Harley Davidson Sales Dropping in Bad Economy

• click to rate

  Posted by Pete817 June 1, 2009 - Filed in Motorcycle News - 4,002 views
  

  I just read this story in the Milwaukee Journal Sentinel about Harley Davidson sales dropping.  I know are local Harley dealer is hurting.  They are doing more and more events at the sealership to bring in new (and existing) customers.  I have even heard about a few H-D dealerships around the country shutting down.
  

  
  

  Harley-Davidson motorcycle sales fell after a recent Sportster promotion ended, according to a Robert W. Baird & Co. analysis.

  In a survey of 75 Harley dealerships, Baird found that new bike sales were down between 20% and 25% from a year ago. Used motorcycle sales fell between 5% and 10%, the survey noted.

  Sixty-three percent of the Harley dealerships Baird surveyed in late April and May were selling bikes below the manufacturer's suggested retail price. That compared with just 36% in the same period a year ago.

  "Dealers with the extra large, overpriced stores are starting to panic and do just the opposite of what they need to do to make it through this mess. They are dropping their prices to no-profit levels, just making things worse," one Harley dealership was quoted as saying in the Baird survey.

  "This starts a vicious circle in which no dealership wins," another dealer said.

  Tighter consumer credit has added to the difficulties of selling motorcycles.

  Some of the dealerships said interest rates for people with good credit scores were too high at Harley-Davidson Financial Services, the motorcycle company's consumer lending arm.

  They complained about losing motorcycle financing business to credit unions.

  "All we are getting are the marginal-credit customers, which makes our portfolio with HDFS look bad," one dealer noted.

  To stimulate sales, many dealers said they wanted Harley-Davidson to launch more promotions.

  Harley's new motorcycle sales fell after the end of a recent promotion in which riders who bought a new Sportster, or who traded in their recently-purchased Sportster, could get the bike's original manufacturer's suggested retail price credited toward the purchase of a qualifying Harley Big Twin or VRSC motorcycle.

  The promotion was good in that it didn't diminish the brand's value, Baird analyst Craig Kennison said recently.

  "We would like to see more bikes sold at or above the MSRP," he noted in the analysis.

  A current promotion that runs through the end of June allows motorcyclists to test ride a Harley.

  It has received mixed reviews from dealers, with some saying it's not as popular as the Sportster trade-in program.

  "We have had to offer some in-store promotions for the first time in years," one dealership noted.

  The test-ride program could be successful, said Chaz Hastings, owner of Milwaukee Harley-Davidson.

  "It's like anything else. You get out of it what you put into it," Hastings said in an interview.

  Milwaukee Harley-Davidson has designated one motorcycle from each category of Harley's lineup as its demo bike. The test rides, on a designated course, are supervised by a dealership staff person who tags along on another bike.

  "I think it's starting to change the mind set of people because, for years, some dealerships didn't give test rides," Hastings said.

  The program attracts customers who have never ridden a Harley, said Todd Berlin, sales manager at Suburban Harley-Davidson in Thiensville.

  "I think it's more about planting a seed for the future than immediate sales," he said.

  Sixty-three percent of the surveyed dealers said sales were worse than expected in April and early May.

  "Sales programs are not enough to overcome buyer resistance," one dealer said.

  "Floor traffic is way, way down. People just are not coming in, and every dealer I have talked to says it's the same at their stores," another dealer said.

  In the Milwaukee area, although people are nervous about the economy they are still buying motorcycles, according to Hastings.

  "We are lucky in this area," he said. "There are good deals, but we haven't had anybody discounting heavily."

  For years, the North American heavyweight motorcycle market grew at double-digit rates thanks to low interest rates, a strong economy, a rising stock market and baby boomers' enthusiasm.

  Only 16% of the dealerships that Baird surveyed expected sales growth this year.

  "I would be more than happy to have the same sales as last year," said Berlin with Suburban Motors, adding that so far his business this year is comparable with 2008's.