Harley's Return to Core Provides Motor Company Profit Lift, but Electric to Remain a Drag

With a long history of manufacturing experience, Harley-Davidson has brand strength and a dealer network that give the firm a wide economic moat and dominant position in the U.S. motorcycle market. However, there are no switching costs to protect Harley's brand when consumers replace their bikes, and the premium price Harley commands relative to its peers has proven problematic during cyclical downturns and periods of competitive pricing, hindering Harley's retail sales and shipments. In 2020, as a result of temporary factory shutdowns, dealer closures, and shifted product launches, Harley ceded massive market share. While still a significant market player, Harley's market share fell roughly 800 basis points, to 42.1% in 2020 from above 50% in 2019. And while it recovered 3% of share in 2021, it again ceded 400 basis points in 2022 (to 41%). We plan to monitor Harley's market share position to help determine the strength of Harley's brand intangible asset.