A Big Mistake?
Harley-Davidson is feeling the full brunt of the COVID-19 pandemic and the subsequent economic crisis. The company is to put it plainly doing really poorly (big surprise, huh?). Because of this, Harley decided to restructure its strategy from the “More Roads to Harley-Davidson” plan that was put in place by the former CEO. That plan prioritized new products and reaching out to new customers. This new plan seems to do the opposite.
In a news release from the company, the new tenants of the strategy are as follows:
- Enhance core strengths and better balance expansion into new spaces
- Prioritize the markets that matter
- Reset product launches and product line up for simplicity and maximum impact
- Build the Parts & Accessories and General Merchandise businesses to full potential
- Adjust and align the organizational structure, cost structure, and operating model to reduce complexity and drive efficiency to set Harley-Davidson up for stability and success
Now, the headline here is that Harley will be pulling back from some of the new things it was doing. This isn’t smart because those new things like electric bikes are what it needs to do to attract new riders in the long-term. A lot of people (including myself) see this as a big mistake. Harley is in the position it’s in because of its stubborn commitment to its core products and a customer base that is aging out of riding. The new products would draw new riders, which could potentially save the company.
However, I will not call this new strategy a complete steaming pile of crap. The first two bullet points above worry me, but the last three are good calls.
First up, Harley sells too many of what is essentially the same bike. It would make more sense to sell a few different versions of the Sportster, Softail, and Touring bikes and then sell the crap out of the parts and accessories. Having 11 Softail models is silly. Taking a hard look at its lineup and reducing internal competition is smart.
Building out the Parts & Accessories and General Merchandise business is never a bad idea, especially if it coincides with the right kind of lineup shakeup. I don’t know how much further Harley can take this (the company already does tons of it), but if there’s an opportunity there, go for it.
Lastly, any kind of organizational structure, cost structure, and reduction of complexity within the organization is smart. Harley is a huge and complicated business. When a business gets complicated in the way Harley is, there’s tons of room for improvement in terms of business efficiency, which can save millions. This is an important place where Harley can improve.
All told, I find the new strategy worrisome. The move to focus on core products is infuriating because Harley finally seemed to be shedding its past and looking to the future, but I do get what it’s trying to do here. A lot of it comes down to execution, and I don’t have much faith in The Motor Company anymore.
I guess you did not read all of the Q1 release. They are not getting out of electric bikes and they are still releasing the adventure and street fighter bikes.
Hi Warren, I did read the full release. I wouldn’t report on it without doing so. I know they’re not getting out of electric bikes. I also know they’re still putting out the bikes that they already said they were putting out. It makes no sense for them not to do those things, they’re already fully invested in those bikes. What I’m saying is that taking your foot off the gas pedal, so to speak, on the things that will literally turn the business around is a worrisome strategy. If you read my article you’ll see that I don’t disagree with this strategy fully, and I say it all depends on the execution of it. If the execution is done well, then everything will be good. Unfortunately, I have little faith in Harley’s ability to execute things properly. For decades they have disappointed. I hope they can execute in a way that provides the business with what it really needs.
it’s not as if Harley have put out a electric product that many people can buy
in their own words , livewire is a halo product
I’m guessing the figures for it were worse than their own predictions
perhaps Harley are realising their true place in the market
niche products in a niche industry for a dying customer base
Hey Darren, you might be right. Harley rode a wave of sales that is quickly disappearing. If they keep this up, they could end up a mere a niche player in the future, which is a shame.
Ahhh, the expert naysayers are at it again.
Yet another expert opinion from a Harley hater!
Bob, you actually made me LOL. I don’t hate Harley. I just want to see them succeed, and right now they’re not because they’re making the wrong products for the market. I don’t see this strategy helping.
The old British bike industry went to the wall, because they were afraid of change.
Harley has to diversify more, not less, or suffer the same fate.
I agree, Mark. This strategy doesn’t seem like the right move.
I have ridden motorcycles for 50 years and have owned 5 Harley Davidson motorcycles during that time,(in addition to many other brands). Most Harley owners love their bikes but have a love/hate relationship with the company. The problem is the leadership approach that has occurred over the last decade. They are having to reemphasize their “core” customers because they drove so many away with their arrogance and exorbitant prices. Harley is a complicated business, but a simple reorganization could fix about 85% of their current problems. Harley can never stop building their legacy products. You are correct that they are building too many versions of the same bike, which is resulting in internal competition. And they do need to bring out new products that will bring in younger riders. Anyone can see this, its as plain as day. The problem for Harley is to figure out how to do it. Well here is how I would do it. Step one. Reorganize the company into four stand alone divisions; Legacy Harley Davidson Motorcycle Division, Electric Vehicle Operations Division (EVO), Screaming Eagle Motorcycle Division, and Apparel, Parts, Accessories Division. Everything else goes under the umbrella of HD Corporate. Then I would have a significant Reduction in Force (RIF) where I would eliminate just about all existing management/leadership positions. That should buy us some financial breathing room. Each division would have a streamlined management team, responsible for the success of their respective divisions. The HD Legacy Division would trim down the number of motorcycles being offered. The Electric Vehicle Operations division would aggressively move forward to create affordable electric products that would attract new riders. I would offer Matt Laidlaw the EVO Division Manager position. Screaming Eagle Motorcycle Division would begin building non-harley high performance motorcycles that would sell to current younger riders who are looking to move away from sport bikes. Perhaps the ADV bike and the street fighters will be offered as Screaming Eagles. SE would become a stand alone brand that would market itself as the American alternative to HD and Indian. Apparel, Parts, Accessories Division gets ramped up into hyper drive, bringing out a totally new products for Screaming Eagle customers. Oh and I would fire the Marketing Director that came up with those awful product launches HD did in the last few years.
HD needs to make some changes and a restructuring like you suggest might be the best way to make that happen.
I’m an H-D owner, though mine is one of Harley’s red-headed step-children, a 2004 V-Rod. Much like Buell owners I’ve heard, I’m dismayed by Harley’s lack of support for these non-mainstream products. It would certainly give me pause if I was considering a purchase like a LiveWire. Which I’m not, because there are and will be many more choices in e-bikes for less than $35k.
I admit confusion by the corporate decisions of recent years. The Street series seems half-finished. An adventure bike? That’s a heavy lift (pun intended) for a company with virtually zero experience in the off-road market since the halcyon days of Aermacchi. The Buell Ulysses was a cult bike handicapped by its Sportster genetics.
H-D has to decide once and for all if it wants to be a mass-producer of motorcycles in a global market (and then produce the full range of bikes including tiddlers that will sell) or stay on the path it had been following since the ’80’s of a boutique brand marketing to a shrinking upper-middle class LARPer customer base.
its called pricing they priced them selves out of the market. I have owned several Harleys. But the average joe dont have 35000 to 40000 to spend on a motor cycle.
Harley Davidson should rely less on the boomer generation and focus more on the new generation. Who can buy machines with fairing, luggage and radios, etc.? Resurrect the Buell line. Create a new engine like Triumph and go with inline 3 or inline 4 cylinders for high performance machines. And get close to the (asian) sport bike pricing as they can. Euro bikes rely too much on prestige and will out price. You want to steal market share while making profits. Introduce machines a young college student or a millenial may want to buy. Study the money makers (asian) and see what they are up to. Think less on retirees and more on the young rider. Else you have machines designed for the young but bought by the old…and they are slowly dying out.
And yes , execution is everything: lean manufacturing. kaizen, just in time manufacturing, design for six sigma, quality control, etc. Japanese transplants make vehicles here in the USA and they are making money.
Harley should be following the path that Triumph took starting in the mid-1990s. Keep some of your “classic” models (Triumph’s Modern Classics line), but develop new models targeted at a younger audience (Triumph’s Roadsters and Supersports line), and if you want, expand into an adventure line.
The only part where I think Harley should deviate from Triumph’s path, is that I think they should push to develop a competitive lightweight standard/naked bike in the 350-650cc space that would attract new riders who would otherwise shop for Kawasaki Ninja 400s, Honda CB400Rs, and Suzuki SV650s, and would also serve as a world bike for markets (like India and Malaysia…*huge* markets) where smaller displacement is the norm. They could keep it a v-twin to go with their tradition, but it needs to be very light to distinguish it from Harley’s tendency to be heavy, and it truly needs to have performance comparable to its Japanese competitors.
Touring is their forte. Looking back, I think HD won the “mine’s bigger than yours” war in touring bikes to it’s own detriment. The whole line has passed a threshold where the average guy, old or young, thinks they are too heavy, hot, and unwieldy. HD should put every available resource into a new touring bike, 500 lb max, 74 cid max, cool to the legs, comfortable, quiet and smooth. It would be a new era and recapture the imagination of America, young and old. Touring the USA with your significant other on a motorcycle transcends age.