After the confirmation of Jochen Zeitz as Harley-Davidson’s (H-D) chief executive officer (CEO) and the announcement of a new business strategy called “Rewire”, news has emerged most H-D dealers in the US will not be getting motorcycle stocks replenished in 2020. This comes from a memo sent to H-D dealers in early May and sighted by the Wall Street Journal.
In the memo, Beth Truett, H-D’s director of product sales, advised US dealers as many as 70% of them would not be getting new motorcycles this year. “We are using this time to course correct and rewire the company in pursuit of making Harley-Davidson one of the most desirable brands in the world,” said Truett.
H-D has 698 dealers in the US and many are making plans to reopen showrooms with the relaxation of Covid-19 lockdowns and regulations. With the limitation on dealer stocks, H-D plans to to appeal to customers of premium brands with limited model availability, a practice often used in the luxury and performance car market.
“Our strategy to limit motorcycle product in the showroom is purposefully designed to drive exclusivity,” wrote Truett in the memo. Truett also said H-D dealers should plan for an extremely tight year from an inventory perspective with new motorcycle showroom stock expected to drop by as much as 65%.
Additionally, Zeitz has been reported saying H-D’s new product launches for the summer of 2020, notably the Bronx naked sports and Pan-American adventure-tourer, will be pushed back to early 2021, ahead of next year’s riding season. This is a turnaround from previous CEO Matt Levatich‘s plans to expand H-D’s model range to include non-traditional small displacement models targetted at a younger rider demographic as well as markets outside the US.
H-D has received negative feedback from both US politicians and the US market for its decision to move manufacturing facilities overseas, notably the construction of an assembly plant in Thailand to serve the Europe and China markets. H-D’s sales in the US market, where it traditionally held more than half the market share, has eroded over the years, with the Milwaukee firm posting a consecutive loss for the previous five quarters.
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There’s 2 directions they can take. Continue building high end bikes but in different formulas than their own traditions to capture a wider market. This would probably maintain the brand as a premium entity but they might have to wait a while for the take-up from the new segment of customers. Or, to build down as per the vision of their recently departed CEO. The second option IMHO would build up lots of mass but at lower margins per unit. It would spread the brand to a much wider audience but at the risk of losing brand premiumness.
If they want to drive exclusivity, they had better equip their bikes with specs to back up their sales pitch. Exclusivity means nothing if no one wants to buy them. If they want to make bikes meant for newer and younger buyers, they can’t win them with H-D’s ‘old’ legacy. The Harley Davidson name is hardly a strong sales pitch today.
They can try to make a bike that sound, and feel like a true Harley, but they absolutely must be able to keep up with the competition. They can get away with higher prices IF they have something to sell…but they don’t have anything. They even lose to fellow Americans. H-D’s Milwaukee-Eight 117 is an embarassment compared to an Indian Motorcycle’s PowerPlus engine. It’s as powerful as H-D’s biggest crate engine, the 131 Screamin’ Eagle but at almost 400cc smaller.
And what is up with their Vrod replacement, the FXDR 114? More expensive than a Ducati Xdiavel, but with worse specs? Why? That is the spiritual successor to the motorcycle that had successfully brought in non-Harley buyers into the stable, yet they replaced it with something that makes a Ducati, and even a Yamaha Vmax, look even more enticing?