The company has long focused its strategy on more expensive and profitable models, in an effort to offset the high financial costs of its customers.
Harley-Davidson Inc.a recognized motorcycle brand and accessible to investors in Argentina through Cedears, has had to revise its income projections for this year, in a context of lower global demand and a decrease in the sale of premium models. The company announced that its projected revenue for 2024 will fall between 14% and 16%, while expected operating margins will reduce to 7.5%-8.5%, adjusting initial forecasts of a 5% revenue decline. -9% and margins of 10.6%-11.6%.
According to the Bloomberg agency, Jochen Zeitz, CEO of Harley-Davidson, pointed to growing economic uncertainty and high interest rates as factors for the decrease in income, although he was optimistic about next year, predicting that “an improvement in consumer confidence and an eventual reduction in interest rates” may offer some respite for 2025.
Lower demand for premium motorcycles
The company has long focused its strategy on more expensive and profitable models, in an effort to offset the high financial costs of its customers. However, this decision limited the base of potential buyers in the last quarter, which contributed to a decline in earnings per share, which fell to 91 cents, compared to $1.38 recorded in the same quarter of 2023.
Revenue from motorcycles and related products was also affected, reaching $876 million, below the expectations of analysts, who projected revenues close to $938 million. Additionally, the North American market recorded a 10% decrease in retail sales.
Additional strategies and challenges for the company
The third quarter of 2024 was particularly complex for Harley-Davidson, not only in terms of sales, but also in its relationship with dealers and corporate responsibility issues. In July, the company announced a cut in inventory distributed to dealers of up to 30%, after receiving complaints that oversupply was affecting dealer profitability amid a period of low demand.
Likewise, in August, the firm reduced some of its diversity, equity and inclusion initiatives, in response to criticism from certain conservative sectors. In September, it had to carry out a recall of more than 40,000 motorcycles due to a risk of short circuits, a measure that further affected consumer confidence.
Future perspectives and challenges
Despite these obstacles, Harley-Davidson is betting that improvements in the economic outlook in 2025 – with a possible reduction in interest rates and greater stability – will allow the company to regain ground. The focus on higher value-added models will continue to be a central part of its strategy, although the challenge lies in adapting its offerings to a market with cautious consumers and changing financial demands.
The emblematic brand, based in Milwaukee, thus faces the need to balance profitability with accessibility, in a market that demands innovative products but at competitive prices. This challenge will be decisive for the future of Harley-Davidson, especially in a global context that requires adjusted strategies and the ability to adapt to economic changes.
Source: Ambito
