Harley-Davidson found itself in hot water with the President when it announced plans to move some production overseas last month, and blamed the tariff war with the EU as the primary reason for the decision.
This didn’t sit well with Harley Davidson consumers, who took to social media to share their displeasure with the American icon’s decision to produce motorcycles in foreign countries:
As you can see from the chart of Consumer Happiness above, the announcement was met with outrage from consumers. Mention volume spiked, and the percentage of tweets that were positive dropped from Harley’s typical levels of 80% happy down to 60% happiness — a large negative move for such an established brand.
Headwinds and headlines are hurting Harley-Davidson
- Macro headwinds: The number of new motorcycles purchased in the U.S. has dropped by nearly 50% in the past decade. Consumers simply didn’t come back to motorcycles after the recession.
- Generational trends: Baby boomers love their Harleys. Unfortunately, the men following in their footsteps into their 50’s aren’t that interested in motorcycles.
- Headline risk: For many investors, it’s concerning to see a company that is so willing to jump into such hot-button issues like we have seen Harley-Davidson do by blaming their decision on President Trump’s tariffs.
- Declining brand loyalty: Harley-Davidson has always been viewed by consumers as an American Icon. By moving some production overseas, the company risks losing this All-American image, as supported by the Consumer Happiness data above.
What to watch for moving forward
We’re going to keep a very close eye on purchase intent mentions for Harley-Davidson. Will sales continue to slowly slide, or is there a resurgence in the company’s future? The good news is that expectations are already very low, so the company will have an easier time surprising Wall Street to the upside.
Most importantly, we’ll be tracking consumer happiness as charted above. If the company can stay out of the headlines for a little while, we should see happiness levels creep back up to that very strong 80% level.
And then there’s always the possibility of a full reversal. Traders and investors need to be asking themselves what happens if the US/EU tariff negotiations turn out better than expected? Could Harley-Davidson turn this entire story around by reaffirming their commitment to US-based production?
Harley may have stumbled with consumers last month, but we’re not ready to count this great American company out.
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