Harley Davidson 2014 Annual Report Download - page 7

Distribution – The Company’s products are retailed through a network of independent dealers, of which the majority sell
Harley-Davidson motorcycles exclusively. The Company’s independent dealerships stock and sell the Company’s motorcycles,
P&A, general merchandise and licensed products, and perform service on Harley-Davidson motorcycles. The Company’s
independent dealers may also have secondary retail locations (SRLs) to meet additional retail and service needs of retail
customers. SRLs also provide P&A, general merchandise and licensed products and are authorized to sell and service new
motorcycles. The Company’s independent dealers also sell P&A, general merchandise and licensed products through “non-
traditional” retail outlets. The “non-traditional” outlets, which are extensions of the main dealership, consist of Alternate Retail
Outlets (AROs) and Seasonal Retail Outlets (SROs). AROs are located primarily in high traffic locations such as malls, airports
or popular vacation destinations and focus on selling the Company’s general merchandise and licensed products. SROs are
located in similar high traffic areas, but operate on a seasonal basis out of temporary locations such as vendor kiosks. AROs
and SROs are not authorized to sell new motorcycles.
In the United States, the Company distributes its motorcycles and related products to a network of independently-owned
full-service Harley-Davidson dealerships and the Overseas Military Sales Corporation, an entity that retails the Company’s
products to members of the U.S. military and government contractors. The Company distributes its motorcycles to its dealers in
the U.S. based on dealer orders but subject to an allocation system that the Company designed to be forward-looking and
market-driven to align the distribution of motorcycles with the demand in individual dealer markets. The allocation system can
affect the number of units of particular models that dealers are able to order and the timing of shipments to dealers. In Canada,
the Company sells its motorcycles and related products at wholesale to a single independent distributor, Deeley Harley-
Davidson Canada/Fred Deeley Imports Ltd., which in turn sells to independent dealers in the Canadian market.
The Company facilitates its independent dealers' sale of certain Parts and Accessories, General Merchandise and licensed
products in the U.S. through its online eCommerce channel. The Company's eCommerce model provides an online storefront,
product merchandising, digital marketing, inventory management and order fulfillment, returns processing, and customer care.
Retail internet orders are fulfilled and shipped by the Company, which acts as an agent for participating authorized Harley-
Davidson dealers who sell the products to customers. Dealers handle any after sale services that the customer may require.
The Company’s operations in the EMEA region are managed out of its Oxford, United Kingdom regional headquarters.
In the EMEA region, the Company distributes its motorcycles and related products to a network of independent dealers located
in approximately 49 countries in the region.
The Company’s operations in the Asia-Pacific region are managed out of its Singapore regional headquarters. In the Asia-
Pacific region, the Company distributes its motorcycles and related products to a network of independent dealers located in
approximately 17 countries in the region.
The Company’s operations in the Latin America region are managed out of its Miami, Florida regional headquarters. In
the Latin America region, the Company distributes its motorcycles and related products to a network of independent dealers
located in approximately 26 countries in the region.
The following table includes the number of worldwide Harley-Davidson independent dealerships by geographic region as
of December€31, 2014:
North€America€Region EMEA
Region
Asia-Pacific
Region
Latin€America
Region Total
United€States Canada
Full Service Dealerships and SRLs 694 69 369 273 55 1,460
Non-Traditional 96 4 11 12 29 152
In 2009, the Company announced a strategic goal to open 100 to 150 new international dealerships from the end of 2009
through the end of 2014. Through December 31, 2014, the Company added 136 new international dealers. This excludes
international dealers closed in the normal course of business.
Retail Customer and Dealer Financing – The Company believes that HDFS, as well as other financial services
companies, provide adequate financing to Harley-Davidson independent distributors, dealers and their retail customers. HDFS
provides financing to Harley-Davidson independent dealers and the retail customers of those dealers in the U.S. and Canada.
HDFS also provides financing to the Company’s Canadian distributor. The Company’s independent distributors, dealers and
their retail customers in the EMEA, Asia-Pacific and Latin America regions are not directly financed by HDFS, but have access
to financing through other established financial services companies, some of which have licensing or branding agreements with
the Company.
Seasonality – The timing of retail sales made by the Company’s independent dealers tracks closely with regional riding
seasons.
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