Can Harley-Davidson survive the downturn?
Posted Nov 19 2008, 04:37 PM by Kim Peterson Rating: Filed under: Harley Davidson, Kim Peterson
America has a strong -- and growing -- used motorcycle market. Add a plunging economy to that, and the road is getting a little rough for Harley-Davidson these days.

Harley shares have taken a beating lately, falling 41% in less than three weeks. Shares are down 70% year to date. Sure, the stock looks cheap, but analysts warn that the earnings potential for the company is unclear.

One reason is that core Harley buyers are simply getting older. Only 12% of buyers are under 35, and long-term demand will slow as baby boomers "exit their peak riding years," wrote a JPMorgan analyst in a recent client note. The analyst expects motorcycle registrations to drop 14.7% next year in the U.S. and 4.2% internationally.

Harley also made bad business decisions. It sold bikes to buyers who clearly couldn't afford it, handing out $20,000 motorcycles with no money down, according to BusinessWeek. And now, a lot of subprime borrowers simply can't, or won't, repay those risky bike loans.

That's led to concerns about the credit rating for Harley's financial services unit. Standard & Poor's has placed Harley on "CreditWatch Negative" status and will meet with management with concerns.

Harley is responding by cutting back shipments to retailers, in hopes that it will reduce its inventory levels. The company has said that earnings will drop about 18% in 2008 -- the second straight year of decline after 20 years of growth, according to Standard & Poor's.


Harley shares are in the $13 range now, and option traders expect the stock to drop below $10 by Dec. 19.

 

So Harley Credit was acting like all these other banks giving out loans to people they shouldn't have?
Imagine that.

 

Yea !!!!!

I Vote for a "Bail Out" for Harley Davidson.......*smirk*

 

Maybe they'll have a T-shirt sale...not!

 

I knew that one was coming

 

Harley survived the Great Depression. I think they will survive this. Some dealers will close, and there will be layoffs. But, I think as a company Harley will survive. I sure hope they do anyway.

 

And the way Indian has priced thier new line, they don't have a prayer at the moment.....

 

Indian doesn't have a prayer IMO. It's a shame, but just bad timing.

 

I think , as a company they will survive , it will weed out a lot of dealers before its over I would think , that can be good and bad , ya never want to see anyone lose their job , but like it or not , the company is first ..

I know several people with high credit risks , who have Harleys , they've ridden forever , but hit bad times , and some could never afford one to begin with ..

But they could make the payment , didnt matter it was a double digit interest rate .. They just wanted the bike , cant put all the blame on harley , they didnt make them buy the bikes , but they also shud have the business sense to see a high risk loan ..

 

Harley Davidson survived AMF, I think they will survive this one.