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Harley-Davidson's Production Shutdown Could Wreck its Profits for 2022
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Harley-Davidson's Production Shutdown Could Wreck its Profits for 2022
2 months ago Industry
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Harley-Davidson is likely looking at missed profits following a brief production halt that suspended the company’s plants in Pennsylvania and Wisconsin. On May 19, Harley said it would stop making its gasoline-powered motorcycles for two weeks citing regulatory compliance issues. But that short period of time is now expected to affect the company’s profits for the entire fiscal year, according to Reuters.

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The motorcycle manufacturers’s compliance woes and subsequent production stoppage extended its backlog of deliveries, making it difficult to sell the company’s most lucrative models. Harley dealers told Reuters “[it’s] hard to sell someone a $40,000 bike that we don’t have in front of us.”

The production halt had only affected the company’s production of gasoline-powered motorcycles. During that brief period, the sale of EV models making up the recently spun-off LiveWire brand were not enough to make up for a loss of sales.

This latest expected downturn at Harley-Davidson simply continues the recent “will they or won’t they” as far as posting profits for the American bike maker. Harley expected to post revenue growth from five to ten percent this year, but that is likely not possible at this point. Analysts say that Harley will probably post a loss of a little over $16 million compared to the same quarter in 2021.

But the problem extends further back than the recent two-week stoppage; Harley-Davidson has struggled with surging costs of raw materials and semiconductor shortages for months, at the very least. Both of these have eaten away at Harley’s profit margins, despite demand for the company’s bikes being reportedly strong.

While demand is good, supply won’t magically follow — not given the supply chain disruptions that the entire industry is facing. Harley-Davidson is even struggling to secure replacement parts for bike repairs and to sell at dealerships as add-on accessories, like those in its Screaming Eagle accessory line.

Harley dealer inventories have dried up, and deliveries continue to plummet. Analysts said that Harley made 223,000 deliveries in 2009, but in the ensuing decade, that number has only shrunk. Profits had been buoyed at one point or another by the bike maker’s pricing — Harley is notorious for the sale of five-figure models. But, now, it seems the “high-margin” bet Harley-Davidson made probably won’t pay off in 2022.

Sourse: Jalopnik

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