March finance promotions helped narrow the gap on Harley-Davidson Inc.‘s slipping U.S. retail sales in the first quarter, the company reported on its earnings call.
The OEM ran its “This is as free as freedom gets” promotion in March, offering customers 2.99% APR and no money down. The company was unable to quantify how the promotion contributed to March sales growth, but Harley is crafting finance promotions to target different consumers and to stay competitive.
“In general, the teams are becoming much more surgical in the reaching of different customers on the terms that the customers are going to respond to,” Chief Executive Matt Levatich said on the call. “We are in a very competitive general industry environment and [that] finance promo… is a headline rate to just make sure that we are not dismissed from anybody’s consideration and what’s going on in the broader industry. It’s all supported with a broader and sharper marketing investment.”
Originations at Harley-Davidson Financial Services climbed 5.4% to $685.3 million year over year.
Meanwhile, Harley-Davidson motorcycles sold in the U.S. dropped 4.2% to 28,091 in the first quarter of 2018. The first-quarter sales performance is seen as an improvement by the OEM because it is the lowest year over year decline in the last nine quarters. Sales declined in the double-digit percentage in January and February then slowed to single-digits in March.
Marketing and dealer initiatives as a part of the More Roads for Harley-Davidson plan also helped mitigate the OEM’s slowing sales.”We feel the driver is clearly our investment in our stronger dealer growth catalyst as well as increased marketing and brand support that we had in the quarter,” said Chief Financial Officer John Olin. “A lot of that takes time to take hold and certainly, the selling season starts in the March timeframe, so we are very pleased with the trends we saw during the quarter, and we’re very pleased with the things that we are doing with the dealer network.”
As for HDFS loan performance, delinquencies 30 days and older increased 42 basis points to 3.73%. The increase was driven by deficiencies of a new loan management system that HDFS implemented in January, and the company expects delinquency increase to be temporary, Olin said.