The American Motor Company Outlines A New Initiative, Direction
Harley-Davidson released a press brief this week, discussing their first quarter 2020 sales results and outlining some “near-term” strategic actions for restarting production and beginning to move into recovery. It’s no secret that H-D has suffered losses in recent years, and the COVID-19 world crisis has imposed devastating effects on them, as well as so many other motorcycle brands around the world.
Still in the absence of a new CEO, the motor company has decided to restructure their “More Roads To Harley-Davidson” campaign instituted under former CEO Mark Levatich. The “More Roads” plan involved reaching out to new customers and younger potential riders with new products and new initiatives. The new proposal, dubbed “The Rewire”, still in the development phase, seems to almost “circle the wagons” by focusing on “core strengths” and “markets that matter.” Jochen Zeitz, acting president and CEO of Harley-Davidson during these difficult times, stated, “Throughout this global crisis, we prioritize the well-being of our employees and the Harley-Davidson community in every decision we make… We have determined that we need to make significant changes to the company; to our priorities, to our operating model and to our strategy to drive more consistent performance as we emerge from this crisis.”
Harley-Davidson acting President & CEO Jochen Zeitz
The new “Rewire” strategy will include several elements:
- Enhance core strengths and better balance expansion into new spaces
- Prioritize markets that matter
- Reset product launches and product lineup for simplicity and maximum impact
- Build 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 up Harley-Davidson for stability and success
One of the takeaways appears to be the company’s plans on withdrawing some of the new products and initiatives that had been implemented, and focusing where the brand has seen its most success over the years- the big cruiser and tourer markets that have traditionally been the staple and signature of Harley-Davidson. By prioritizing the “markets that matter”, the news brief stated the intent to “narrow focus and invest in the markets, products and customer segments that offer the most profit and potential.”
A key phrase (in our opinion) is found within the third bullet point: “Expand profitable iconic motorcycles to excite existing customers. Remain committed to Adventure Touring, Streetfighter and advancing electric motorcycles.” While the company will apparently reschedule some planned product launches (the Pan America?), the focus appears to turn toward efforts to keep existing customers by introducing even more variations of existing models. This “remain committed” clause to the new directions that had been proposed under “More Roads” seems a bit ambiguous. We hope the company won’t begin to brush the Pan America, Bronx, and Livewire et al under the rug in efforts to stop the bleeding. We are of the opinion that those were, and are, worthwhile endeavors.
The news release also stated in the final bullet point: “Create a framework including an organization that is more focused, profitable and nimble; a cost structure that is adjusted to the new realities of the market post crisis.” Thinning their model lineup and pushing their parts, accessories and brand merchandise would be fantastic moves. Also, streamlining their organization, their cost structure, and reducing complexity are all points any large company can benefit from. Harley is a massive and complicated corporation, and business efficiency is a key to survival in any economy, especially in these times. But words on paper are one thing. Execution is another.
Here’s hoping Harley-Davidson can weather the storm we’re all still in, and “The Rewire” will help position the brand for life and growth on the other side of this, while retaining enough of the “More Roads” initiatives to continue to reach new markets and new riders for the future.
*sources: Harley-Davidson, Web Bike World
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I truly hope Harley-Davidson does not abandon the PanAmerican in what it could be. If they return to the original proposal to market a 500 & 750 as well as the 1250 and can make them as good and price competitive with the others it would be key to long term success. My self for instance, I own a traditional Harley(my 6th) and a Suzuki Vstrom. Nothing would excite me more than a 750 dual sport that was built to last and performed as well as my 650. Another overweight and underperforming bike would be a financial disaster. All of these electronic riding aides and modes could be optional. Having rode motorcycles for 62 years, I want ABS but the rest of it is could be offered as an option.
I’d be inclined to agree with you, John. I believe H-D is on to something good with the Pan America and the forthcoming Bronx. Those were hallmarks of the “More Roads” initiative, as well as the Livewire, all of which are halo projects, intended to show what the motor company is capable of. The heavy cruiser and tourer market is shrinking by 10% per year, so new initiatives should indeed include new categories- ADV, streetfighter, smaller displacement, etc.
Thanks for chiming in,