Harley-Davidson – 2005

Forest David: Francis Marion University

A. Case Abstract

Harley-Davidson is a comprehensive business policy and strategic

management case that includes the company’s year-end 2004 financial statements,
competitor information, and more. The case time setting is the year 2004.
Sufficient internal and external data are provided to enable students to evaluate
current strategies and recommend a three-year strategic plan for the company.
Headquartered in Milwaukee, Wisconsin, Harley-Davidson’s common stock is
publicly traded on the New York Stock Exchange under the ticker symbol HDI.

There is something about the power of a Harley motorcycle that intrigues

both men and women. The way this company connects with its customers is
extraordinary. The Harley name and logo epitomize symbols of American
individualism and a bit of American rebelliousness. Many customers have the
famous Harley bar & shield logo tattooed on his or her arm. The company
sponsors rides and rallies everywhere from Daytona to Houston and in
international cities like Saint-Tropez, Sungwoo, and Lillehammer. From Mexico
to Mount Fuji and Austria to Australia, Harley riders get together at events in
more than 100 countries. For some riders, however, the thrill may just be the back
roads and riding alone on a lazy Saturday afternoon. The distinctive sound of a
Harley-Davidson roars. Even the Harley Web site roars. No other motorcycle has
this sound. The sound, however, is annoying and obnoxious to many
noncustomers.

B. Vision Statement (proposed)

To be recognized as the best motorcycle company in the world.

C. Mission Statement (proposed)

Harley-Davidson is committed to providing the highest quality products and

financial services to men and women worldwide (1, 3). The Harley name stands
for customer satisfaction (7) and we would like all Harley customers to relay their
satisfaction to all motorcycle dreamers. Harley-Davidson uses advanced
technology to produce the superior motorcycles (4). Our philosophy is to conduct
business with utmost integrity while serving our customers, employees, and
shareholders (6). We appreciate the hard work of our employees (9). We push
excellence though our Harley-Davidson bar and shield logo and the Harley

144
 Owners Group (HOG) (7). We continue to do our part in supporting all
environmental laws in every country we do business (8). Harley-Davidson
intends to stay committed and determined.

1. Customer
2. Product or services
3. Markets
4. Technology
5. Concern for survival, growth, profitability
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees

Mission Statement (actual)

We fulfill dreams through the experience of motorcycling, by providing to

motorcyclists and to the general public an expanding line of motorcycles and
branded products and services in selected market segments.

D. External Audit

Opportunities

1. The international heavyweight motorcycle market is growing and is now

larger than the US heavyweight market
2. European demand for Harleys is the highest in the international market and
represents the single largest motorcycle market in the world.
3. Gas prices are high; motorcycles get good gas mileage.
4. Women and younger riders are increasingly becoming interested in bikes.
5. Alliances with Ford Motor Company or other automobile manufacturers are
possible.
6. Industry registrations of domestic heavyweight motorcycles are increasing.
7. Market share increasing in Europe and Asia for the last two years.
8. Increasing demand in US markets for bikes.
9. Customers value quality parts.

Threats

1. Harley’s ongoing capacity restraints has cut supply and resulted in a

loss in domestic market share in recent years.
2. Harley’s average buying age is 42 years old and increasing.
3. The European Union’s motorcycles noise standards are more
stringent than those of Environmental Protection Agencies (EPA).

145
 4. Some competitors of Harley-Davidson have larger financial and
marketing resources and are more diversified.
5. Environmental protection laws.
6. Shifts in buyers’ needs and tastes.
7. Customer loyalty in European and Asian countries low for American
products.
8. Costs could become expensive from importing.
9. Perception of Harleys among noncyclers is often not good.

Competitive Profile Matrix

Harley Honda Yamaha

Critical Success Factors Weight Rating Weighted Rating Weighted Rating Weighted
Score Score Score
Advertising 0.20 4 0.80 2 0.40 2 0.40
Product Quality 0.15 4 0.60 3 0.45 3 0.45
Price Competitiveness 0.10 2 0.20 2 0.20 2 0.20
Management 0.10 3 0.30 2 0.20 2 0.20
Financial Position 0.15 4 0.60 3 0.45 2 0.30
Customer Loyalty 0.10 3 0.30 2 0.20 2 0.20
Global Expansion 0.15 2 0.30 2 0.30 2 0.30
Market Share 0.05 3 0.15 2 0.10 2 0.10
Total 1.00 3.25 2.30 2.15

EFE Matrix

Key External Factors Weight Rating Weighted Score

Opportunities
1. The international heavyweight market is growing and is now larger than 0.150 2 0.300
the US heavyweight market
2. The European demand for Harley-Davidson is the highest in the 0.150 2 0.300
international market and represents the single largest motorcycle market in
the world
3. Gas prices are high. 0.100 2 0.200
4. Women and younger riders are increasingly becoming interested in 0.100 4 0.400
bikes.
5. Alliances with Ford Motor Company or other automobile manufacturers 0.025 1 0.025
are possible.
6. Industry registrations of domestic heavyweight motorcycles are 0.050 3 0.150
increasing.
7. Market share increasing in Europe and Asia for the last two years. 0.025 3 0.075
8. Increasing demand in US markets for bikes. 0.025 4 0.100
9. Customers value quality parts. 0.025 3 0.075
Threats
1. Harley’s ongoing capacity restraints has cut supply and resulted in a 0.100 2 0.200
loss in domestic market share in recent years.
2. Harley’s average buying age is 42 years old and increasing. 0.050 2 0.100
3. The European Union’s motorcycles noise standards are more stringent 0.050 2 0.100
than those of Environmental Protection Agencies in the U.S and increased
environmental stand.

146
4. Some competitors of Harley-Davidson have larger financial and 0.025 1 0.025
marketing resources and they are more diversified.
5. Environmental protection laws. 0.025 3 0.075
6. Shifts in buyers needs and tastes. 0.025 3 0.075
7. Customer loyalty in European and Asian countries. 0.025 2 0.050
8. Costs could become expensive from international importing. 0.025 2 0.050
9. Perception of Harleys among noncyclers is often not good 0.025 3 0.075
Total 1.00 2.38

E. Internal Audit

Strengths

1. Net income in 2004 was $889 million, which was 53 percent higher than in
2002.
2. Strong relationships built on trust and respect with suppliers and dealers.
3. The standard and performance segments of Harley-Davidson make up 70% of
the European heavyweight motorcycle market.
4. Harley-Davidson operates in two principal business segments: Motorcycles
and Related Products, and Financial Services.
5. Harley-Davidson is the only major American motorcycle manufacturer.
6. Strong brand name.
7. The company has continued to focus its capital expenditures on capacity
expansion at its new and previously existing facilities.
8. The Harley Owner’s Group (HOG) is the industry’s largest company
sponsored motorcycle enthusiast organization, which currently has
approximately 430,000 members worldwide.
9. Harley-Davidson offers a custom segment that allows owners the opportunity
to customize their bikes, this division makes up the highest number of Harley-
Davidsons sold.
10. Harley-Davidson has a strong marketing department, which sponsors and
participates in all major motorcycle consumer shows and rallies.

Weaknesses

1. Harley-Davidson does not emphasize price in its product.

2. Harley-Davidson has had difficulty gaining market shore in some European
countries.
3. Registrations for the Asia/Pacific market are decreasing.
4. Facing ongoing capacity constraints.
5. Only a small portion of the company's annual capital expenditures relate to
equipment, which has the sole purpose of meeting environmental compliance
obligations.
6. The top Board of Directors for Harley-Davidson are all men.
7. The leadership strategy council is comprised completely of vice presidents.
8. Difficult to attract and retain talented employees.
9. Lack of opportunity for advancement.

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 10. Loss of benefits.
11.

Financial Ratio Analysis (January 2006)

Growth Rates % Harley Industry SP-500

Sales (Qtr vs year ago qtr) 10.00 2.40 14.20
Net Income (YTD vs YTD) 7.20 (13.10) 15.90
Net Income (Qtr vs year ago qtr) 15.70 8.80 15.10
Sales (5-Year Annual Avg.) 12.95 8.04 4.78
Net Income (5-Year Annual Avg.) 24.76 14.84 11.04
Dividends (5-Year Annual Avg.) 34.98 12.04 4.61
Price Ratios
Current P/E Ratio 16.1 20.7 19.0
P/E Ratio 5-Year High 44.8 57.5 64.8
P/E Ratio 5-Year Low 14.0 16.0 17.4
Price/Sales Ratio 2.78 1.33 1.53
Price/Book Value 5.07 4.24 2.93
Price/Cash Flow Ratio 12.60 14.60 12.50
Profit Margins
Gross Margin 42.1 24.9 47.3
Pre-Tax Margin 27.9 12.0 12.1
Net Profit Margin 18.0 6.7 8.3
5Yr Gross Margin (5-Year Avg.) 40.1 25.5 47.3
5Yr PreTax Margin (5-Year Avg.) 23.3 9.5 9.4
5Yr Net Profit Margin (5-Year Avg.) 15.1 5.9 5.9
Financial Condition
Debt/Equity Ratio 0.27 0.25 1.07
Current Ratio 3.1 2.1 1.4
Quick Ratio 2.7 1.3 0.9
Interest Coverage 65.0 35.9 3.5
Leverage Ratio 1.6 1.9 5.8
Book Value/Share 10.42 8.66 13.21
Investment Returns %
Return On Equity 32.8 21.2 15.9
Return On Assets 20.0 11.3 2.8
Return On Capital 25.8 17.0 7.7
Return On Equity (5-Year Avg.) 26.1 18.3 12.0
Return On Assets (5-Year Avg.) 15.2 9.6 2.0
Return On Capital (5-Year Avg.) 21.3 15.7 5.7
Management Efficiency
Income/Employee 105,000 20,000 30,000
Revenue/Employee 587,000 295,000 366,000
Receivable Turnover 4.3 8.0 7.7
Inventory Turnover 12.9 7.1 7.8
Asset Turnover 1.1 1.7 0.4
Adapted from www.cnbc.com

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 Date Avg. P/E Price/Sales Price/Book Net Profit Margin (%)
12/04 18.20 3.57 5.55 17.7
12/03 17.50 3.10 4.85 16.5
12/02 26.30 3.42 6.26 14.2
12/01 30.80 4.89 9.36 13.0
12/00 35.50 4.13 8.55 12.0
Adapted from www.cnbc.com

Date Book Value/ Share Debt/Equity ROE (%) ROA (%) Interest Coverage
12/04 $10.94 0.25 27.6 16.2 61.8
12/03 $9.81 0.23 25.7 15.5 67.3
12/02 $7.38 0.17 26.0 15.0 59.7
12/01 $5.80 0.22 24.9 14.0 NA
12/00 $4.65 0.25 24.7 14.3 NA
Adapted from www.cnbc.com

Net Worth Analysis (year-end 2004 in millions)

1. Stockholders’ Equity $3,218 $ 3,218

2. Net income x 5 = $889 x 5 $ 4,445
3. Share price = $52 /EPS = $3.28 x Net Income $889 $ 14,093
4. Number of Shares Outstanding X Share Price = 274 x $52 $ 14,248
Method Average $ 9,001

IFE Matrix

Key Internal Factors Weight Rating Weighted

Score
Strengths
1. Net income in 2004 was $889 million, which was 53 0.075 4 0.300
percent higher than in 2002.
2. Strong relationships built on trust and respect with 0.075 4 0.300
suppliers and dealers.
3. The standard and performance segments of Harley- 0.065 4 0.260
Davidson make up 70% of the European heavyweight
motorcycle market.
4. Harley-Davidson operates in two principal business 0.050 3 0.150
segments: Motorcycles and Related Products, and Financial
Services.
5. Harley-Davidson is the only major American motorcycle 0.050 3 0.150
manufacturer.
6. Strong brand name. 0.050 4 0.200
7. The company has continued to focus its capital 0.040 3 0.120
expenditures on capacity expansion at its new and previously
existing facilities.
8. The Harley Owner’s Group (HOG) is the industry’s 0.040 3 0.120
largest company sponsored motorcycle enthusiast
organization, which currently has approximately 430,000
members worldwide.
9. Harley-Davidson offers a custom segment that allows 0.030 3 0.090
owners the opportunity to customize their bikes, this division
makes up the highest number of Harley-Davidsons sold.

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10. Harley-Davidson has a strong marketing department, 0.030
which sponsors and participates in all major motorcycle
consumer shows and rallies.
Weaknesses
1. Harley-Davidson does not emphasize price in its product. 0.075
2. Harley-Davidson has had difficulty gaining market shore 0.075
in some European countries.
3. Registrations for the Asia/Pacific market are decreasing. 0.060
4. Facing ongoing capacity constraints. 0.055
5. Only a small portion of the company's annual capital 0.050
expenditures relate to equipment, which has the sole
purpose of meeting environmental compliance obligations.
6. The top Board of Directors for Harley-Davidson are all 0.045
men.
7. The leadership strategy council is comprised completely of 0.040
vice presidents.
8. Difficult to attract and retain talented employee. 0.035
9. Lack of opportunity for advancement. 0.030
10. Loss of benefits 0.030
TOTAL 1.00
F. SWOT Matrix
Strengths
1. Net income in 2004 was $889
million which was 53 percent
higher than in 2001.
2. Strong relationships built
on trust and respect with
suppliers and dealers.
3. Harley-Davidson operates in two
principal business segments:
Motorcycles and Related
Products, and Financial
Services.
4. Harley-Davidson is the only
major American motorcycle
manufacturer.
5. Strong brand name.
6. The company has continued to
focus its capital expenditures on
capacity expansion at its new
and previously existing facilities.
7. The Harley Owners Group
(HOG) is the industry’s largest
company sponsored motorcycle
enthusiast organization, which
currently has approximately
430,000 members worldwide.
8. Harley-Davidson offers a
custom segment that allows
150
3 0.090
1 0.075
1 0.075
1 0.060
1 0.055
2 0.050
2 0.090
2 0.080
2 0.070
2 0.060
2 0.060
2.51
Weaknesses
1. Harley-Davidson does not
emphasize price in its product.
2. Harley-Davidson has had
difficulty gaining market share in
some European countries.
3. Registrations for the
Asia/Pacific market are
decreasing.
4. Facing ongoing capacity
constraints.
5. Only a small portion of the
company's annual capital
expenditures relate to
equipment, which has the sole
purpose of meeting environmental
compliance obligations.
6. The top Board of Directors
for Harley-Davidson are all men.
7. The leadership strategy
council is comprised completely
of vice presidents.
8. Difficult to attract and
retain talented employees.
9. Lack of opportunity for
advancement.
10. Loss of benefits.
 owners the opportunity to
customize their bikes, this
division makes up the highest
number of Harley-Davidsons
sold.
9. Harley-Davidson has a strong
marketing department, which
sponsors and participates in all
major motorcycle consumer
shows and rallies.

Opportunities S-O Strategies W-O Strategies

1. The international heavyweight 1. Expand production into Europe 1. Hire two women to Board of
market is growing and is now (S1, S2, O2, O3) Directors (W6, O4)
larger than the US heavyweight 2. Partner with an apparel maker to
market produce Harley apparel; joint
2. The European demand for venture in Europe (S5, O4)
Harley-Davidson is the highest
in the international market and
represents the single largest
motorcycle market in the world.
3. Gas prices are high.
4. Women and younger riders are
increasing becoming interested
in bikes.
5. Alliances with Ford Motor
Company or other automobile
manufacturers are possible.
6. Industry registrations of
domestic heavyweight
motorcycles are increasing.
7. Market share increasingly in
Europe and Asia for the last two
years.
8. Increasing demand in US
markets for bikes.
9. Customers value quality parts.
Threats S-T Strategies W-T Strategies
1. Harley’s ongoing capacity 1. Increase strong brand name (S6, 1. Improve employee relationships
restraints has cut supply and T9). (W7, T4)
resulted in a loss in domestic 2. Promote smaller Harleys in 2. Build a new manufacturing plant
market share in recent years. Asian countries (S9, T7, T8) in the USA (W4, T1)
2. Harley’s average buying age is 42 3. Build a new manufacturing plant
years old and increasing. in Europe (W2, T1)
3. The European Union’s
motorcycles noise standards are
more stringent than those of
Environmental Protection
Agencies in the U.S and
increased environmental stand.
4. Some competitors of Harley-
Davidson have larger financial
and marketing resources and they
are more diversified.

151
5. Environmental protection laws.
6. Shifts in buyers’ needs and tastes.
7. Customer loyalty in European
and Asian Countries.
8. Costs could become expensive
from international importing.
9. Perception of Harleys among
noncyclers is often not good.

G. SPACE Matrix

Conservative

Financial Strength (FS)

Return on Investment
Leverage
Liquidity
Working Capital
Cash
CA Flow
-6 -5 -4 -3 -2

Financial Strength (FS) Average

152
y-axis = FS + ES = 5.8 + (-3.2) = 2.6
x-axis = CA + IS = -1.8 + (+5.0) = 3.2

H. Grand Strategy Matrix

RAPID MARKET
GROWTH

Quadrant II Quadrant I

Harley
WEAK STRONG
COMPETITIVE COMPETITIVE
POSITION POSITION

Quadrant III Quadrant IV

SLOW MARKET
GROWTH
1. Forward Integration
2. Backward Integration
3. Horizontal Integration
4. Market Penetration
5. Market Development
6. Product Development
7. Related Diversification

I. The Internal-External (IE) Matrix

The IFE Total Weighted Score

Strong Average Weak

3.0 to 4.0 2.0 to 2.99 1.0 to 1.99
High I II III
3.0 to
3.99

Medium IV V VI
The EFE Total 2.0 to
Weighted Score 2.99
Harley

Low VII VIII IX

153
 1.0 to
1.99

Hold and Maintain

Region Revenue
USA $4,097M
Europe $478M
Japan $193M
Canada $$138M
Other $110M
Total $5,016

J. QSPM
Strategic Alternatives
Joint Venture in Increase Brand
Key Internal Factors Weight Europe Name Promotion
Strengths AS TAS AS TAS
1. Net income in 2004 was $889 million, which was 53 0.075 4 0.300 3 0.225
percent higher than in 2002.
2. Strong relationships built on trust and respect with 0.075 2 0.150 4 0.030
suppliers and dealers.
3. The standard and performance segments of Harley- 0.065 4 0.260 2 0.130
Davidson make up 70% of the European heavyweight
motorcycle market.
4. Harley-Davidson operates in two principal business 0.050 --- --- --- ---
segments: Motorcycles and Related Products, and
Financial Services.
5. Harley-Davidson is the only major American 0.050 --- --- --- ---
motorcycle manufacturer.
6. Strong brand name. 0.050 2 0.100 4 0.200
7. The company has continued to focus its capital 0.040 --- --- --- ---
expenditures on capacity expansion at its new and
previously existing facilities.
8. The Harley Owner’s Group (HOG) is the industry’s 0.040 2 0.080 3 0.120
largest company sponsored motorcycle enthusiast
organization, which currently has approximately
430,000 members worldwide.
9. Harley-Davidson offers a custom segment that 0.030 --- --- --- ---
allows owners the opportunity to customize their bikes,
this division makes up the highest number of Harley-
Davidsons sold.
10. Harley-Davidson has a strong marketing 0.030 --- --- --- ---
department, which sponsors and participates in all
major motorcycle consumer shows and rallies.
Weaknesses
1. Harley-Davidson does not emphasize price in its 0.075 --- --- --- ---
product.
2. Harley-Davidson has had difficulty gaining market 0.060 4 0.240 2 0.120
share in some European countries.

154
3. Registrations for the Asia/Pacific market are 0.055 --- --- --- ---
decreasing.
4. Facing ongoing capacity constraints. 0.050 --- --- --- ---
5. Only a small portion of the company's annual capital 0.045 --- --- --- ---
expenditures relate to equipment, which has the sole
purpose of meeting environmental compliance
obligations.
6. The top Board of Directors for Harley-Davidson are 0.040 --- --- --- ---
all men.
7. The leadership strategy council is comprised 0.035 --- --- --- ---
completely of vice presidents.
8. Difficult to attract and retain talented employees. 0.030 --- --- --- ---
9. Lack of opportunity for advancement. 0.030 --- --- --- ---
10. Loss of benefits 0.075 --- --- --- ---
Total 1.130 0.825

Joint Venture in Increase Brand

Key External Factors Weight Europe Name
Opportunities AS TAS AS TAS
1. The international heavyweight market is growing and 0.150 4 0.600 2 0.300
is now larger than the US heavyweight market
2. The European demand for Harley-Davidson is the 0.150 4 0.600 2 0.300
highest in the international market and represents the
single largest motorcycle market in the world
3. Gas prices are high. 0.100 3 0.300 4 0.400
4. Women and younger riders are increasing becoming 0.100 --- --- --- ---
interested in bikes.
5. Alliances with Ford Motor Company or other 0.025 --- --- --- ---
automobile manufacturers are possible.
6. Industry registrations of domestic heavyweight 0.050 --- --- --- ---
motorcycles are increasing.
7. Market share increasing in Europe and Asia for the last 0.025 3 0.050 1 0.025
two years.
8. Increasing demand in US markets for bikes. 0.025 --- --- --- ---
9. Customers value quality parts. 0.025 --- --- --- ---
Threats
1. Harleys ongoing capacity restraints caused a shortage 0.100 --- --- --- ---
supply and a loss in domestic market share in recent
years.
2. Harleys average buying age is 42 years old and 0.050 --- --- --- ---
increasing.
3. The European Union’s motorcycles noise standards are 0.050 4 0.200 3 0.150
more stringent than those of Environmental Protection
Agencies in the U.S and increased environmental stand.
4. Some competitors of Harley-Davidson have larger 0.025 --- --- --- ---
financial and marketing resources and they are more
diversified.
5. Environmental protection laws. 0.025 --- --- --- ---
6. Shifts in buyers’ needs and tastes. 0.025 --- --- --- ---
7. Customer loyalty in European and Asian Countries. 0.025 3 0.075 2 0.050
8. Costs could become expensive from international 0.025 3 0.075 2 0.050
importing.
9. Noncustomer perception is low. 0.025 1 0.025 4 0.100
SUBTOTAL 1.925 1.375

155
SUM TOTAL ATTRACTIVENESS SCORE 3.055 2.200

K. Recommendations
• Form a joint venture with a European motorcycle company. This would enable Harley to
infiltrate the European market in a more cost effective way, and allow Harley to stay
more informed on European Union Laws dealing with noise and emissions. Also joint
venture with a European apparel maker to produce and market Harley apparel. Total
Cost expected of $2.5B.
• Expand the brand name of Harley through increased advertising, trade shows, and bike
rallies. Total cost $500M.

L. EBIT/EPS Analysis

$Amount Needed: $3,000M

Stock Price $52
Tax Rate 35%
Interest Rate 7%
Shares Outstanding 274M

Common Stock
Recession Norma
EBIT $750,000,000 $1,250,000
Interest 070 Percent Stock0- 3
EBT 750,000,000
Recession 1,250,000
Norma
Taxes
EBIT 262,500,000 $1,250,000
$750,000,000 437,500,
EAT
Interest 487,500,000
63,000,000 812,500,
63,000,0
M. Epilogue
#
EBT Shares 331,692,308
687,000,000 331,692,
1,187,000
On January 19, 2006, Harley-Davidson Inc. reported that fourth-quarter

Taxes
pushing 1.47
profit rose 10 percent as the company benefited from higher sales overseas,
EPS 240,450,000
its results above Wall Street expectations. 2.45
The year 2005 was Harley’s 415,450,
twentieth straight year of record revenue, earnings, and retail motorcycle sales. Its

EAT 156
446,550,000 771,550,
# Shares 314,384,615 314,384,
shares closed up $2.56, or almost 5 percent, to $54.05 on the New York Stock
Exchange.
Quarterly earnings grew to $230 million, or 84 cents per share, for the
October-December period from $209 million, or 71 cents per share, a year earlier.
Revenue grew 10 percent to $1.34 billion from $1.22 billion, with motorcycle
revenue up 10 percent to $1.09 billion. The company said U.S. retail motorcycle
sales increased 0.7 percent, while international sales rose 13 percent.
For the full year 2005, Harley’s net income rose 8 percent to $959.6
million, or $3.41 per share, from $889.8 million, or $3 per share, in 2004.
Revenue grew 7 percent to $5.34 billion from $5.02 billion in the prior year. The
company maintained its forecast for wholesale unit growth in the range of 5 to 9
percent annually and an annual earnings per share growth rate of 11 to 17 percent.
It kept its motorcycle shipment target for 2006 of between 348,000 to 352,000
units, with planned wholesale shipments of 79,000 motorcycles during the first
quarter.
However, Gary Cooper, an analyst with Bank of America, said U.S. sales
in the fourth quarter were disappointing and meant inventories at U.S. dealers had
nearly doubled to an estimated 65,000 units, a record high. The company sells 80
percent of its motorcycles domestically. "This high level of inventory exists at
the same time that industry motorcycle sales are decelerating and the U.S.
economy is slowing," Cooper said in a research note. "To our eyes, this is not an
appropriate time to be carrying an all-time high level of inventory." Ziemer said,
while the company aimed to reduce wait times and retail prices for motorcycles at
U.S. dealers, inventories were piling up at northern climate dealers but were tight
in the South. "Putting inventory in the right place at the right time has been
challenging," he said. "We have not found a short-term silver bullet solution."
Harley’s worldwide retail sales grew 3.0 percent in the fourth quarter and
6.2 percent for the full year to 317,169 units; the company said. For the year,
U.S. sales grew 4.2 percent to 253,414 units, European sales grew 19.9 percent to
29,482; Japan was up 11.1 percent to 11,420; Canada rose 4.1 percent to 11,660;
and all other markets grew 19.4 percent to 11,193.

157