# Harley-Davidson has eliminated discounts, markets and product models on the road to a turnaround

“We sharpened our approach and policies around supply and
inventory management to help preserve the value of our bikes for customers,
while almost completely eliminating promotions and discounting activities,” said
Jochen Seitz, chief executive of Harley-Davidson, on the Tuesday earnings call,
according to a FactSet transcript.

As a result, Seitz says it is better able to preserve “the
long-term value of our brand and our motorcycles.”

The company said prices for used Harley bikes in the U.S. are up “significantly” in the third-quarter.

See: GM and Ford knew about climate change 50 years ago, energy trade publication has uncovered

Harley-Davidson shares soared more than 23% in Tuesday trading after it reported earnings that blew past expectations.

The company is leaving about 40 global markets and the U.S. is the company’s top-priority market, Seitz said.

And Harley-Davidson is discontinuing product, cutting the
lineup by 30%. The company is also ending optional offers that customers are
least interested in.

Finally, the company said it is streamlining its network of dealers in the interest of customer service consistency, bringing the number of participants down 4% so far.

“We’ve committed significant resources to improve the
network’s overall profitability,” Seitz said.

“We can now focus our resources where they can make the most impact investing directly in areas that we believe have the highest potential for short, mid- and long-term success, like our stronghold core categories and new segments like adventure touring.”

Harley-Davidson has even changed its calendar so that its
model year will be in the early part of the first quarter, “creating product
excitement at the time that most riders are preparing for the riding season.”

UBS analysts are upbeat about Harley-Davidson’s prospects,
asking whether the “focus on profitability is starting to pay off.”

However, analysts still think there is room for improvement.

And: Google’s Waymo, Daimler team up to build self-driving trucks

“We expect the next 12 months to see better margin though it
does not address Harley-Davidson’s existential demand problem,” UBS said.

UBS rates Harley-Davidson stock buy with a $31 price target.

Seitz said the company aims to build on its “complementary”
businesses like parts and accessories and general merchandise, not just among
those who purchase bikes, but those who already ride them, a “significant asset”
that he says the company hasn’t effectively tapped.

Harley-Davidson has also restructured its e-bicycle business,
allowing it to focus on motorcycles. E-bikes will now be marketed as Serial 1,
powered by Harley-Davidson.

Harley-Davidson stock has gained 22% over the last three months, but is down 4% for the year to date. The S&P 500 index
SPX,
-0.20%
is up 5% for the period.