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SUPPLY ISSUES HINDER HARLEY SALES

As Harley-Davidson Q2 and half-yearly financial results become imminent in late July, BMO Capital Markets analyst Gerrick Johnson has released his usual quarterly survey of US Harley dealership performance.

“Our retail checks indicate strong demand,” he said. “Despite macro-economic uncertainty, dealers continue to see demand outpacing supply, putting a governor on near-term sales, but aiding in the perception of exclusivity and desirability.”

According to Johnson’s sources, many new bike models and limited editions are sold before they reach dealer showrooms. “Traditional touring base models may last on the floor for a week or two,” he added. “But we have not had any feedback that customers are cancelling their pre-orders, and dealers continue to plead for more product.”

However, the BMO Capital Markets report does admit that Harley’s suspended production from 19 May to 6 June, due to a “regulatory compliance matter” relating to an outsourced component common to its internal combustion bikes, has had a deleterious impact — on both US domestic and export markets. Although production resumed in line with the original suspension timeline, shipments were subsequently sporadic. Many dealers only received deliveries in the final week of June and some got nothing at all before the quarter ended.

Johnson has therefore shifted 8075 bikes, equating to about £130m in revenue, out of his Q2 estimate and into Q3. “The net effect is no change for the year,” he concluded. “But we have adjusted our model, and now expect worldwide retail sales to be 19% down in Q2, but 21% up in Q3.”

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