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Sizing Up Harley's Big Head Start Over Revived Indians

A Harley-Davidson dealership in Marina del Rey, Calif.

Photograph by Patrick T. Fallon/Bloomberg

A Harley-Davidson dealership in Marina del Rey, Calif.

The relaunch of the long-defunct Indian motorcycle brand doesn’t appear to have slowed Harley-Davidson (HOG) down a bit.

In fact, with a few new models of its own, the Wisconsin company has actually picked up speed since the August debut of the revived Indian brand by Polaris Industries (PII). Harley said sales in the recent quarter increased 2.1 percent, to $1.03 billion, and profit surged almost 7 percent, to $75.4 million. All told, the company sold 45,875 bikes in the recent quarter, a 5.7 percent over the year-earlier period.

Polaris, unfortunately, declined to break out motorcycle sales by unit, but it said its revenue on that front almost doubled, to $68.8 million, with virtually all the increase coming from three new would-be Hog beaters in its resurrected motorcycle line. Customers dropped about $33.4 million on the new Indians; assuming an average price point around $21,000, Polaris probably sold somewhere around 1,600 Indians in the last three months of the year.

If we assume those were all in the U.S.—Polaris is still building up its dealer network abroad—that compares with Harley’s domestic sales of 27,202 in the period. In short, the Indians are most likely seeing less than one-10th of the Hog business: Not all that threatening yet, but it’s very much the early days. Polaris had only 60 Indian dealers by the end of the quarter, compared with Harley’s 700 or so.

On a conference call this morning, John Olin, Harley’s chief financial officer, suggested that Polaris is mostly tapping into customers shopping for nostalgia. “They sold some motorcycles in the fourth quarter; we expected that,” he said. “It hasn’t thrown us off our plan at all, and we’ll see how they continue to roll out.” Harley Chief Executive Keith Wandell pointed out that his charge has been fending off Honda (HMC), Suzuki (7269:JP), and Yamaha (7951:JP) for years.

Meanwhile, both companies are getting some momentum from an economic tailwind. A heavyweight bike purchase is just the sort of thing a surging stock portfolio can prompt, to say nothing of the requisite leather chaps. Not surprisingly, as the Dow soared through last year, U.S. motorcycle registrations increased 2.2 percent in 2013.

Stock is an associate editor for Twitter: @kylestock

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