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Expect a glut of HOGs

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Harley Davidson motorcycleI don't normally watch the stock of Harley Davidson Inc. (NYSE: HOG). Lately though, I've had a look at how it's doing and things look pretty ugly right about now. Value investors might be tempted to buy in or to build on an existing position at this time, and that may be a good choice, but as far as a seasonal investment, this year HOG may be scheduled for intake to the slaughter house. In the face of a worsening economy and a kaleidoscope of consumer credit woes, that big bike maker probably won't be faring so well. It's my opinion that domestically, Harley Davidson is going to become it's own largest competitor, at least in the near term.

For the last 20 years, buying a Harley has been a purchase of status far more than an expenditure of need. As much as 85% of the Harley Davidson fleet has been purchased by pleasure riders rather than commuters or hard-core biker types. This reality puts those classy machines into the realm of consumer toys rather than consumer needs. Add to this the fact that Harley riders are getting older. They say: If you won't be able to pick up your bike when you lay it down, it's time to give up the ride.

My point here is that more and more Harley Davidson motorcycles are entering the secondary phase of their life cycles. First phase owners are beginning to sell off their bikes. I noticed the increase of used Harleys for sale beginning two years ago, and last year I noticed the start of a very slight decline in asking prices. This does spell good news if you're in the market for one, and if that's the case, I envy you. However, this signals tougher marketing domestically for that classic American icon, hence the Harley Davidson push into India and China.

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Last updated: July 06, 2009: 04:44 AM

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