On Sep. 24, Harley-Davidson announced that it has decided to exit the Indian market, the world’s largest motorcycle market. The iconic American motorcycle maker is discontinuing manufacturing and largely scaling back its sales operations in the country. Last week, Toyota Motor said it wouldn’t further expand in India, owing to the country’s high tax regime.
What's the latest Harley-Davidson news?
India’s Hero MotoCorp and Harley-Davidson are in advanced talks for putting a distribution deal in place after Harley-Davidson stops local manufacturing in India, according to Reuters. The distribution deal will allow Hero MotoCorp to import and sell Harley-Davidson motorcycles as its sole distributor.
The report added, “Discussions are also ongoing to let Hero become a contract manufacturer for at least one Harley motorcycle with 300-600 cc engine capacity, which it will launch later.” Harley-Davidson declined to comment on the matter, and the financial terms of the agreement are not yet clear.
Harley-Davidson to exit India
On Sept. 24, Harley-Davidson said that it had decided to shut down its only factory in India due to low sales volumes. The company entered the Indian market in 2010, and has sold more than 25,000 units since. The exit decision is part of its "Rewire" strategy to shift its focus back on core markets and more profitable motorcycles. Earlier this year, Harley said it was looking forward to reducing its product portfolio and exiting lower-volume markets.
According to MarketWatch, “The motorcycle maker said it expects restructuring costs in 2020 of $75 million for the actions taken from Aug. 6 through Sept. 23, and total costs associated its Rewire actions of $169 million this year.”
Harley-Davidson announced the "Rewire" strategy after reporting an unexpected quarterly loss amid the coronavirus pandemic. In the second quarter of 2020, Harley's EPS fell YoY (year-over-year) to -$0.60 from $1.23. Wall Street analysts had expected the company to report EPS of $0.04. Sales of motorcycles and related products fell 53 percent YoY to $669 million in the second quarter.
What is Harley-Davidson's stock price today?
Harley-Davidson stock was up about 0.4 percent at $23.18 in premarket trading today. The stock fell 0.8 percent yesterday and closed at $23.10 with a market capitalization of $3.5 billion. The stock has fallen by 8.5 percent in the last five days and 35.3 percent in the last year.
Harley-Davidson stock is trading 43.5 percent below its 52-week high of $40.89 and 61.4 percent above its 52-week low of $14.31. Year-to-date, the stock had fallen by 37.9 percent as of yesterday.
Should I buy or sell HOG stock?
Currently, analysts' stock price forecast for Harley is $31.64, which suggests a 37 percent upside. The highest target price for the stock is $37, which implies a 60.2 percent upside, and the lowest target price is $23, which suggests a 0.4 percent downside. Among the 22 Wall Street analysts tracking Harley stock, five recommend "buy," 16 recommend "hold," and one recommends "sell."