Latest AMD/Baird dealer survey reveals mixed results
THE results of the latest AMD/Baird quarterly Harley-Davidson authorized dealer survey reveals mixed results among those surveyed (October through mid-November 2014).
Domestic US dealers surveyed reported retail unit sales up by between 5 and 8 percent through mid-November (up as much as 14 percent in the case of used model sales).
However, the results that dealers are achieving from those sales and the other activities within dealerships, suggest that the low level of units being bought at this time of year will continue to leave many stores flat (at best) in terms of profits until volumes pick up again in the spring.
Canadian new unit sales appear to be off by approximately 20 percent, with other international markets essentially flat at this time. The survey revealed increases of between 1-2 percent, but on a small sample.
Contrary to the positive unit performance appears to be largely negative performance in retail results terms, with dealers reporting slightly down retail results in all categories.
Baird asked dealers to rate new unit retail trends by production category. Overall, demand for touring bikes remains robust (likely attributable to the reintroduction of the Road Glide), but statistically and anecdotally dealers are reporting that they are encountering issues with Dyna and Softail sales in particular.
One dealer is quoted as saying that sales in the period were "way down ... like a light switch was turned off", and another reported that sales were "poor, with margin under pressure."
Other dealers stated that "previous model changes missed the mark"; "Harley must figure out a way to drive Cruiser sales"; "initial surge of pent-up Road Glide demand has now tapered off. There are too many carry-overs and not enough changes to model line-up."
While "Softail and Dyna new and used sales have been decreasing drastically over the last couple of years" appears to summarize the feeling of many dealers, others appear to be doing better ... "sales are incredible! Way over last year - up 40+ percent"; "stronger than we expected, much better than last Fall"; "bikes selling the best are used Big Twins."
In terms of the new bike inventory they are carrying, dealers report that it is broadly "balanced" for the time of year, with 60 percent saying that it is "about right", but one in five reporting that it is too low.
Despite used bike retail trends being "solid" on a volume-weighted basis, dealers consider their used bike inventory to be too high, which is likely a result of more frequent trades being seen in association with new bike retail sales.
Indeed, Baird say that they have seen the glut of used bike inventory weigh on used bike trade-in values, a factor in Harley's July decision to cut 2014 new bike production.
In terms of new bike pricing, 56 percent of dealers surveyed report that they are selling bikes bellow MSRP - a number that Baird say that they would consider to be within the "normal" range.
Overall, discounting appears to have moderated from the elevated levels seen during the third quarter - when Harley used promotions to clear out non-current inventory.
Dealers report that the consumer financing environment remains stable, with 57 percent reporting no change, though nearly one in four told Baird that it has been more difficult in the period concerned.
Baird recently established a Harley-Davidson dealer sentiment index, capturing both current and longer term (3-5 year) dealer perspectives.
Additionally, Baird asked dealers to evaluate Harley-Davidson based on the company's level of innovation and return on investment.
Both current dealer sentiment (54 versus 66) and 3-5 year sentiment (60 versus 73) declined on a year-over-year basis – likely attributable to a number of factors, including the strong Rushmore launch last year, difficulty stocking sufficient Street inventory, declining trade-in values, among others. Still, Harley dealers are very satisfied with the company’s level of innovation (74) and return on investment (60).
One dealer said that "Harley's unwillingness to deal with retail issues and competition is a huge concern", while another stated that "2014 had many changes with the Rushmore introductions, while 2015 had few. The price point for Dyna and Softails since standard ABS has made the product price point to high compared to the Touring options. The used market is drying up and scaring our customers. Used motorcycles are not holding their value.”
Conversely, proving that Baird's research genuinely picks up a full spectrum of feedback, another dealer stated that "it is an amazing time to be a Harley dealer!"
Robert W. Baird & Co. Inc. is an employee owned wealth management, capital markets, asset management and private equity firm that was founded in 1919 and is headquartered in Milwaukee, Wisconsin. The company says that it currently has $105 billion in client assets.
Any AMD readers who would like to see this or future AMD/Baird quarterly Harley-Davidson dealer surveys in full, or any authorized Harley-Davidson dealers who would like to participate in future surveys, can contact AMD’s Information Editor Sara Viney by email (email@example.com).