Rough Ride: Harley-Davidson's plummeting share price and the search for stability
Rough Ride: Harley-Davidson's plummeting share price and the search for stability
How the falling share price creates challenges for Harley-Davidson!
Harley-Davidson has published its Quarterly figures veröffentlicht, woraufhin der Aktienkurs deutlich fiel. Der Nettogewinn sank um etwa 24 Prozent auf 199 Millionen Dollar. Aktuell hat sich der Kurs bei ca. 27,-€ stabilisiert, nachdem er in den letzten drei Monaten konstant bei etwa 31,-€ lag, was in den letzten Jahren ein häufiges Kursniveau darstellte. Als der Kurs im März 2020 bei 15,-€ stand, wurde Jochen Zeitz zum CEO von Harley-Davidson ernannt, um die Aufgabe zu übernehmen, das Unternehmen zurück in die Profitabilität zu führen.
Share price highs and lows under Jochen Zeitz
During Jochen Zeitz's tenure, the share price reached a high of €45 in October 2022, but then fell again slightly, a trend that continued until the presentation of the new 2023 models in February 2023. After the presentation, a renewed rally set in and the price briefly approached the €45 mark again. However, at the end of February 2023, the tide suddenly turned on the stock market and the share price fell.
Investor valuation and change of strategy: Harley-Davidson's balancing act in a challenging market
And now, as the year draws to a close, it seems investors are taking stock of the impact of global layoffs, divestitures and other strategy changes, especially if profits don't increase. Harley-Davidson implemented price increases just this spring aimed at improving the company's profitability in a challenging market environment. These price adjustments are a reaction to rising production costs and the desire to position the brand more strongly in the market as a premium supplier. However, the reaction of the market and investors to this strategy has been mixed.
Price increases: Risk and opportunity for Harley-Davidson
In an uncertain economic environment, higher prices for Harley-Davidson motorcycles could deter potential buyers, which could have a negative impact on sales and market share. On the other hand, these price increases have the potential to strengthen the company's profit margins and contribute to its financial stability in difficult times.“
Investor perspective: Impact of price increases on Harley-Davidson
Investors are particularly interested in seeing how the price increases affect Harley-Davidson's financial performance. They are keeping a close eye on how the company's decisions affect its share price and long-term competitiveness.
Strategic realignment: Harley-Davidson's path to financial stabilization
The price adjustments were one of many strategies Harley-Davidson considered to correct its financial course and position the company for the future. Global layoffs and the sale of real estate were also part of a broader plan to optimize the company's cost structure and focus on core competencies.
As Harley-Davidson navigates its way through these changes, the question remains as to how successful these measures will be in improving the company's long-term financial health and creating value for shareholders.
Serial 1 has now been sold to LEV Manufacturing
Harley-Davidson hat seine E-Bike-Sparte im November 2023 an das US-Unternehmen LEV Manufacturing verkauft. In Zusammenarbeit mit der Investmentfirma Lave VC plant das Unternehmen, die E-Bikes zu günstigeren Preisen vorerst auf dem US-Markt anzubieten. Zuvor wurden die Serial 1 E-Bikes ausschließlich über Harley-Davidson authorized dealer vertrieben, wobei die Händler im Vergleich zum allgemeinen E-Bike Markt nur geringe Margen erzielten.
This made the sale less attractive for them. In addition, this division is not part of Harley-Davidson's core business. It is not yet clear whether the Harley-Davidson lettering under license is included in the package, or whether we will only see the Serial 1 logo without the Harley-Davidson lettering in the future. It may well be that Harley-Davidson has used the funds to buy back its own shares to cause a slight turnaround in the share price. If investors see the Serial 1 sale as a positive signal, it could create a buying mood in the market.
LiveWire electric motorcycle development and change of CEO
At LiveWire, the outsourced company in which Harley-Davidson holds 74% of the shares, the new electric motorcycles bear only the name ‚LiveWire designations‘ and not the Harley-Davidson lettering. Surprisingly, however, there are still some hidden components with the Harley-Davidson Bar&Shield logo on the new LiveWire S2 Del Mar, for example. It was not until June 12, 2023 that Jochen Zeitz handed over the reins to Karim Donnez, who has been the new CEO of LiveWire ever since. This means that there have already been numerous gear changes in Harley-Davidson's transmission throughout the year, but next year will show whether they are now in the right gear.
With the new CVO Street Glide and CVO Road Glide models, we are already seeing attempts to find new pricing strategies!
The company aims to achieve higher profits by offering different paint options for the premium models. The CVO Street Glide is available ex works in Palladium Silver for €45,495. However, if you choose the same model in the more elaborate Whiskey Neat / Raven Metallic paint finish, you will pay an additional €7,140. With this strategy, Harley-Davidson has succeeded in keeping the entry-level costs for the premium class relatively low and still has a higher range at the top.
Market gap in the low-price segment: lost opportunities for Harley-Davidson
An ongoing problem is the lack of supply in the lower price segment in which the Evolution Sportster models were previously positioned. Not only are sales of the former 8 or so models lost here, but also the downstream business, such as merchandise, accessories and often also the financial services business. After the Sportster, a transition to the Softail / Cruiser class was often common.
Loss of entry-level models: A setback for Harley-Davidson and customers
Even if these models did not generate much profit for the company, they made it easier for buyers to get started. Over the years, customers had paid off their models or created a reusable value. With these very price-stable models, end consumers hardly suffered any losses, but rather created value that they could bring in when buying the next model. This turnover is now missing internationally!
The actual Sportster successors with the 975 and 1250 Revolution Max engine cannot really fill this gap. They have not been competitive in terms of price since the spring, which has led to prices being lowered at the end of the year.
The Sportster S finds her happiness now (as of 11/23) from 17.245€ (Spring 2023 / €18,495) rather with the former FXDR and V-Rod riders. The Sportster Nightster now comes from 14.905,- € (spring 2023 / € 16,095)and the Nightster Special was reduced to € 15,985 (Spring 2023 / €17,595) lowered. The price-performance ratio was not really optimal in the spring, but the market principle of supply and demand seems to be working, even if these are rather unusual actions for the Harley-Davidson brand, but we are also living in unusual times at the moment.
Trade-in campaign: adjustment of the pricing strategy at Harley-Davidson
The highly sought-after Street Bob was normally available until the fall from a price of €19,495 ex works. Until 30.09.23, we ran a special trade-in campaign in our country, offering a trade-in bonus of up to €2,400 on selected models, and the current ex-works list price is €17,695.
According to information from Harleysite, this campaign was very successful and many bike owners took advantage of the offer. This indicates that the previous price range may have been set too high. Some Harley-Davidson dealers also followed up with their own promotions immediately after the campaign, to which Harley-Davidson itself presumably responded.
Sale of the 120th Anniversary Collection
The Harley-Davidson CVO Road Glide 120th Anniversary Limited has just been hit very hard. While it is listed on the official Harley-Davidson website currently still with a price of € 59,995 (as at 26.11.2023) is listed ex works, I have just this week noticed significantly lower prices at some Harley-Davidson dealerships - up to € 10,000 below the list price.
This price reduction could indicate that even by Harley-Davidson standards the original price is perceived as very high, or to bring the exclusive special model limited to 1500 models to the customer this year. I see the 120th Anniversary CVO as one of the reasons why we won't be getting any new CVO Limited models in 2024, at least I haven't heard anything about it yet.
The Anniversary paint kit on the CVO is really something to behold, the elaborate design with the eagle that runs across the entire bike is really not commonplace. But the beautiful red metallic of the other 120th Anniversary models is also extremely effective, especially in sunlight. There are only a few of the limited 120th Anniversary models left.
Special 120th Anniversary merchandise offers for the Open House
The 120th Anniversary merchandise should be out of stock and make room for the new season. Some authorized Harley-Davidson dealers have already made Open House in December, special offers with very unusual discounts have been announced.
Presenting new products only in January may not have been the best decision
In the past, the new models were often presented for the first time at Lake Faak, whereupon many customers decided immediately and promptly signed contracts for the new models. They were usually delivered in time for the new season. Not only that, but often conversions had already been completed. This also affects suppliers, such as manufacturers of exhaust systems, who first need the vehicles for measurements and tuning before they can start production. Business shifts to the rear, or does not take place at all.
If you only have around 4 months to sell an anniversary model, for example, time is running out. If the customer could have taken a look at it as early as 2022, the desire for it might be a little more intense, especially if the matching merchandise is sold during the Christmas period and is already under the Christmas tree.
They completely missed out on this last year, and now the price level of the 120th Anniversary Portfolio is completely heading towards the bargain market. We haven't had that before either, so some people will be happy to be able to pick up a bargain now.
What are the Harley-Davidson prospects for 2024?
After the leak of the CVO models in spring, access to information is now more difficult. The leak has caused a lot of confusion at the manufacturer, the really very bad photos of the leaked CVO models, which particularly affected the CVO Road Glide, have stirred up the community. It has not been confirmed, but from what we hear, the presentation of the CVO models has been brought forward considerably in order to create facts.
New design and engine innovations: Harley-Davidson's outlook for 2024
Nevertheless, some details about the 2024 model year are already known, for example Harley-Davidson has ushered in a new era with the new design and the new 121ci VVT engine. It is very likely that we will see elements of this in the models Street Glide Special 2024 and Road Glide Special 2024 will meet again.
Unclear details, clear priorities: Focus on top-selling models in 2024
However, the details of whether the Skyline OS infotainment will be adopted and how the implementation around the engine will take place are still open. The focus in 2024 will be on these two important and high-selling models, which will play a key role in 2024.
Strategic focus and investor confidence: Challenges for Zeitz in the transition to 2024
It seems rather unlikely that any changes will be made to the large Limited models in 2024, apart from the paint kits, otherwise they would not have launched the 120th Anniversary CVO Harley-Davidson Road Glide Limited this year. It is the most expensive limited edition model in the Harley-Davidson range to date.
Harley-Davidson will focus on the Grand America Tourer Special versions, and if these are well received by customers, the financial result will be positively affected, but not until 2024. It is therefore clear that it will not be an easy turn of the year for Jochen Zeitz if he loses the confidence of investors now and the share price continues to fall.
Long-term prospects: LiveWire's role in Harley-Davidson's electric strategy for 2024
In the long term, it could make sense to LiveWire because it is already foreseeable that in 12 years at the latest the registration of an internal combustion engine could become problematic, unless a political turnaround would prevent this. But a LiveWire is not a Harley-Davidson LiveWire, so it is no longer a real topic on the Harley site, that remains reserved for the Harley-Davidson LiveWire, of which there are still a few models. LiveWire has announced that the S2 Del Mar will be delivered in Germany in quarter 01/2024, which ultimately means that the electric division will generate revenue in 2024.
Critical months for the CEO: persuasion without unveiling the 2024 model strategy?
Conclusion: It will be a tough few months for the CEO; the question will be whether he can convince investors once again without revealing the model strategy for 2024. It would probably be better for him and the European market in particular if he could pull out this ace in November and present the new models directly to dealers and customers in January / February.
Text & picture credits: Harley-Davidson & Harleysite
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