H-D manufacturer cannot back up stock price with falling sales!

For some motorcycle manufacturers, 2022 was a booming year. Ducati and BMW had record bike sales years, whilst KTM also had a bumper year too.

Many of the other major brands also saw 2022 as a recovering year from the previous two years of lean times but their financial position is backed up by increasing sales figures. In fact for early 2023, the major brands that also sell smaller engined bikes are having record breaking times already.

Suzuki, Yamaha have hit highs in the far east. Honda in all their markets and both Indian and Chinese manufacturers are already seeing big bumps in orders and sales.

However there is an oddity in the marketplace! Harley-Davidson have seen slightly improved profits but with overall reduced sales from previous years and certainly not rebounded back to pre covid sales figures…however their stock price has seen a big rise in the last few month from a lowly near $30 per share to now reaching over $46 per share as per early 2023.

Even CEO Jochen Zeitz admits that the company’s financial position should not really be gauged on the stock price alone as that can easily go up and down due to external variables out of the control of the company. Their higher price point seems to have made the company more profitable but this also has to do with their other sales of non motorcycle products such as finance, accessories and clothing as well as branding and other financial positions.

Recently other companies have come under increasing scrutiny as their stock prices have been largely inflated due to some less than regulatory practices involving purchasing stock by shell companies owned by the same people, thus artificially keep the stock high. This enable the company to going to lending institutions and borrow money to invest and bolster the company further…but it is all founded upon a crumbling deck of cards…where have we heard this before?

Now, of course this is not to say that a company like Harley-Davidson is doing anything of the sort, however it lends itself to question the over inflation of the stock and the perception that the CEO is doing a great job in steering the company back to health. It also questions those who hang their hat on the notion that all is well in the H-D world just because they have had an increasing stock price for some months…but once again sales figures do not support such a stock rise.

So what of 2023? Well many have been perplexed by H-D January announcement and the continued high prices which is either making owner rider stick with older bikes or even move to other brands. The company were supposed to announce small displacement X350 and X500 for the global market but no official word on that but we know that it will not be for the American market.

The company has a real opportunity to make hay whilst the sun shines on a new business model but it seems the company are more interested in keeping the the lower unit sales at greater profit margins rather than selling cheaper bikes to appeal to more riders with reduced margins. Perhaps they cannot import these smaller bikes into the USA for any competitive price, hence why these are penciled for the Eastern markets alone?

2022 may have been a very good year for some brands and H-D being no exception, but the truth will out for the coming year and whether their strategy will be successful in the face of the oncoming global economic situation of high inflation and increasing lending rates. It might just be a bridge too far for the iconic American brand.

Leave a Reply