down 3.1 points)
Financial Services Segment Results (vs. Q1 2016)
  • Financial Services Revenue: $173.2 million ($173.4 million, down 0.1 percent)
  • Operating Income: $52.6 million ($56.4 million, down 6.6 percent)
  • 30+ Day Delinquencies: 3.17 percent (2.88 percent in Q1 2016, 2.64 percent in Q1 2015)

Average motorcycle revenue per unit, year on year, dropped $342 in first quarter due to the “unfavorable mix” of inventory, the company stated.

Harley-Davidson reported, worldwide, touring bikes accounted for 41 percent of total Q1 shipments, down from 46.4 percent in Q1 2016 (again, related to reduced shipments in the U.S. to clear 2016 inventory, according to the company), cruisers made up 35.5 percent (vs. 32.4 percent last year) and Sportster/Street motorcycles were 23.4 percent of the mix, vs. 21.2 percent last year.

Harley-Davidson shares (HOG) fell 6 percent in pre-market trade on Tuesday after the company missed analysts’ revenue expectations.


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