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Harley (HOG) Looks for Alliance to Expand in India Market

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Harley-Davidson, Inc. (HOG - Free Report) is looking for a partner to manufacture lightweight motorcycles for customers in India and other Asian markets, per Reuters. This is in sync with the Milwaukee-based company’s plan to introduce a 250cc to 500cc motorcycle in India and boost sales in the world's largest two-wheeler market. Expanding footprint in markets outside the United States will aid Harley, which is already struggling with the aging customer base and declining sales in its native country.

Per management, Harley has realized that it is too focused on large heavyweight motorcycles and needs to grow its expertise in 250-500cc motorcycles. In India, the company is exploring for an alliance that will enable it to develop its market share by understanding consumers and assembly. Additionally, Harley will increase its number of dealers in the country from the current tally of 30.

The company anticipates roughly $250 million increase in its operating margin in 2022 through motorcycle launches and product development in the lightweight segment.

Harley-Davidson, Inc. Price and Consensus

 

With rising discretionary spending, motorcycle sales in India are witnessing a double-digit growth against declining sales in the United States. Moreover, the industry sales in the 250cc to 500cc segment is anticipated to grow 25% in the country through 2021. In order to benefit from this growth prospect, many international motorcycle manufacturers are partnering with Indian companies. However, the path doesn’t seem to be a smooth one in India’s highly competitive market. The companies have to achieve their profit targets in the extremely cost-competitive market with lower-margin lightweight motorcycles.

Price Performance

In the past three months, Harley’s stock has gained 6.4%, outperforming 3.4% increase recorded by the industry it belongs to.

 

Zacks Rank & Key Picks

Harley currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are Honda Motor Company (HMC - Free Report) , CarGurus, Inc. (CARG - Free Report) and Fox Factory Holding Corporation (FOXF - Free Report) . Honda and CarGurus presently carry a Zacks Rank #2 (Buy) while Fox Factory sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Honda has an expected long-term growth rate of 3%. Over a year, shares of the company have gained 8%.

CarGurus has an expected long-term growth rate of 5%. Shares of the company have risen 62% in the past year.

Fox Factory has an expected long-term growth rate of 15.8%. Over a year, shares of the company have gained 60.4%.

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