A Closer Look At Harley Davidson’s International Growth Strategy

by Trefis Team
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Harley-Davidson (NYSE:HOG) has had a challenging start to 2017. With a slowing industry environment, the company reduced its shipment guidance for 2017 by 200 basis points. While the performance of its international segment was also slow in Q2 2017, Harley-Davidson expects growth in this segment in the second half of the year. The company is focusing on expanded distribution and its new high impact motorcycles are likely to drive international growth. Harley Davidson is expanding into several geographies and the company recently opened its first concept store in India to increase its presence in smaller cities of the country.  During Q2 2017, Harley-Davidson added 13 new dealerships in regions such as China, Thailand, Korea, Switzerland, and Italy. The international segment holds strong growth opportunities for the company as U.S. retail sales slow-down and Harley Davidson’s strategy in this segment will be a key growth factor in the long term.

Tapping Growth Opportunities Internationally

According to our estimates, more than 25% of Harley Davidson’s valuation comes from motorcycles sold outside the U.S., with the non-Europe and U.S. segment accounting for more than 15%of the company’s valuation.

See our complete analysis for Harley-Davidson

The company is focusing on growth opportunities in Asia Pacific and to drive this growth it is planning to open an assembly facility in Thailand. This facility will reduce the company’s tariff burden and provide greater access to the markets in the region.  Harley-Davidson is banking on its Street Rod model to drive international growth and the company believes that increased availability of this model by next year will drive sales in international markets. This bike was recently launched in Indonesia, after the launch of Street Rod 750 in India earlier this year.

India and China are the world’s two largest two wheeler markets and with an increase in disposable incomes in these regions, demand for luxury bikes is likely to increase in the coming years. India’s luxury motorcycle market is likely to double to 20,000 units by 2022 and through its concept store Harley-Davidson is looking to capture a larger share in this market.

Harley-Davidson has identified the growth potential in international markets and through strong products and expansion of dealership the company is looking to grab a greater share in this market. We believe the international segment will remain a strong growth driver for the company in the coming years and its international strategy will play a key role in the company’s long term growth.

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