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Why Harley-Davidson Stock Is Falling Again Today

By Rich Duprey – Updated May 29, 2020 at 11:37AM

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Exclusivity is fine, until someone offers a great deal on a slightly used motorcycle.

What happened

Shares of Harley-Davidson (HOG -0.87%) opened lower on Friday, a day after analysts expressed concern over lower used-motorcycle prices weighing on sales. At 11:30 a.m. EDT today, the stock was down 7.2%.

So what

The conflict between new bike sales and used bikes has been a pernicious problem for Harley for some time now, though prior to the COVID-19 pandemic it had been easing. Because its motorcycles carry a premium price tag, being able to get a good deal on a motorcycle just a couple of years old will suppress sales further.

Motorcycles in a line

Image source: Getty Images.

Now what

Used motorcycle prices undoubtedly play a role in new CEO Jochen Zeitz's plan to make new Harley-Davidson bikes more difficult to come by. 

Although details are scarce at the moment, the idea is for the bike maker to reduce production to create an air of exclusivity by tightening availability. There was a time a number of years ago when bike buyers had to wait months to get their new Harley-Davidson, but the company decided to lean into the outsize demand and ramped up production. 

That worked well until the financial markets collapsed in 2007 and its core customers subsequently began aging out of the market. Now it's trying to manufacture demand, though it could just end up hurting sales and profits. 

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Harley-Davidson Stock Quote
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