Analyst: Harley sales cool so far in Q2 to 13%
Favorable weather helped pull forward bike sales in the first quarter, but momentum cooled during April and May, according to a research note provided to Powersports Business by Longbow Research analyst James Hardiman.
Dealer contacts surveyed by Longbow Research reported an approximate 14 percent increase in May following a strong 17 percent increase in April. Hardiman said that favorable weather trends helped pull demand forward in the first quarter, adding that it is encouraging to see strong second quarter momentum following the strong first quarter.
Inventories were a point of concern, however. Contacts surveyed reported an average 4 percent inventory shortage in the first two months of the quarter, which is only slightly better than the 6 percent inventory shortage exiting the first quarter of 2012.
"That said, we recently learned that this year's dealer show (which coincides with the start of the 2013 model-year ordering period) will not be until late August, which only amplifies dealer fears that 3Q inventories could get punishingly low and have an impact on sales," Hardiman said in the note.
Used bike prices have also leveled out year-over-year, with a used model year 2012 bike selling at a one percent discount on average, which is near-level with the 0 percent discount on comparably aged bikes a year ago. Hardiman noted the discount was much better than the 5, 10 and 6 percent discounts on comparable models during the 2008-2010 years.
The approximate 13 percent sales growth so far in the second quarter 2012 continues on the trend of six quarters of positive sales following two and a half years of negative sales growth going back to 2007.
Hardiman said that while actual sales results reported by dealer contacts in Q4 2011 and Q1 2012 were reported at 11 percent and 25 percent growth, respectively, Longbow was hesitant to assign too much weight to the few outliers in the group who saw a dramatic increase in sales results.
"We believe some of this to be a function of much more volatile results during this seasonally slow period whereas 2Q results (and especially May) represent much more normally distributed sales results," Hardiman said.
Positive results in sales are tampered by the inventory concerns. With the average dealer reporting a 4 percent shortage in inventory, dealers are concerned that an extra 7,000 bikes being held back in anticipation of the York production issues won't be enough to tide dealers over until the dealer show, Hardiman said.