Harley-Davidson Suffering from Major Recalls
It’s getting a lot less attention than Volkswagen’s Dieselgate, but Harley-Davidson is having a year of recalls that is having a major impact on the brand. In 2015 to date this year, 312,000 Harleys have been recalled. Reportedly, the American motorcycle company has spent $30 million from 2012 through 2014 on Harley-Davidson recall repairs. That amount should be more than matched just by 2015 alone because there were less than 10,000 recalls annually in 2012 and 2013 based on Wall Street Journal research. RELATED: See More Photos of the Harley-Davidson Project Livewire
Harley-Davidson execs say the problem isn’t the influx of temporary workers the company has hired or the reorganization of its American manufacturing facilities. It has more to do with design flaws that caused saddlebags to fall off and clutches affected by metallurgical issues.
This recall imbroglio shouldn’t have a major impact on Harley-Davidson’s bottom line (unless problems persist at current levels). It had $2.2 billion in net income from 2012 through 2014 and the recall expenses in that same period represented about 1.4 percent of that figure.
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Some speculate Harley-Davidson has added new technology that was not properly vetted before installation on a massive scale. That could include items like its new engine-cooling technology that combines water and a liquid coolant and recently introduced hydraulic clutches.
Harley-Davidson is facing increased competition, which it says is driven by deep discounting by its rivals from Europe and Japan. Its market share for motorcycles above 600cc dipped below 50 percent down to 47.5 percent in the second quarter from 50.3 percent a year earlier and 54.9 percent for all of 2013.
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Of course, not just Harley-Davidson is affected by recalls. As the Wall Street Journal noted, Honda, the largest Harley competitor, has also seen major recalls this year. It recalled 143,000 motorcycles in 2014 and 60,000 so far in 2015.
Honda told the paper that its recall was a “proactive approach” as if to suggest it may not have been forced to do the recalls by the federal government. It said the recalls were driven by common parts used among several models.