Harley-Davidson reported a 7.2% decrease in net income over its first quarter of 2016 despite seeing an increase in worldwide motorcycle sales and revenue. This was a result of a 65% increase in its marketing budget and a $70 million investment in product development. Harley-Davidson still reported a net profit of $250.5 million, but that represents a decrease from the $269.9 million in profit reported in the same quarter last year.
“I am pleased with how our first quarter results demonstrate the progress we’re making in both driving demand and delivering business performance in a highly competitive environment,” says Matt Levatich, president and chief executive officer, Harley-Davidson, Inc.
|Q1 Harley-Davidson motorcycle retail sales|
Harley-Davidson sold 57,458 motorcycles over the first quarter, up 1.4% from the 56,661 units sold in the same quarter of 2015. Sales were down slightly in the U.S., dropping by 162 units to 35,326 motorcycles. Harley-Davidson attributes the slight drop to discounting by competitors and poor economic conditions in areas heavily dependent on the oil industry. Still, Harley-Davidson claims a 50.9% market share on heavyweight motorcycles in the U.S.
Except for a 26.5% drop in Latin American sales, Harley-Davidson reported growth in international markets, reporting a 4.5% increase in motorcycle sales outside the U.S. It’s a modest growth but Harley-Davidson announced last October that increasing international retail sales was going to be one of its main objectives. Sales were especially strong in Canada where Harley-Davidson has taken over direct distribution following the end of its partnership with importer Deeley. Sales north of the border increased by 16.3% with the newly-established Harley-Davidson Canada
“Our recent investment to directly serve our customers and dealers in Canada has been well received with continued double-digit growth in Q1,” says Anoop Prakash, Managing Director, Harley-Davidson Canada.
The quarter also saw the launch of Harley-Davidson’s Live Your Legend marketing campaign. The campaign debuted in the U.S. during the NCAA Men’s Basketball Tournament and will expand globally later this year. Harley-Davidson is also trying to create brand awareness through demo programs. In the first quarter, Harley-Davidson reported double the number of demos in the Europe, Middle East, Africa (EMEA) Region and a 57% increase in demos in Japan. In the U.S., Harley-Davidson saw a 30% increase in demos during Daytona Bike Week.