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Though both companies have key new product they are optimistic about, the two major U.S. motorcycle manufacturers are taking a cautious approach to the rest of 2024, expecting weakness in the industry.
Harley-Davidson and Polaris, parent company of Indian Motorcycles, both recently reported financial results for the first quarter of 2024. Looking ahead, Harley-Davidson maintained its previous guidance calling for revenues from motorcycle sales to be between flat and down 9% compared to last year. Motorcycles are a comparatively small part of Polaris' business, and the company has bigger problems with its snowmobile and marine businesses. The company lowered its projection for sales in its On-road segment, which includes Indian and Slingshot. They are now projected to be down a mid-single-digit percentage for 2024. In other words, right in line with what Harley-Davidson is projecting.
That guidance is despite some important new models hitting the showrooms. Harley-Davidson's new Street Glide and Road Glide are key products for that company, as it focuses ever more on the touring market, and executives said early indications are promising. Meanwhile, Indian executives are excited about the new 2025 Scout lineup that will soon be arriving at dealerships as that company aims to attract new customers.
"Scout is an entry point into the brand with more than 90% of Scout owners being new to Indian motorcycle, and also serves as a pipeline for growth into the other parts of our lineup," said Polaris CEO Mike Speetzen. He said about 70% of Scout buyers eventually buy a bigger Indian cruiser or touring model.
Even if the new Street Glide, Road Glide, and Scout lineup are successes — and, based on our first rides and general consumer chatter, I expect they will be — the manufacturers don't expect that to be enough to make 2024 a great sales year.
Industry headwinds
Several common themes emerged in the Harley-Davidson and Polaris conference calls. For one, dealers are feeling stressed as inventory levels are now back to where they were before pandemic-related shortages. Higher interest rates hit dealers twice. They raise the cost of keeping new models on the floor, before they're sold, while they also deter some consumers from making a discretionary purchase like a new motorcycle. Both Harley-Davidson and Indian are reducing wholesale shipments to dealers to try to alleviate some of that pressure. Harley-Davidson CEO Jochen Zeitz said wholesale shipments to dealers this year will be reduced by as much as 10%.
Promotions, which were non-existent when inventory was low, are now back, and that also cuts into manufacturers' profits. Some of those promotions involve lower interest rates to try to offset the effect higher rates have had on consumers. Additionally, Harley-Davidson recently introduced a new program called Flex Financing for its most expensive models that provides some features similar to a lease. It offers a lower monthly payment and at the end of the term the rider can choose to pay off the loan with a final balloon payment, refinance, trade in the bike on a new one, or settle the account and return the motorcycle.
Both companies are watching expenses. Harley-Davidson is moving its LiveWire electric motorcycle spinoff from its California base to company headquarters in Milwaukee and will reduce employee count by 10%, reducing LiveWire's expected loss this year by about $10 million.
Both companies also reported lower sales outside the United States, especially in Asia due to economic weakness in China.
Overall, the tone from both reports was cautious.
"Gas is still expensive," said Speetzen. "And with the hope of interest rate relief ... dimming ... I think you just see consumers continuing to be cautious and careful with how they're spending their money."
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