The Motor Company Unveils Turnaround Plan Amidst 4th Quarter Tumble
Harley-Davidson saw their stocks tumble $96 million in the 4th quarter, even as they revealed their new “HardWire” initiative, a 5-year plan intended to scale back and focus on their primary “breadwinners”- the large displacement touring, cruiser and trike segments.
In an article Tuesday in the Milwaukee Journal Sentinel, Harley-Davidson president and CEO Jochen Zeitz stated in a conference call with industry analysts that the Motor Company was committed to setting “realistic expectations” for growth going forward, after years of failing to meet goals. Harley also revealed that motorcycle production/shipments to dealers fell 32% in 2020, or about 145,000 units, the company’s lowest since the 1990s. “We will not chase volume for volume’s sake,” Zeitz declared.
According to the Sentinel, “Harley posted a 4th-quarter loss of $96 million, or 63 cents per share, compared with a profit of $13 million, or 9 cents per share, a year earlier. Revenue fell to $725 million, down 32% from a year earlier.” North American sales in the 4th quarter dropped 15%, and a total of 18% on the year. Across the globe, Harley exited a total of 39 unprofitable markets in 2020, and overall global motorcycle sales were down 17% on the year.
“In the past, we have over-committed and under-delivered,” stated Zeitz. To try and right the ship, Zeitz revealed details of the 5-year turnaround plan, known as “The HardWire”, which include a used bike program dubbed “Harley-Davidson Certified”, creating a separate division for electric motorcycle development, and extending ownership to all 4.500 company employees via an equity grant. “We launch The HardWire with capabilities, assets and a legacy unmatched by any competitor,” Zeitz declared.
Harley-Davidson faces a tough road ahead, as their primary target demographic of Baby Boomer riders with moderate to considerable financial means are aging out of riding, and younger riders seem to have neither the means nor the interest in large displacement, expensive motorcycles. The introduction of the Pan America holds promise among ADV and off-road riders, but time will tell if the Motor Company can effectively reach this particular market with the new offering, and if they will embrace the Pan Am.
Sadly, as the earnings report was made public and Zeitz held his conference call with industry analysts, Harley stocks plummeted yet again, to the tune of 19% as investors expressed skepticism and concern. “Obviously the earnings were a big disappointment. Until they can prove Wall Street wrong, I think the stock is going to continue to be volatile,” said analyst Brian Yarbrough of Edward Jones Co. “They are doing the right thing by trying to correct the supply and demand problem. There has been way too much supply in the market and not enough demand. I just don’t know that shrinking your way to profitability works.”
Former CEO Mark Levatich tried to focus the Motor Company on smaller, lighter, more approachable and affordable motorcycles and electrics. Then in early 2020 the company let him go after 26 years, and Zietz took the reins in his place, as acting then permanent president/CEO. Zeitz’s focus has been just the opposite, that of “circling the wagons” and focusing on big bikes with big prices, for older riders with bigger bank accounts. “We are now committed to setting realistic expectations, and we know that execution is everything,” Zeitz stated.
Time will indeed tell whether the consolidation moves of The HardWire will reap success and growth for the legendary motorcycle brand. We certainly wish Harley-Davidson all the best success.
Road Dirt Crew
*Information for this article was sourced from the Milwaukee Journal Sentinel. Click here for original story: Harley-Davidson 4th Quarter Loss
*Click here for Harley-Davidson’s site: Harley-Davidson Motorcycles
*Photos by Harley-Davidson and Nathan “GenZ Biker” Baron.