H-D Announce Fight Back

July 30, 2018

The 115th anniversary year has been a tough one for world's most famous motorcycle manufacturer. Harley are in a fight with Indian, Trump is calling them out for the way they run their business and off-shore factories (which is remarkably similar to virtually every other bike maker in the world, including KTm and Triumph) and they're being punished with EU import taxes in response to Trump's levies on raw material imports to the US. It easy to imagine what the mood in Milwaukee has been like, especially for a company whose main products (that's motorcycles, by the way, not T-shirts) have four year development programmes. 

But, today, Harley has taken a rarely seen move of 'launching' bikes that won't be in showrooms for 12 or 24 months, and it's all part of a new strategy, that they're calling More Roads.

 

The heritage products and bagger tourers are incredibly popular in the US, but they're not bringing new people to the brand. The video above illustrates how that can no longer form the basis for profitable growth. H-D need to try new things, new for H-D at least. They have been hogtied by their own history for too long, and arm's length experiments with Buell and MV have mot worked out well. Here's what to expect. 

Coming in 2019, is Harley-Davidson's first electric motorcycle. The Livewire, above, is a development of the ambitious, and ahead of the curve project called Project Livewire, a worldwide road show of 20-plus running bikes, back in 2014. After massive investment it seemed Milwaukee lost faith and the alternative fuel concept was shelved. Harley's recent investment in a stake of electric motorcycle company Alta hinted at a Livewire comeback. 

 

This is massive news for Harley and the future of electric bikes. Only KTM, out of the bike established players, has pushed full-size electric motorcycles so far. Expect a rush of the big manufacturers to follow.

The film also shows concept electric bicycles and CAKE-style fun bikes and even Monkey bike style machines. Harley has also released this concept sketch of an electric bike. Yes please.

Coming in 2020, is Harley's first adventure bike. This market segment has been growing for years, though whether it can continue to do is debatable. Still it's a big arena that Harley have had no part of since the Buell Ulysses failed to tempt buyers of BMWs and KTM Adventures.

 

The Pan-America is powered by a new, as yet unreleased 1250cc liquid-cooled V-twin. If it didn't have the bar and shield logo it could be a Suzuki or Kawasaki, but it's comments like those that have, perhaps, held H-D back from developing for so long. A Harley does not need to look a Sportster or 1950s ElectraGlide to be a Harley.  

Also, slated for 2020 is an as yet unnamed 'streetfighter' model, with the same 1250 engine as is in the Pan-America ADV bike. Squint your eyes and it is reminiscent of the XR1200, but the streetfighter has stopped trying to pass itself off as a street tracker. Again, because of the new engine, if it had a Yamaha badge on it I wouldn't think it was a huge departure for the Japanese firm (Bulldog, anyone?). Harley is moving into new segments and it needs to play by the established rules and expectations if it's going to be taken seriously and tempt new riders. 

The final model to tease buyers is a mean, low-riding 1250 custom, again using the new engine, with hints of the 2018 model year Fat Bob (my favourite H-D custom ever). The 1250 custom is not even slated for release until 2021, showing how much Harley feel they must regain some limelight and the initiative from the competition. 

 

One bike missing from the line-up is a street tracker, to tap into the current fashion for hooligan racing, but perhaps this bike is so close to being released that they are keeping their powder dry to make a big reveal at next month's 115th anniversary events in Milwaukee. It makes sense, but I could be completely wrong.

 

Harley also seems to realise that the current cookie cut corporate dealers are not attractive to a new generation of riders, and need to engage with new riders a different way. It doesn't matter how cool your viral videos and your hooligan and women who ride ambassadors are if the dealerships are inviting as quick sand.

 

Harley's press release also says they are, 'Developing a more accessible, small-displacement (250cc to 500cc) motorcycle for Asia emerging markets through a planned strategic alliance with a manufacturer in Asia. This new product and broader distribution is intended to fuel Harley-Davidson’s customer access and growth in India, one of the largest, fastest growing markets in the world, and other Asia markets.'

 

In its comprehensive release it explains what it means to the financial side of the business and the shareholders...

 

'The accelerated strategy will require significant investment to change the trajectory of the business globally, and the company plans to fund it entirely through comprehensive cost reduction and reallocation of previously planned investment and resources including operating investment through 2022 of $450 to $550 million and capital investment through 2022 of $225 to $275 million.  In total, the company plans More Roads to Harley-Davidson to generate more than $1 billion of incremental annual revenue in 2022 as compared to 2017.

 

'The company believes its accelerated strategy is in line with and reinforces its objectives to drive revenue growth and expand operating margins.  The company expects to fund strategic opportunities while maintaining its current investment and return profile and capital allocation strategy.

 

'Harley-Davidson’s funding principles will focus on stabilizing and strengthening the existing business, enhancing the premium brand, and investments in profitable, growth-oriented projects. We expect these principles, along with a disciplined capital allocation focus, will allow Harley-Davidson to execute with improved cost competitiveness and overhead efficiencies.'

 

This is all adds up to a ballsy move from a company that knows it needs to mutate to survive. IT'll be fascinating to see how it all pans out. 

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