Harley-Davidson (HOG) Last Update 7/29/22
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Harley-Davidson Company


  1. Financial Services constitute 41% of the Trefis price estimate for Harley-Davidson's stock.
  2. Motorcycles and Related Products constitute 40% of the Trefis price estimate for Harley-Davidson's stock.


  1. Latest Earnings

Harley-Davidson posted a better than expected set of Q2 2022 results. While revenue fell by 4% year-over-year to $1.47 billion, as the company paused production in May due to supply issues, the number came in well ahead of estimates. Net income rose almost 5% year-over-year to $216 million, as the company focused on more profitable models. Harley also reaffirmed its full-year outlook, noting that it expects motorcycle revenue to grow by between 5% and 10%.


  • Total Worldwide Shipments and Average Revenue Per Motorcycle:

  • Harley Davidson's total worldwide shipments declined from 240k in 2017 to around 145k in 2021, driven largely by the impact of the Covid-19 pandemic and saturation in the company's core U.S. market. However, with Covid-19 easing, and the company focusing on bringing in new customers, sales could recover to over 250k units by the end of 2028. However, if sales actually surpass our estimates and rise to over 300k, there could be a 10% upside to our price estimate.
    Harley-Davidson's average revenue per motorcycle increased from around $16,000 in 2019 to around $18,500 in 2021. Going forward, we expect it to increase over our forecast period to around $21,000. However, if the company can generate higher revenue per motorcycle of about $24,000, there can be a 10% upside to our price estimate.


Harley-Davidson is a manufacturer of heavyweight (601cc+) cruiser and touring motorcycles. Harley-Davidson is an iconic brand that commands a ~50% share in heavyweight motorcycle sales in the U.S. After the U.S., the most significant markets are Europe and Japan. Harley-Davidson is known to engage its customers in motorcycling-related community activities. The company sponsored the Harley Owners Group (HOG), the largest riding club in the world, with over 1 million members. Such initiatives boost motorcycle accessories and merchandise sales, which significantly contribute to the overall revenue. Like most automobile manufacturers, the company has a financial services division called Harley-Davidson Financial Services (HDFS) that provides retail loans to customers to buy new and used motorcycles, offers wholesale loans to dealers to help them finance their operations, and also acts as an agent to provide motorcycle related insurance to customers.


Despite a shrinking market over the past few years, motorcycle sales are still the largest source of value for Harley-Davidson

Harley's motorcycle division is still its most valuable segment, given the ongoing recovery in motorcycle sales following Covid-19 and an increasing focus on higher-value motorcycles such as Touring, large Cruisers, and Trikes. Gross margins for the segment are also relatively thick by automotive industry standards, projected at around 30% for 2022.


  1. Launch of electric vehicles

Harley Davidson jumped into the EV era with the launch of the Harley-Davidson LiveWire, its first electric vehicle, in 2019. The company is looking to spin off the LiveWire division, merging it with a special-purpose acquisition company to create a new publicly traded electric-vehicle player. The new entity is expected to be majority-owned by Harley.

  1. The Hardwire strategic plan

In 2021, Harley unveiled a five-year strategic plan it called “The Hardwire." Under the plan, the company is targeting low double-digit EPS growth through 2025, mid-single-digit revenue growth in the motorcycles segment, and double-digit growth in operating income for the financial services segment. The company also intends to grow in presence in the Touring, large Cruiser, and Trike segments, which are the most profitable segments of the motorcycle market.

  1. Increase in non-traditional riders taking up motorcycling

The U.S.'s core customer base for heavyweight motorcycles consists of middle-aged Caucasian males. But with an aging population of baby boomers in the domestic market and the rising popularity of affordable lighter motorcycles among millennial customers, the heavyweight motorcycle market might see negligible growth in the coming years. Harley-Davidson hopes to meet the deficit created by its declining core customer base with sales to its outreach customers.

As the core customer base ages, the company is focusing on building a new generation of Harley riders. The long-term strategy through 2027 focuses on building 2 million new Harley-Davidson riders in the U.S.