Harley-Davidson Has Skipped the Mark in Electrical Transportation

The legendary Harley-Davidson (NYSE:HOG) brand name is in trouble. The business has seen revenue tumble for a fifty percent-ten years, and earnings have evaporated. Procedures to get into electrical bikes have mainly unsuccessful, and the core company will not present any signals of a turnaround. 

Irrespective of all of these difficulties, Harley-Davidson stock is up 82% around the previous 12 months, and investors look optimistic about a turnaround. But you will find superior motive to assume that will not likely happen for this leisure inventory. 

Impression source: Harley-Davidson.

Harley-Davidson’s motorbike market is shrinking

Just one thing is clear: Harley-Davidson’s current market is receiving more compact as the lifestyle that brought the company to industry dominance diminishes. The shopper foundation is growing old, more youthful individuals are no lengthier intrigued in the glance or audio of Harley-Davidsons, and rising marketplaces adjacent to the motorcycle industry have been complicated for the model to enter. 

HOG Revenue (TTM) Chart

HOG Income (TTM) details by YCharts

The most significant problem is that Harley-Davidson was generally a culture manufacturer, and that is what designed it so strong for many years. It was not just motorcycles — it was people’s apparel, the sound the bikes made, and prolonged rides on the open up road. As a lot more people today go to city markets and search for fewer disruptive indicates of transportation, the culture appears to be out of date. 

Heading electrical is just not ample

Harley-Davidson has not been entirely astonished by the industry’s alterations — it saw the electric auto market coming to motorcycles. But it miscalculated what kind of solutions shoppers want and in which its brand can hook up. The latest LiveWire items are a very similar type component to regular bikes, but that’s not wherever consumers are trending. 

Electric powered scooters are really wherever the expansion has been, with Statista estimating that about 50 million electrical scooters and bicycles have been bought in 2020. Grand Look at Investigation estimates the electrical scooter market place will develop from $20 billion in 2020 to $42 billion in 2030. This is in which the advancement is, and Harley-Davidson is basically absent. If it is really hunting to draw in youthful consumers, scooters would have been a great way to develop the enterprise.

Just receiving into electric mobility just isn’t more than enough — organizations have to make the proper products and solutions and have the right brand names. Harley-Davidson is neither, indicating it is missing out on a big progress marketplace which is adjacent to its core merchandise. 

No simple responses

Management has tried using to lay out a turnaround tactic. They want to get into used motorcycle income, and grow the lineup of electric powered bikes and bicycles. But made use of bikes are just an quick revenue grab, and you can find no indicator that Harley-Davidson will create substantial market place share in lesser electric powered mobility items.

The potential is wanting dimmer by the day for Harley-Davidson. In some cases an legendary brand name like this just sees the globe move it by. 

This short article signifies the viewpoint of the author, who may perhaps disagree with the “official” advice position of a Motley Idiot top quality advisory assistance. We’re motley! Questioning an investing thesis — even one particular of our have — will help us all think critically about investing and make selections that help us become smarter, happier, and richer.