By Dennis Chung
Harley-Davidson‘s much analyzed “Rewire” plan may be starting to see some positive results, as the company reported its strongest third quarter since 2015 despite decreasing sales volume. It will take a while longer to see if the plan and its eventual follow-up, the Hardwire plan, will pay off in the long run, but for the short term, the Rewire has succeeded in reducing costs.
According to Harley-Davidson’s third quarter report, revenues declined by 8% to $1.166 billion, but net income increased 39% to $120 million from the $87 million reported in the same period of 2019. By this metric, this was Harley-Davidson’s best third quarter since it saw a net income of $140 million in 2015.
Worldwide retail sales declined by 8.1%, but that is a marked improvement over the first two quarters, as sales for the year to date are down 18.1%. The sales decline has slowed in most markets, with Harley-Davidson even seeing an increase in Europe, where retail sales rose by 6.7%.
Obviously, the COVID-19 pandemic had a large impact on sales, as did the Rewire’s efforts to reduce production and clear out existing inventory. Harley-Davidson says worldwide inventory is down 19,300 motorcycles (-30%) compared to the third quarter of 2019. The reduced supply and the elimination of discounting and sales promotions resulted in more motorcycles selling at full MSRP in the U.S. At the same time, the average resale price of Harley-Davidsons increased, narrowing the price gap between new and used motorcycles.
In previous years, Harley-Davidson would have announced its new model lineup by now. Starting with the 2021 model year, new models will be announced closer to the start of the spring riding season.
As part of the Rewire plan, Harley-Davidson shifted the introduction of new model announcements from August to early in …read more