Harley-Davidson (HOG) To Recall Over 57K Touring Motorcycles

Harley-Davidson, Inc. (NYSE:HOG) has announced the voluntary recall of 57,138 Touring motorcycles globally. An oil line clamp may have been inappropriately installed, resulting in the vehicles being recalled.

The defective oil line in the affected vehicles can come loose and spray oil onto the path of the rear tire. A number of such incidents have been reported as per documents filed with the National Highway Traffic Safety Administration. The affected motorcycles are 2017 Touring models built between Jul 2, 2016, and May 9, 2017. These include Electra Glide, Road King, Road Glide and Street Glide models.

The issue has caused some crashes, one resulting in a minor injury. Harley-Davidson is expected to send letters to affected customers from this week. Free repairs are likely to be performed at local dealerships.

Harley-Davidson’s worldwide dealer retail sales of new motorcycles went down 4.3% to 55,049 units in first-quarter 2017 due to weak demand in the U.S. Retail motorcycle sales were adversely affected by higher competitive pressures. Total shipments also declined 14.7% year over year to 70,831 motorcycles in first-quarter 2017. Harley-Davidson continues to expect stiff competition to hurt retail sales this year as competitors rely on discounts and product introductions to boost sales. Furthermore, Harley-Davidson expects headwinds due to macro economic challenges in some regions. It anticipates shipments in 2017 to be relatively constant or slightly lower year over year.

However, the company’s market share in the 601cc-plus motorcycle registrations remains high. Moreover, it is working toward improving its international reach. In first-quarter 2017, the company added seven new dealerships in China, India, Norway, Slovenia, Spain and Thailand. It is also focused on building its product portfolio to increase customer base.

Price Performance

Harley-Davidson underperformed the Zacks categorized Automotive-Domestic industry. The company’s shares lost 7.5% in the last three months compared with the industry’s 1.4% gain.

Zacks Rank & Stocks to Consider

Currently, Harley-Davidson carries a Zacks Rank #3 (Hold).

Some better-ranked companies in the auto space include BorgWarner Inc. (NYSE:BWA) , Lear Corporation (NYSE:LEA) and GKN (LON:GKN) plc (OTC:GKNLY) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BorgWarner has an expected long-term growth rate of 8.7%.

Lear has an expected growth rate of around 7.1% over the long term.

GKN has an expected long-term growth rate of 5.3%.

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