Harley-Davidson Beefs Up Incentives to Clear Out Carryover Inventory

harley-bikeHarley-Davidson Inc. is boosting its finance offers in response to higher than expected 2016 carryover inventory, Chief Financial Officer John Olin said during the third-quarter earnings call on Tuesday.

“Model year 2016 carryover inventory is a much bigger percentage of the total inventory that we have in the system than we would like at this point, and it is higher than what we had on a year-over-year basis,” Olin said. “The dealers are doing a very good job of burning through that carryover, but it is, no doubt, higher than we want.”

In response, Harley-Davidson is offering 1.99% financing on select models with no money down for top tier — prime and super-prime — consumers, Olin said.

However, finance promotions for the manufacturer are “down quite significantly” on a quarter-to-quarter basis in 2016 versus 2015, he added. “In 2015, we were running deeper offers at 0.99% and much broader across our model lineup.”

Additionally, 2015 was the first year Harley-Davidson felt the impact of “significant discounting, which was currency-driven by the competition,” he said. “We did more finance offers last year than we did this year in general. Spending is down quite significantly on a year-over-year basis.”

Overall, financing promotions are “actually lower” on a year-over-year basis, Olin said, “but we are very focused on helping move some of those models that we are long in.”

Additionally, the motorcycle manufacturer is offering a winter warranty program for the first time “in the last couple of years,” Olin said. Customers who purchase a motorcycle in the U.S. between now and April 1 will have two-year warranty coverage added.

Harley-Davidson is taking a “three-pronged approach in the marketplace right now” to help the dealers clear out inventory and prepare for the 2017 model vehicles, Olin explained. Two consumer-focused approaches — the finance promotions and winter warranty program — and a dealer-focused approach, Olin said.

The company will offer an incentive to help dealers trade new model year 2016 carryover by facilitating and defraying the cost of trading, Olin said. “We hope to encourage and facilitate getting the right motorcycles to the right dealers at the right time, to move through as much of the carryover inventory as quickly as we can,” he said.

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