Yesterday we reported Indian made great strides in Q3, with a claimed increase in retail sales of 16% – a day on which mothership Polaris’s stock (PII) jumped the same 16%. In that same third quarter, Indian’s cowboy, Harley-Davidson, saw its sales decline 8.1%. Unlike Indian, H-D actually breaks out numbers: 45,469 units sold domestically in Q3 2016 slid to 41,793 in Q3 2017 – and 161,658 units for the whole year. Domestically.
In the U.S., Indian says it jumped from owning 3% of the over-900cc market last year, to over 10% of it by September, 2017 (and this in a market where sales of all bikes over 900cc was down 9.2% for the year, according to H-D). Ten percent of 161,000 tells us Indian sold around 16,000 heavy cruisers.
What does this tell us? I think it tells us more people are buying Indians lately, but it’s way too soon to put the fork in Harley-Davidson. The faithful knew the new Milwaukee 8 was going to be in more 2018 models, and many buyers decided to hold off buying until they appeared. It’s a pretty safe bet that, with the release of eight new Softails last August, things will probably be seriously picking up in Q1 of next year for H-D if not in Q4 of this one. It’s no coincidence Indian saw its big gains this year after releasing its new Chieftains Elite and Limited, and Roadmaster Classic early this year. People like new and improved.
On another positive note, things weren’t quite so bad for H-D’s international sales, which fell just 4.6%, from 23,486 to 22,416 units in the third quarter. Like Coca-Cola, Levi’s and Marilyn Monroe’s mole, there are just some distinctly American brands you can’t kill without a prolonged and savage beating. Indian is still trying to establish its overseas beachheads.
Still, it’s a remarkable feat of corporateering for a brand Polaris didn’t acquire until 2011, and whose first new bike launched in 2013, to have already captured a 10% US market share in just four years: In nearly 20 years of trying, Victory never came close to that. If you’re H-D, you have to be a little concerned about the trajectory. From a Motley Fool article in May of last year:
Since relaunching the [Indian] brand, Polaris’ total revenues have increased 47% to $4.7 billion, but motorcycles have grown from accounting for 8% of the total to 15%, and sales have nearly quadrupled to $698 million annually. That may be a rounding error to Harley-Davidson, which did $1.3 billion in sales in the first quarter alone, but Polaris has already become the No. 2 motorcycle manufacturer.
With Polaris motorcycle sales growing 67% last year and Harley-Davidson’s falling almost 2%, if those trends continue, Polaris will be selling more motorcycles than Harley in just three-and-a-half years. Of course, it’s highly improbable Polaris can maintain the breakneck pace it’s been on, but it’s also clear it can dramatically narrow the gap between first place and second place in short order.
Now that Polaris is past the recall problems with its Slingshots, done with the worst of the Victory bloodletting, and even owns the 2017 American Flat Track championship, well… a lot of people say Indian is the best thing to happen to Harley-Davidson. A little competition is good for everybody. Especially for people who ride motorcycles.