And Now For Something Completely Different: Financial Analysis Predicts Gloom and Doom for Harley

A few days before the MoCo’s rosy quarterly earning statement dropped, a starkly different report predicting Harley-Davidson’s insolvency was released by an independent site.

The opinion comes from Idea Mechanic, and while the tiny site is less than two months old, its PDF regarding HD’s future was spot on in several cases. Yes, the target demographic is aging. Yes, interest rates are eventually going to rise, diminishing Harley’s ability to buy cheap money and fund stock buy-backs. And yes, the elevated rates will raise the costs of any new projects or expansion.

Furthermore, in 2014 Warren Buffett will take his money and go home after earning a healthy 15% per year for his $300 million investment since 2009. And no, there probably won’t be a federal bailout if things go really wrong. But I’d challenge the mysterious Idea Mechanic (there is no ‘about’ section on the blog) with regard to their one crucial assumption: Harley Davidson is not an enormous frozen monolith staring down a tidal wave. It is a dynamic entity filled with creative people who adjust.

If things are as bad as the Idea Mechanic believes, then certainly, Harley-Davidson has noticed.

Other portions of the assessment are simply laughable: “The pope doesn’t approve.” “Harley Davidson will facing increasing regulatory pressure.” (Certainly on emissions, but this guy is talking about safety). First off, nobody buys a Harley because they have someone else’s approval (besides your significant other, perhaps). You buy a Harley because it’s badass, because they’re loud, precisely because many people don’t approve. And is one man’s opinion in Italy really going to change your mind?

Additionally, the comparison between the cigarette and motorcycle industries is laughable. Motorcycles will never face the safety-oriented regulatory pressure that cigarettes have faced because there is no health debate. Motorcycle OEM’s have never pretended that there is no danger in riding (as cigarette manufacturers did with smoking). Everyone who rides knows there is risk involved—and we accept it.

The bottom line is that yes, things might get gloomy for Harley. But to assume that Harley is done is absurd and I’d happily bet against the Idea Mechanic. How about you?

Here’s the Idea Mechanic’s report: a-gloomy-perspective-on-harley-davidson-69552.

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