Harley-Davidson has instructed its dealers not to talk about how sales have been throughout the recession, but the news that 36 dealerships have closed in the past year, and more closures are expected in 2011, speaks for itself on how sales have been. On a conference call with analysts CFO John Olin said, “This contraction was expected and in-line with our desire to modestly consolidate our U.S. dealer network in response to lower overall volume since the economic downturn took hold,” which is a very glossed over way of saying that American brand has become too bloated over the past years, and needs to go on a diet.
Harley-Davidson expects to ship between 221,000 & 228,000 motorcycles worldwide in 2011, which is up 8% over last year’s figure, but still pales in comparison to the numbers the Milwaukee brand was posting before the economic collapse (303,479 in 2008). Since 2006, sales at Harley-Davdison have continued to slide, but the most dramatic affect was in 2010, where sales were down 30% compared to before the recession (over 36% in the domestic market).
The operative word being used in Milwaukee right now is “restructuring”, but we imagine there’s some heavy face to palm action over the considerable loss of purchases in the cruiser market. With sales already on the decline over the past five years, there’s a serious question as to whether the recession has just kick-started what analysts have been seeing for the past two years: the brand is on its way out.
While Harley-Davidson is optimistic about this coming year, and rebuttals talk of its aging demographic with factoids like “we hold the #1 share position with young adults,” the fact remains that the core demographic, the preponderance of Harley-Davidson purchasers, are still coming from the Baby Boomer generation. Suggesting that Harley-Davidson is effectively catering to riders in their 20’s & 30’s is misguided at best, since a company that accounts for roughly half of the domestic motorcycle market should lead in sales over every demographic because of sheer volume alone.
The call confirms that the attitude is the same in Milwaukee, as the company outwardly continues to put lipstick on a pig (or is it hog?), while quietly pandemonium surely ensues behind closed doors, as Harley-Davidson executives continue to bang their heads over how they’re going to paint themselves out of this corner.