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Harley © Photodisc/Superstock

Extra6/10/2009 2:15 PM ET

More trouble for Harley-Davidson

The motorcycle manufacturer's sales hit a wall this spring, deepening the gloom enveloping the iconic American company.

By Kim Peterson
MSN Money

Spring is the most important time of the year for Harley-Davidson (HOG, news, msgs). It sells about a third of its bikes in April, May and June, analysts say, as the weather warms up and bikers itch to hit the road.

After the horrible year Harley has had, I can only imagine the company was hopeful for a miracle this spring. But that didn't happen. Analysts at UBS say retail sales at Harley plummeted 35% in April and May, according to Barron's.

And so Harley's problems continue. Americans still love their motorcycles, they just don't love brand-new Harleys. Here are the biggest problems the company faces:

  • The used motorcycle market does a brisk business.
  • Harley buyers are getting older. Only 12% of buyers are under 35.
  • Harley offered no-money-down financing to subprime buyers who either couldn't or wouldn't repay their loans. As a result, its financing arm is in trouble with delinquent loans and credit rating concerns.
  • The company has cut back shipments to retailers in hopes of bringing down inventory. Harley also had to close plants, lay off employees and cut production this year.

The share price has been sliding since the beginning of May.

Last year at this time, the share price was nearly $40. It plunged below $9 in March, bounced back above $20 in May, and these days is lingering in the $15 to $17 range.

Friday, Citigroup cut its rating on Harley to sell. Barron's thinks the stock may have topped out in May.

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Fund data provided by Morningstar, Inc. © 2009. All rights reserved.
StockScouter data provided by Gradient Analytics, Inc.
Quotes supplied by Interactive Data.
MSN Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.
 
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Wednesday, June 10, 2009 1:34:01 PM

I looked to buy a new HD in Wichita, KS recently.  The dealer added freight, set-up, and security system to the price ($920.00) and offered a $500 incentive to purchase accessories, etc. in their store.  They wouldn't work with me on the price of the bike.  The sales persons must have thought I was not a serious buyer and didn't try to offer a test ride and/or close the sale.  I bought an '02 Dyna Low-Rider from an individual with 5,397 miles on it (pristine condition) for $9,000.00 and paid cash for it!  Guess the dealer wasn't too interested in moving new bikes!

Wednesday, June 10, 2009 1:38:18 PM
I love Harley's and have owned several. This is an American company that uses American labor. As with the troubled auto industry, the consumer should buy its products from companies which keep the money within our shores. Buy American! And save iconic name brands like Harley-Davidson.
Wednesday, June 10, 2009 1:54:40 PM
Love Harley, we have had several over the years and wouldn't think of any other kind of bike.  Definatly buy American, and who can resist the sound of a Harley.
Wednesday, June 10, 2009 1:57:37 PM
I would like very much to own a Harley but cannot afford the initial price or the cost for maintinance. I've owned about 13 bikes so far and enjoy riding very much but the bikes I've ridden are cheaper but perform as well if not better in some areas.  I would really like to be one of the in hog crowd but unless something changes, I'll still be riding the competition and wishing........................Sad
Wednesday, June 10, 2009 2:00:36 PM
Try a different dealer American 38. My dealer in Madison, WI is great and will bend over backwards to get/keep you happy.
Wednesday, June 10, 2009 2:00:49 PM
This is a shame. I ride Harleys, but they are expensive and do not appeal to the younger buyers. Sportbikes are selling to the 30 and under crowd and also some of us veteran riders. I bought a Suzuki Hayabusa last year because Harley/ Buell did not offer anything close to it. Major redo time HD!
Wednesday, June 10, 2009 2:02:41 PM
I haven't ridden in 20 years. Have been considering a new 883xl.  The price is right,but when the dealer adds on freight, set up and security , I backed away. As bad as the economy is right now, If you have a buyer thats ready, I' d eat the fees and push some bikes
Wednesday, June 10, 2009 2:03:06 PM

Used to be you bought a Harley if you wanted to show a rebellious side. Now only accountants and lawyers can afford 'em and typically the only thing fatter than a FatBob tank is the rider. The sound of a V-twin can be great, but straight pipes blasted in a quiet neighborhood  label the rider as a jerk.  Love that they are an American bike. Just wish they could consistently build a bike with the same reliability and cost:benefit tradeoff as a Honda.

Wednesday, June 10, 2009 2:05:35 PM

I rode Harleys for years,had a Harley shop, for about 3 years, but now I ride a YAMAHA Royal Star Venture & A Royal Star Tour Classic, I got tired of working on that Vibratory that had HARLEY DAVIDSON written on the Gas tank, Harley has a Quality Control Problem and every time I would show and tell the Factory Rep, He would laugh and say we are selling all  we can make now, so why fix it.

    So now let them Reap what they have sown, SUFFER, Stupid, You did it to yourself, so you can`t blame it on anything or anyone else.

Wednesday, June 10, 2009 2:10:55 PM
Over the last few years, I've purchased 2 new bikes from a Harley dealer that sells their bikes at MSRP.  I was satisfied with that because some of the dealers in the area were selling above MSRP.  Now, one of those dealers that used to sell above MSRP is sending out emails that they're selling all new Harley's at MSRP, as if that is really something special.  I think they're going to have to do better than that now to attract new business.  Love the bikes, but I think they're going to have to be willing to wheel and deal a bit more on the sticker price, just like the car dealers have had to do.
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