No easy ride for Harley as bikers leave

Head of US motorcycle brand's UAE operation tries to look beyond 15% decline in units sold.

Sales of the quintessential American motorcycle dipped as customer numbers declined in the face of the financial downturn.

Sales of Harley-Davidson motorcycles in the UAE have taken a fall, a development the company's local dealer partly attributes to a decline in the population and reduced spending on leisure vehicles. The number of bikes sold across the Emirates last year dropped 15 per cent, from 500 to 425, said Marcel Bode, the general manager of Harley-Davidson UAE.

"It was a lot of factors," he said on the sidelines of the Gulf Bike Festival in Dubai. "Financing has an effect, a number of potential customers have left, the market shrunk and people were more cautious with their cash. It is still a leisure product, something that you don't necessarily need." Overall sales in the UAE, however, grew by 4 per cent last year, boosted by business at the new Harley-Davidson boutique in Dubai Mall, which sells Harley clothing and accessories, Mr Bode said.

Last month, the parent company, the largest motorcycle maker in the US, posted its first quarterly loss since 1993 as consumers put off purchases of premium models. The loss of US$218.7 million (Dh800.6m) in the fourth quarter compared with net income of $77.8m a year earlier, the Milwaukee-based company said. Vehicle sales dropped steeply across the UAE last year as banks tightened credit for vehicle purchases after the economic crisis took hold.

Laurent-Patrick Gally, a retail analyst with Shuaa Capital, said that against this background Harley-Davidson had performed relatively well in the UAE, most likely because motorcycles generally cost less than cars. "If you put things in perspective, new car sales were probably down much more than 15 per cent across the country," he said. "It is not bad for something that is more discretionary than a car purchase."

Harley-Davidson motorcycles cost between Dh31,500 and Dh155,000, Mr Bode said. While he could not say whether the market would return to growth this year, he was optimistic about the long term. Harley-Davidson UAE plans to expand in the region this year, replacing its current 200 square metre location on Abu Dhabi island with an 800 sq metre showroom and service centre in Musaffah. "We expect more business to move to Abu Dhabi," he said. Harley-Davidson's Abu Dhabi sales were also less impaired last year, declining 2 per cent compared with a 16 per cent drop in Dubai, he said. The company plans to open another Harley-Davidson clothing and accessories store in Abu Dhabi next year, but there is no set location yet.

There are also plans to reintroduce the motorcycle brand Ducati into the market in April, with a 253 sq metre dealership at the Dubai Autodrome. Harley-Davidson UAE recently acquired the local licence for the premium Italian motorcycle brand. Ducati prices range from Dh47,000 to Dh250,000. The brand has been absent from the UAE market for about two years, Mr Bode said. The group also plans eventually to sell scooters and off-road motorcycles. Despite the premium price and discretionary nature of these products, Mr Bode believes they will continue to sell.

"In the UAE, it is real easy to sell premium products," he said. "There is a lot of disposable income." * with Bloomberg [e-mail]