Harley-Davidson (HOG) reported retail sales were down 9.3% YOY in Q2 ’17 amidst an industry wide slowdown; as baby boomers, historically the company’s biggest customers, aren’t buying new bikes. To exacerbate the issue, boomers are selling their old HOG bikes, which is driving prices down within the used market. As a result, the used Harley market is booming, with pre-owned HOGs selling at 2.5x the rate of new ones. The growth within the used market reflects the strength of the Harley-Davidson brand, but those sales obviously don’t impact the company’s bottom line.
Howie Long-Short: Harley is rolling out 17 new models in 2018, 9 of which are under $12,000. Smart. Millennials want to ride HOGs, they just want cheaper ones.
Fan Marino: Harley envisions adding 2 million new riders in the U.S., by 2027. Their riding schools turn out 65,000 new riders/year. Howie is the mathematician, but 65,000/year over 10 years is only 650,000. Where are the other 1.35 million people coming from?