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Motorcycles Sales Bounce Back Post Pandemic Slump

By | General Posts

by Sabrina Giacomini from https://www.rideapart.com

Rising from the ashes.

To say that 2020 has been an eventful year so far is an understatement. “2020, written by Stephen King” is probably the best description of this year’s events we found so far. Of course, with a pandemic forcing most of the global population into lockdown, the health crisis was bound to have an impact on the motorcycle industry.

For several manufacturers, between suspended production and customers shying away from the dealers, the months of April and May 2020 have been challenging to say the least. Thankfully, with life gradually resuming, so are sales, and the numbers are bouncing back.

Things Are Going Better Than Expected:

An increasing number of people and publications suggest that the pandemic will encourage more people to turn to motorcycles and scooters for transportation—the perfect type of commuter for social distancing.

In the U.S., buyers didn’t waste any time running for the hills—literally—as soon as COVID-19 poked its ugly head. Honda, BMW, Suzuki, and Yamaha’s North American branches reported that sales are thriving since the beginning of the year, particularly in the off-road segment. For instance, American Honda Motor Co. confirmed that motorcycle sales for May 2020 have more than doubled over May 2019—both in the road and off-road segments (+103% and +172% respectively). For BMW North America, while official sales numbers were not disclosed, the spokesperson did say that May 2020 sales were far exceeding last year’s.

The European market is showing a similar, positive trend. Italian sales numbers for June 2020 show a 37-percent increase over June 2019—not even over the catastrophic month of May 2020. More bikes and scooters sold in Italy post-pandemic than last year, back when nobody had even heard of a coronavirus. A total of 39,085 motorcycles, scooters, and mopeds have been registered in Italy in June.

The market is also on the mend in India where local branches are finally seeing the light at the end of the tunnel. Though the June sales numbers remain significantly below the 2019 numbers, they are on the rise after the May 2020 slump. For Honda Motorcycle & Scooter India, the 210,879 units moved in June represent a 153 percent increase in sales over May. For Hero, sales increased by a staggering 300 percent between the two months. Royal Enfield is also back in the green with a total of 38,065 motorcycles sold in June versus 18,429 in May.

Despite a rocky start to 2020, it looks like the motorcycle industry is faring far better than we initially anticipated.

Harley-Davidson To Drop From S&P 500 As Coronavirus Batters Struggling Motorcycle Maker

By | General Posts

by Bill Roberson from https://www.forbes.com/

Iconic American motorcycle maker Harley-Davidson [HOG] continues to struggle. The company will move off the S&P 500 in the next week and will land on Standard and Poor’s MidCap 400 list of stocks instead, according to the Milwaukee Journal Sentinel. Clothier Nordstrom Inc. and Alliance Data Systems Corp. will also fall off the S&P 500.

With a two-month work stoppage (since resumed) due to the pandemic coupled with an expected deep dive in sales due to the general halt in economic activity, the near future could be a rough ride. The most recent report on sales from the company show the numbers were down close to 18% year over year as of late April.

The S&P 500 delisting, set for June 22, comes while Harley-Davidson continues to navigate rough waters, including a personnel shuffle that included the CEO and a stock price that has hung in the $25 range during the pandemic but was as high as $73 in 2014 and over $40 per share in the last year. In the depths of virus-fueled market turmoil in April of this year, the share price dipped to nearly $15 but has since rebounded, almost reaching $30 just about a week ago. The drop from the index could hurt the stock price since many investors include companies in the S&P 500 as part of their portfolios.

Before the coronavirus and COVID-19 outbreak, the Milwaukee,Wisconsin-based maker of heavyweight cruisers – and a fully electric model – had been on a sales and stock price slide for several years as the company searched for new buyers. Their core – and highly loyal – customer base has slowly eroded due to age and competition, notably from a resurgent Indian, which was once Harley’s main sales and racing competitor before shuttering post-WWII. The brand was recently revived by outdoor recreation equipment Polaris and has targeted Harley’s market while also attracting new riders with their Scout and FTR models.

Under the tenure of now-departed CEO Mark Levatich, Harley embarked on a risky tangent into the world of electric vehicles and debuted the all-electric LiveWire motorcycle two years ago. While the bike has received favorable reviews, a price tag near $30,000 has been a tough sell while pioneers in the electric motorcycle space like Zero sell models with similar performance for nearly a third less. Before Levatich left the Motor Company, as Harley is also known, the CEO said more electric models, including bicycles, were on the way. New CEO Jochen Zeitz, a longtime board member known as a turnaround specialist, hasn’t yet laid out the specifics for Harley’s future, saying he plans to “rewire” the company with a 5-year plan for growth.

Part of Harley’s current conundrum is a perfect storm of a waning traditional customer base, expensive motorcycles, and young people who have high debt, myriad transportation options and little brand loyalty. Harley-Davidson has been working to build their international markets over the years and growth there has been a strong point along with their finance arm, but slumping overall sales have driven the company’s market cap to under $4 billion, or nearly half of what the S&P 500 regards as a minimum to make the list.

Tyler Technologies Inc., Bio-Rad Laboratories Inc. and Teledyne Technologies Inc. will all join the index, according to the Milwaukee Journal Sentinel.

Harley-Davidson Leads the List in Peak Demand for Motorcycles

By | General Posts

by Daniel Patrascu from https://www.autoevolution.com

Like most other countries in the world, the UK is set to relax its distancing measures as of this week, despite the health crisis being more severe than ever. Among the distancing measures to be kept is the obligation for the Brits to wear face-coverings on all public transport means on the island.

That decision seems to have scared people who would normally ride the tube or buses, and that is visible in the number of online searches for alternative means of transportation. Motorcycles and their derivatives seem to be in high demand these days, according to the figures provided by Auto Trader.

The organization says that compared to the same period last year, sales of motorcycles and mopeds exploded, reaching 180 and 2019 percent, respectively. Keep in mind this happens as sales of cars are dropping to levels not seen since the 1970s.

Online interest for such two-wheeled machines is at a peak as well, and the idea that this is not a passing trend is backed by other data as well: Brits are hell-bent on becoming motorcycle riders, and proof to that is the doubling of Compulsory Basic Training (CBT) riders must take before being allowed on the roads.

“It seems to be part and parcel of getting into a ‘new normal’. They’re relatively cheaper options for commuting, they can help you get around easily in congested urban areas, and they’re easier to park in tight spots,” said in a statement Auto Trader’s Rory Reid.

“They can also be a much more viable option than walking or cycling for the majority of people whose commute is longer than five miles.”

As far as what type of motorcycles the Brits prefer, two Harley-Davidson families, the Sportster and Softail, are among the most sought after, followed by the Yamaha R1 CBR1000RR and the Honda Fireblade.

Harley appoints turnaround specialist Jochen Zeitz to revive sales

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by Rachit Vats, Sanjana Shivdas from https://www.reuters.com/

(Reuters) – Harley-Davidson Inc (HOG.N) on Thursday appointed board member and turnaround specialist Jochen Zeitz to the role of chief executive officer, as the struggling motorcycle maker looks to tap into his expertise to woo customers and revive sales.

Shares of Harley, which were down 47% this year as of last close, rose 5% to $20.6 in morning trade.

Zeitz, a former CEO hailed for turning around German footwear brand Puma’s near-bankrupt business, is known to have led a push for sustainability at Harley and was a force behind Harley’s LiveWire, the company’s first electric bike.

The company said Zeitz, who joined the Harley board in 2007, will continue to serve as the board chairman.

Harley has failed for years to increase sales in the United States, its top market, which accounts for more than half of its motorcycles sold. As its tattooed, baby-boomer consumer base ages, the Milwaukee-based company is finding it challenging to attract new customers.

To make matters worse, the pandemic has further dented demand as Americans stay at home to curb the spread of COVID-19.

In April, Harley slashed here its dividend and halted share buybacks to boost its cash reserves to weather the impact from the health crisis.

Zeitz was asked to take over after CEO Matthew Levatich stepped down in February following Harley’s worst sales performance in at least 16 years.

In his first call with investors as acting CEO, Zeitz lined up plans to cut costs and “de-emphasize” some of its unprofitable international regions.

The shift in strategy for the company that symbolized the counterculture movement of the 1960s comes as it struggles to woo the next generation of younger riders with its electric and more nimbler bikes in the United States.

Royal Enfield withdraws from Japan until new importer takes charge

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by Abhinand Venugopal from https://www.rushlane.com

Royal Enfield’s Japan operations were carried out by the importer, Wingfoot

Chennai-based motorcycle manufacturer Royal Enfield operates in more than 50 countries across the globe. The automaker has a huge fan following in many parts of the world, especially for its single-cylinder ‘Classic 350’ model.

In India, the company has updated most of its products to BS6 specifications while readying to launch the next-gen ‘UCE 350’ models, starting with the Royal Enfield Meteor 350 (which replaces the Thunderbird range).

Wingfoot Co. Ltd., Royal Enfield’s official importer in Japan has announced a business termination with the British-origin motorcycle manufacturer. The official statement stated that it has “finished all business related to the import and export of Indian-made Royal Enfield motorcycles” after ending the contract with Eicher Motors — the parent company of Royal Enfield.

In other words, Royal Enfield has temporarily withdrawn from the Japanese market until a new importer takes charge. Royal Enfield Japan’s official website will be taken down by the end of this month while its social media handles will be deleted on May 15. In a matter of days, Eicher Motors might announce a new partner to commence operations in Japan.

Royal Enfield has not been a strong player in Japan since the country has its own compelling alternatives from the likes of Yamaha, Honda, Suzuki and Kawasaki. Even in India, Japanese two-wheeler brands often come at the top of monthly sales charts while Royal Enfield mostly remains at the bottom of the top 10. However, it is no secret that India is a volume-sale market and six-digit numbers need not always tell the story of a brand’s success or struggles.

As mentioned before, Royal Enfield has already made a smooth transition to BS6 emission norms. In the process, the company has discontinued the higher ‘500’ models on account of poor sales. As a tribute to the decade-old model line, Royal Enfield had introduced the limited-run BS4-compliant Classic 500 Tribute Black. The next-gen ‘350’ models are currently in the works. Various reports state that they will be a huge improvement over the current ‘UCE 350’ range since Royal Enfield has employed a completely new platform.

The Indian automotive market is currently going through a rough phase due to the COVID-19 lockdown protocols. Owing to this, Royal Enfield faced a sales decline of 44% in March and is expected to witness an even more drastic fall this month. Experts predict that the entire scenario of buying a new vehicle would change once the Indian government withdraws its lockdown policy — know more details.

Harley-Davidson shifts strategy, to focus on core markets

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from https://www.livemint.com

  • The company’s shares climbed after the motorcycle maker’s new acting chief executive officer laid out plans to cut costs
  • The stock had plunged 49% this year through Monday’s close

Harley-Davidson Inc. shares climbed after the struggling motorcycle maker’s new acting chief executive officer laid out plans to cut costs and complexity and focus on the company’s strengths.

The stock rose as much as 17% after the unveiling of a strategy dubbed “The Rewire,” which Morgan Stanley analyst Adam Jonas said could make Harley one of few manufacturers to grow profits in the coming years.

“It is clear to us that HOG will be less adventurous in terms of trying its hand at segments and markets where the brand faces extremely low chances of success with high up-front costs and high risks of brand atrophy that could threaten the company’s long-term survival,” Jonas, who rates the stock the equivalent of a buy, wrote in a report Tuesday.

Jochen Zeitz, a board member and former CEO of sporting-goods maker Puma SE, took over as acting CEO at the end of February. He’s dialing back his predecessor’s turnaround plan to focus on expanding U.S. ridership, iconic profitable bikes such as the Adventure Touring and Streetfighter models, and electric motorcycles. Those goals echo the demands of an activist investor, Impala Asset Management, that reached an agreement calling for Harley to add an independent director to its board later this year.

‘Achievable Plans’

Harley “has become accustomed to over-committing and under-delivering; we need to set achievable plans and realistic goals,” Zeitz said during the earnings call. “It is clear that our strategy needs to be refocused to better align with our capacity and capabilities and also updated given our new reality.”

Harley shares were up about 12% as of 11:53 a.m. in New York; the stock had plunged 49% this year through Monday’s close.

Zeitz was mum on the subject of a permanent CEO search, batting away analyst questions by saying he’s focused on steering the iconic motorcycle maker through the crisis.

The fallout from the coronavirus was swift: U.S. sales had been up 6.6% before the pandemic took hold in mid-March, but the drop during the first three months ended up being Harley’s biggest first-quarter fall since 2010. After that 16% plunge in retail sales, Harley is in all likelihood headed for its sixth straight annual decline.

Slashing Costs

Zeitz resisted giving a new financial forecast, saying it’s too early to see the full scope of the virus’s impact. But he’s slashing costs and borrowing money to ensure Harley can weather the storm.

The manufacturer said it will save $250 million this year by freezing hiring, reducing salaries, trimming capital expenditures and retiming product launches. It’s also halting share repurchases.

Harley announced it’s in talks with major U.S. banks to secure $1.3 billion in funding and expects to tap capital markets for more in the coming weeks after sales of its motorcycles declined in every market worldwide, including a 13th consecutive quarterly drop in the U.S.

John Olin, Harley’s chief financial officer, said he’s tightening underwriting standards and increasing loan-loss provisions at the company’s lending arm. He stepped up provisions by $36 million and wrote off $8.9 million in credit losses in the quarter. Harley has been granting payment deferrals for some customers.

Harley-Davidson cuts dividend, halts buybacks to preserve cash

By | General Posts

by Ankit Ajmera from https://www.reuters.com

(Reuters) – Harley-Davidson Inc (HOG.N) slashed its dividend and halted share buybacks on Tuesday to boost its cash reserves as global lockdowns due to the coronavirus pandemic hit motorcycle demand in the first quarter.

The company has $1.47 billion in cash and is in talks with big U.S. banks to get $1.30 billion in loan to ride out the crisis, it said, adding it would focus on its core U.S. market to prop up sales.

Harley shares, which have lost nearly half of its value so far this year, jumped as much as 17% in morning trading after the company rolled out its cash preservation plan.

“Harley continues to struggle with declining sales, but it continues to generate respectable free cash flow and we consider shares fairly valued at current levels,” said CFRA Research analyst Garrett Nelson.

To boost sales, the company also said it will “de-emphasize” on some unprofitable international regions.

The shift in strategy for the company that symbolized the counterculture movement of the 1960s comes as it struggles to woo the next generation of younger riders with its electric and more nimbler bikes in the United States.

Sales have been declining for the past five years in its largest market as its baby-boomer fan base ages. To make matters worse, the pandemic has further dented demand as Americans stay at home to curb the spread of COVID-19.

“We are at critical time in our history that requires significant changes to the company,” said acting Chief Executive Officer Jochen Zeitz, who took helm in February and is best known for turning around the Puma brand.

Zeitz’s plan to move the launch of new models to early part of the first quarter from August to better align with the start of the riding season helped U.S. retail sales in the first 10 week of the quarter to rise 6.6%.

But as the quarter drew to a close, overall sales fell 15.5% in the United States, taking a hit from the lockdowns. Retail sales fell 20.7% internationally.

Zeitz said Harley will expand its lineup of profitable motorcycles, while also focusing on selling new products such as adventure touring, sport bike Streetfighter and electric motorcycles.

Harley cut its quarterly dividend to 2 cents from 38 cents. Earlier this month, it pulled its 2020 profit forecast and decided to temporarily lay off most of its global production employees to reduce costs.

Motorcycles and related products revenue fell 8% to $1.10 billion in the quarter ended March 29. On an adjusted basis, it earned 51 cents, beating expectations of 41 cents, according to Refinitiv data.

Wary of public transport, coronavirus-hit Americans turn to bikes

By | General Posts

from https://auto.economictimes.indiatimes.com

The coronavirus pandemic has sparked a surge in bike sales across the United States, according to a major manufacturer and a half dozen retailers interviewed by Reuters.

“I’m 51 and healthy, but I don’t want to get on the subway,” said John Donohue, a Brooklyn-based artist who bought a bike two weeks ago. Donohue, who doesn’t own a car, says he’s not sure when he’ll be comfortable on mass transit again.

The coronavirus pandemic has sparked a surge in bike sales across the United States, according to a major manufacturer and a half dozen retailers interviewed by Reuters.

Many of the purchases are by people looking for a way to get outside at a time of sweeping shutdowns and stay-at-home orders aimed at containing the virus: Even the worst affected states are allowing people out to exercise.

Still, a portion of the sales, especially in urban areas, are to people like Donohue who also want to avoid the risk of contagion on buses or subways.

He plans to use his new 24-gear hybrid for journeys such as regular visits to a printing shop across town that he normally travels to by subway. A key feature, he said, was the bright red panniers he added to carry his artwork.

To be sure, bikes remain well down the list of U.S. commuting preferences.

About 870,000 Americans, on average, commuted to work by bicycle in the five years through 2017, or about 0.6% of all workers, according to the U.S. Census Bureau. The rate was higher in urban areas, at about 1.1%, and about 20 cities with at least 60,000 residents had rates of about 5% or more.

A more recent survey, though, showed a higher percentage of U.S. workers using a bike to get to work. Private research firm Statista Inc.’s 2019 survey showed 5% rode their own bike, while another 1% used a bike share service, an increasingly common option in larger cities.

Running Out Of Stock

The government has declared bicycles an essential transportation item, so many bike shops remain open despite the widespread business shutdown. Many, though, have modified how they operate, no longer letting buyers test bikes and handing them over on the curb rather than inside the store.

According to the National Bicycle Dealers Association, roughly three-quarters of U.S. bike sales are through big box stores. While many of the outlets of large specialty sporting goods chains are closed, general merchandisers like WalMart Stores Inc, the largest seller of bikes, remain open. Walmart did not respond to a request for comment.

Kent International Inc., which imports bikes from China and also makes them at a plant in South Carolina, said sales of its low-priced bikes had surged over the past month.

Kent is already out of stock on five of its top 20 models and expects that to rise to 10 by the end of the month, chief executive and chairman Arnold Kamler said. He noted supplies were flowing in from China, which has reopened much of its manufacturing base over the past month.

Kamler said sales at most of the major retailers he supplies were up 30% last month and are up over 50% so far in April, with the surge in demand forcing him to change shipping arrangements.

He normally imports bikes to ports on both the East and West Coasts. But with many retailers asking for more bikes, he’s now directing all shipments into West Coast ports, then transporting them across the country. That adds to freight costs, he said, but can cut weeks off delivery times.

Low Prices

Mark Vautour, who manages a bike store near the Boston University campus, said he had sold bikes to anxious commuters – including at least one medical worker who wanted an alternative to using the subway.

“We’ve joked for years that trains are like a petri dish,” Vautour said.

Mostly, though, his sales have been children’s bikes, “because parents don’t know what to do with their kids.”

One indication that people are buying bikes for more utilitarian uses like commuting is that many of the purchases are low-priced bikes, several bike retailers said.

Joe Nocella, owner of 718 Cyclery & Outdoors in Brooklyn, said his normal “sweet spot” was bikes that sell for $1,500 to $2,000, used by city dwellers for touring.

“Now the average bike has turned to $500 to $800,” he said.

Those lower prices are one reason many bike retailers are struggling, despite strong sales.

Andrew Crooks, chief executive of NYC Velo, a three-store chain in the New York area, said the drop in average selling prices meant revenues had fallen at a time when he was still paying rents, salaries and other costs.

“So we could keep our doors open and still end up with a business that’s not viable,” he said.

Still, some new buyers say they are switching to bikes for the long term.

Having been stuck at home in Baltimore, Kaitlyn Lee bought a $550 bike this weekend so she could get outdoors safely and avoid public transport when she gets a job.

Lee will finish a graduate degree in public health at the University of Maryland this spring and has applied for jobs at the Centers for Disease Control and the Health Resources and Services Administration, part of the U.S. Department of Health and Human Services. Her plan is to commute by bike to a future job, if possible.

“I mean, it’ll never completely vanish,” she said of the coronavirus. “Rather we will learn how to live alongside of it, just like with other viruses.”

Global Motorcycle Sales In Free Fall Due To COVID-19

By | General Posts

by Dustin Wheelen from https://www.rideapart.com

Even before the World Health Organization declared COVID-19 a pandemic on March 11, 2020, many financial experts were speculating on the impact of the global crisis. Once motorcycle manufacturers and dealerships closed their doors to observe social distancing orders and promote public safety, we knew that the market could undergo a massive reduction in productivity and sales.

Now that economic reports for the month of March are available, we’re able to assess the impact on the industry—and it isn’t good. We all knew that global motorcycle sales stumbled in 2019, but with the advent of the novel coronavirus, we could see a further decline for markets like India and a contraction of previously growing sectors in Europe.

In India, the world’s largest motorcycle market, domestic manufacturers saw steep downturns in March. Year-over-year sales figures declined for Hero MotoCorp (-43 percent), Royal Enfield (-44 percent), Bajaj (-55 percent), and TVS Motor Company (-62 percent) during the third month of 2020.

Foreign makes weren’t immune to the economic slowdown with Suzuki India selling 42% less units during the period as well. Not all the news was bad though, as Honda Motorcycle & Scooter India managed to increase sales by 10 percent. Despite the bleak numbers, Suzuki India Managing Director Koichiro Hirao emphasized the company’s responsibilities during the global pandemic.

“At present, our first and foremost priority is to ensure the health and safety of the employees and all stakeholders,” said Hirao. “As the industry fights the COVID-19 pandemic by implementing shutdowns and taking precautionary measures, we believe that industry will overcome this difficult time and bounce back with positive growth in the coming months.”

Though Suzuki India is enduring its own woes during this time, the company still reported a 5.7-percent increase in sales during the 2019-2020 fiscal year.

“We are pleased to close this financial year on a positive note with 5.7 percent growth amid the precautionary measures taken in the wake of the COVID-19 pandemic,” stated Hirao.

In Europe, Italy’s motorcycle market crumbled with sales numbers plummeting by 66 percent. Scooter and moped purchases fell by 62 percent while motorcycle sales collapsed with a 69-percent reduction. However, the country’s motorcycle market also experienced growth in the first and second month of 2020.

Calculating the overall sales for the first quarter of 2020, Italy only dropped 24 percent compared to last year. Regardless of the meager returns, the BMW R 1250 GS sold the most units—presumably to those looking for an apocalypse-appropriate motorcycle.

With the majority of factories and dealerships still shuttered, who knows what April’s sales data has in store. Manufacturers are keeping an optimistic eye on the future with hopes that the industry will bounce back once closures and social distancing measures are rolled back. Until we reach that post-COVID-19 world, we’ll have to continue speculating about the future of the motorcycle industry.