As Harley-Davidson Sales Struggle Continues, Company Says New Product Is the Best Response

We’ve kept light tabs on Harley-Davidson over the past few years, typically to chronicle its downward progress in an effort to make parallels between it and the world’s automakers. Despite having its share of ups and downs throughout its long history, the motorcycle brand finds itself with an impressively loyal customer base willing to pay premium prices for its product.

Unfortunately, its key demographic is quickly aging out of the hobby. In response, the company turned its focus towards younger generations. While Boomers living in America remain H-D’s most important clientele, it’s seeking to branch out into other markets and age brackets. It’s also attempting to rebrand itself to achieve broader appeal without torpedoing the heritage angle that has worked so well for it in the past.

When we last checked in with Harley-Davidson, the company had just delayed its all-electric LiveWire — a bike aimed at helping the brand tap into a new market while broadcasting its ability to gaze ahead into the same vague future automakers are now struggling with. H-D has since released its Q4 earnings for 2019.

The prognosis could be better.

On Tuesday, the bike manufacturer reported a decline in quarterly motorcycle revenue even greater than estimates issued by analysts (who were already fearing the worst). H-D reported its lowest quarterly sales since 2014; motorcycle revenue fell 8.5 percent (vs Q4 2018) to $874.1 million, while merchandise remained a bit more stable.

Combined revenue from Harley’s motorcycle and finance businesses was $1.07 billion for Q4, compared with $1.15 billion from the previous year. Full-year revenue sat at $5.36 billion, compared to 2018’s $5.72. It also still made money, posting $423.6 million in profit in 2019, but that sum is about $100 million short vs the previous annum.

The only real bright spot last quarter was a bit of growth in Asia. Spurred by demand in markets like China, Harley said Asia-Pacific sales rose 2.7 percent through the end of 2019. The company plans to deliver additional motorcycles in the region (mostly with smaller motors) in an attempt to further boost volume. Due to retaliatory tariffs imposed on U.S.-built motorcycles, Europe will likely be a similarly difficult nut to crack. However, H-D can circumvent those duties by shipping product from Thailand. The company aims to emphasize middle-weight bikes it believe will sell in both Europe and Asia.

During the company’s earnings call, CEO Matthew Levatich said product needed to be reexamined everywhere.

“We have a lot of growth platforms beyond just increasing ridership in the United States,” he said. “And so you’d need to look no further than the investment in the middleweight platform and the potential that has as we gain access to the significant majority of the heavyweight marketplace outside the United States. So we’ve been laying the groundwork with dealer distribution points, stronger dealer initiatives, the plant in Thailand, laying the groundwork for a very strong and potent impact of that middleweight platform investment. And so independent of those U.S. ridership investments, we have growth trajectories that are part of our strategy.”

Levatich also noted the importance of electrification, saying “that is clearly the direction that automotive products are going over time, and they make for phenomenal products.” He views electric motorcycles as an easy way to get new customers, as they require less riding knowhow than a traditional bike with a hand clutch and toe shifter.

While the LiveWire (above) launch was mired in problems, Levatich said electrification will remain an important part of the company’s future. In the long term, H-D believes it can recoup its losses by adding staff to its electric motorcycle projects, building more small-displacement motorcycles, increasing electric bicycle sales, and moving additional merchandise. But it’s not ignoring the bigger bikes entirely. Before the end of this year, Harley-Davidson plans to launch two new models: The Pan America is an 1250cc adventure tourer while the Bronx is a 975 or 1250cc street fighter that looks like a modern-day Buell. It’s definitely not for everybody, though it piqued your author’s interest more than most of H-D latest offerings.