Harley-Davidson Recalls 57,000 Motorcycles Due to Faulty Oil Line

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Investors of Harley-Davidson Inc. (NYSE:$HOG) are having a rough year so far. Besides disappointing first quarter reports, the company has recently voluntarily recalled about 57,000 of its motorcycles, reported the Milwaukee Journal Sentinel. The recall was due to reports of loose oil lines that resulted in oil being sprayed onto the rear tire’s path. Already, there have been nine reports of oil lines coming loose, and two crashes and one injury have occurred as a result of some of the oil lines coming off the bikes.

Harley-Davidson said that the problem may be caused by an incorrectly installed clamp on the engine oil cooler line.

The 2017 Electra Glide Ultra Classic, Police Electra Glide, Police Road King, Road King, Road King Special, Street Glide, Street Glide Special, Road Glide and Road Glide Special motorcycles that were built between July 2, 2016, and May 9, 2017, are all included in the recall.

While many companies in the transportation industry have dealt with recalls and accidents caused by incorrect assembly before, other matters aren’t helping the classic-motorcycle producer deals much. For one, a decline in retail sales led to a 14% drop in revenue — as detailed in the company’s first quarter reports. The revenue drop is largely due to poor demand in India and China, causing sales in the Asia Pacific to fall by 9.3%.

It’s not all bad, though — in Latin America, sales went up by 24%, offsetting some of the poor sales performance Harley-Davidson had experienced. However, the increase in sales in this region still wasn’t enough to save the company’s revenue.

Investors are particularly concerned as this quarter marks the second consecutive one in which sales have not matched what had been predicted. This means the company is performing poorer than expected. As such, investors should watch out in case sales and revenue continues to fall for the company.

It doesn’t seem like views of Harley-Davidson’s stock has soured though, despite falling 9% in 2017 so far while the S&P 500 (INDEXSP:$.INX) gained 9%. On average, analysts had a hold rating on a stock with a price target of 58.23 — about 9% above present trading levels — according to a poll by FactSet.

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About the author: Grace is currently studying at UBC to achieve her BA in Computer Science. She is due to graduate in 2020. As a content creator, Grace has written financial analysis, stock market news, and informational investing articles. She also worked as an editor with her university publication 'UBC Undergraduate Journal of Art History'.