Harley-Davidson Inc.: Global Road Trips, Training Programs Prove Profitable

July 19, 2006
Motorcycle maker's push into overseas markets is paying off.

Teach them and they will buy. That is the theory behind Harley-Davidson Inc.'s Rider's Edge program, which aims to take armchair Harley fans and turn them into road warriors via new-rider training classes. The classes, which are offered at various Harley-Davidson dealerships around the country, teach new riders how to be confident on their motorcycles, the basics of shifting, how all the controls work, turning drills and braking exercises.

Another theory that Milwaukee-based Harley-Davidson feels will increase sales and visibility -- going global.

Earlier this year the company -- one of IndustryWeek's IW 50 Best Manufacturers for 2006 -- entered the China market.

According to a March 23 press release announcing the company's first Beijing dealership, entry into China will be a gradual process. The leisure-oriented market for premium, heavy-weight motorcycles is just beginning to emerge in China, with market development limited by ownership and riding restrictions in most large cities and on highways, and by limited but growing disposable income, according to the company.

Another market the motorcycle maker wishes to tap is India. However, India has its own set of restrictions that makes Harley's entry a difficult one. One is import duties, which are about 60%. The other roadblock is stringent emissions standards.

According to a July 11 story in IndiaTimes Auto, nearly 80% of the automobiles in Indian cities comprise two-wheelers, and it is necessary to control their emission in a stringent manner.

Harley-Davidson Inc.
At A Glance
Harley-Davidson Inc.Milwaukee, Wis.Primary Industry: Motor VehiclesNumber of employees: 9,5802005 In ReviewRevenue: $5.67 billionProfit Margin: 16.91%Sales Turnover: 1.08Inventory Turnover: 15.35Revenue Growth: 6.64%Return On Assets: 17.5%Return On Equity: 29.82%

While the process of moving into new markets is a slow one, James Ziemer, Harley's president and CEO, indicates the efforts are bountiful.

"We've been doing a lot of things to increase our outreach," Ziemer said in a July 17 interview with Reuters. "Obviously our international [business] certainly kicked in with the investments we've been making there for several years."

Indeed, the company announced increased revenue and earnings per share for its second quarter, which ended June 25. Revenue for the quarter was $1.38 billion compared with $1.33 billion in the year-ago quarter -- a 3.3% increase. Net income for the quarter was $243.4 million compared with $237.4 million, an increase of 2.5% over the second quarter of 2005. Second-quarter earnings per share were $0.91, an 8.3% increase.

"The company believes that worldwide retail sales of Harley-Davidson motorcycles will support a wholesale unit growth rate in the range of 5% to 9% annually and an annual EPS growth rate of 11% to 17%," said Ziemer in a July 17 statement.

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