Harley Davidson (HOG) – Anniversary Launch

Earlier this month, Harley Davidson (HOG) introduced their new 2023 models, which included the CVO Road Glide Limited as well as six additional limited-edition motorcycles. At first, only the CVO Road Glide Limited will be available to dealers while the other six will be released throughout the year. The other models include: Ultra Limited, Tri Glide Ultra Anniversary, Street Glide Special Anniversary, Road Glide Special, Fat Boy, and Heritage Classic.

BMO Capital analyst Gerrick Johnson pointed out that when looking at the 120th Anniversary collection, one can’t help but notice the similarities to the Indian brand, made by Polaris (PII). “The Anniversary bikes will be offered with “Heirloom Red” as the base color. While Indian motorcycles are offered in a vast array of bold colors , the brand’s iconic identity is burgundy which looks very similar to heirloom red. The gold-plated tank medallion on each bike depicts an Art Deco rendition of the iconic Harley-Davidson eagle, which has a stylistic similarity to the Indian headdress logo. We estimate that Indian has about 8% of the US heavyweight market, share that HOG would like to take back.”

Harley will also be keeping the new model distribution tight. According to dealers, each one only gets three of the new 2023 models out of the lineup. After they get the initial three, they will be able to order more down the road. Each dealership is getting one of the CVO Road Glide Limited (only 1,500 made). Speaking with a handful of dealers, the mood was overall positive for this launch:

“There’s a lot of interest for the new anniversary CVO models. People generally like the colors.” (New York)

“We have a bunch of pre-orders for the Anniversary editions. Nightster Special and Breakout will sell quick once they’re in stock at the dealership.” (Pennsylvania)

“We like what we have seen so far.” (Texas)

“Excited about the Anniversary models and think they will be well perceived.” (Tennessee)

While we will need to wait for specific sales data to populate over the coming months related to these new models, Harley Davidson will be reporting earnings this Thursday before the open. Unfortunately, channel checks appear mixed. BofA recently hosted an expert call with Sam Weiss, Dealer Operator & Owner of Steel City Motorcycle Company in Washington, Pennsylvania. The dealer said that he ended Q4 +25% Y/Y in new units, with sell-through accelerating in the quarter, and believes he will also end January up Y/Y across both new and used motorcycles. This would be well ahead of industry IHS data thru November which is indicating U.S. retail down 1.1%. “Dealership profitability remains at all-time highs, with no expectations for increased discounting while there does not seem to be evidence of a recession or waning consumer demand,” according to the dealer.

Meanwhile, according to data from RL Polk (subsidiary of S&P Global), Harley Davidson’s retail registrations in October increased +1.5%, decreased -4% in November, and under the assumption that registrations increased +2% in December.

The other aspect to Harley Davidson that will be worth monitoring are related to motorcycle loans taken out by customers. According to BofA, due to the rise in interest rates, customers have certainly seen an increase in their monthly payments. But for now, BofA is pointing out that delinquency rates are still below pre-covid as well below 2008-2009 levels.