Harley-Davidson shares lost nearly 6 percent on Tuesday after the motorcycle maker reduced its full-year shipments forecast, underscoring slowing demand as the company’s loyal baby boomer customer base ages.
The motorcycle maker, which had previously forecast flat to modestly down full-year shipments, said it expects to ship 241,000 to 246,000 motorcycles in 2017, compared with 262,221 a year earlier.
Shares fell 5.8 percent, to $48.95.
That’s a far cry from the nearly 350,000 it shipped each year about a decade ago.
Baby boomers, Harley’s main customer base, are aging and the storied motorcycle maker is also up against discounts offered by rivals such as Indian brand bike maker Polaris and Japan’s Honda Motor.
“Given US industry challenges in the second quarter and the importance of the supply and demand balance for our premium brand, we are lowering our full-year shipment and margin guidance,” said Chief Executive Matt Levatich, later telling analysts that hourly employment cuts were in the works.
The company expects to ship 39,000 to 44,000 motorcycles in the current quarter, suggesting a decline of up to 20 percent.
Harley’s dealers in the US had too many 2016 models at the end of the fourth quarter, which led the company to limit shipments of its 2017 models, including higher-margin touring motorcycles with the new “Milwaukee-Eight” engine.
RBC Capital Markets analyst Joseph Spak said unless retail demand improves the company may face a similar situation.
To flush out the excess inventory that was restricting sales of its latest models, Harley took the rare step of offering rebates on its 2016 motorcycles to US dealers in the first quarter.