By on January 29, 2020

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.

 

Both bikes will do a lot to expand the brand’s portfolio, which is still overloaded with cruisers, and could help to bring in riders under 45. Their shared platform is supposed to underpin up to 11 new models — many of which are said to come in well below the manufacturer’s typical high-end pricing — and debut its new 60-degree V-twin Revolution Max engine.

Levatich noted a general shift in rider preferences toward segments in which H-D doesn’t traditionally compete, saying Harley needed to try and be one step ahead of the market.

“Competition is about competition for people’s scarce time, people’s scarce funding and commitment,” he explained. “We use that word a lot, commitment is becoming scarcer in the decisions people make as far as investing their time. And you can see that in all kinds of other industries that require a lot of time to become really embedded in doing something, and that’s what our efforts are about. We think those efforts are very important skill and capability building for the company anyway, even if this challenge proves more durable than we are setting out to achieve.”

[Images: Harley-Davidson]

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54 Comments on “As Harley-Davidson Sales Struggle Continues, Company Says New Product Is the Best Response...”


  • avatar
    JimZ

    they should have been thinking about this 15 years ago, instead of pretending the gravy train of soaking the Boomers would last forever.

    • 0 avatar
      saturnotaku

      H-D is going to become the Buick of motorcycles: only purchased by aging Boomers and the Chinese.

    • 0 avatar
      redgolf

      JimZ – Exactly!

    • 0 avatar

      Exactly JimZ, that’s the problem with all American companies. Japanese trying to serve practical needs, provide good value along with high quality and luxury and being engineering oriented. American companies should learn to respect experienced engineers and not consider them as disposable items that can be easily outsourced to college graduates from 3rd world countries.

      • 0 avatar
        JimZ

        “Japanese trying to serve practical needs, provide good value along with high quality and luxury and being engineering oriented.”

        You should have thought about this a little bit more. Japan Inc. is a shadow of what it was in the 1980s. Sharp is owned by the Chinese, Toshiba has sold off unprofitable business units, and Sony has shed as much of its money-losers as needed to survive.

        I’m not sure I understand why Americans love buying stuff from Japanese companies who are heavily subsidized by their government because they don’t want to buy stuff from American companies who are very lightly subsidized (if at all) by our government.

        it’s as if we want to have our cake and eat it too, but pretend we have neither.

        • 0 avatar
          ToolGuy

          “American companies who are very lightly subsidized (if at all) by our government”

          Maybe $4.8 Billion a year to the oil industry. Is that “light”?

        • 0 avatar
          Carson D

          The Japanese government doesn’t take money from American consumers to increase the value of Japanese products in the US.

          Products subsidized by the US government are really subsidized by stealing from Americans. Not all of us have bought into the divide-and-concur strategy of the statists. I don’t want to rip off my fellow Americans. I don’t want to reward that behavior by others.

          Japan’s profusion of people delusional enough to manipulate markets has left them a country of diminished expectations and a perilously contracting population. They’re an object lesson, not a threat. At least they’re rational enough not to add to their welfare roles and crime rates with mass immigration. Maybe it is because they don’t have a history of valuing individual rights, so their elite has no need for a replacement electorate.

        • 0 avatar
          Rick Astley

          “I’m not sure I understand why Americans love buying stuff from Japanese companies who are heavily subsidized by their government because they don’t want to buy stuff from American companies who are very lightly subsidized (if at all) by our government.

          it’s as if we want to have our cake and eat it too, but pretend we have neither.”

          Ironically, the ingredients to make that cake were subsidized by the US government….

          Which brings the ever so large monkey wrench to bear on your argument. There is no valid argument against non-US governments subsidization under the basis that somehow the US government isn’t subsidizing it’s industries, or in your argument which I feel is incorrect, “lightly subsidized”.

          US industries are HEAVILY subsidized. From farming, to manufacturing, aerospace, fuels and automotive. Your tax dollars are sunk into just about every aspect of your American life.

        • 0 avatar

          “I’m not sure I understand why Americans love buying stuff from Japanese companies who are heavily subsidized by their government because they don’t want to buy stuff from American companies”

          I think that Americans are not informed about what is going on in other countries. Then Americans for some reason have disdain for American companies an wish them ill – all that death watch parties. I personally find wishing death to anyone something that should not be celebrated. But death wish is widespread from CEOs who come with plan to kill companies and stuff their pockets at the same time, to ordinary Americans who wish e.g. Boeing to go bankrupt and hundreds of thousand worker left without work.

      • 0 avatar
        Art Vandelay

        Yeah so Microsoft, Apple, Google, and a plethora of other highly profitable and cutting edge companies are American companies too and they seem to do fine recruiting and maintaining the talent to keep them atop their segments. SPACEX comes to mind and Elon’s other company certainly seems to have their engineers a decade or so ahead of even Toyota in their segment.

        Yes, the Japanese can screw a car together pretty well. But American companies are doing pretty well with regard to products that are pretty important here in the 21st century.

    • 0 avatar
      Art Vandelay

      They did think of it 15ish years ago. Then they subsequently starved the result of that thinking (Buell) of product and refused to drop the Revolution motor from the V-Rod into the bikes that should have gotten them.

      They treated those riders/buyers like second class citizens. We won’t be back anytime soon.

    • 0 avatar
      redapple

      JIMZ

      Nailed it !

    • 0 avatar
      Art Vandelay

      They did think about it 15 years ago. Buells were sweet bikes saddled with an ancient lump of a motor that made the overall package pretty non-competitive. Then they built the Revolution motor that would have made the bikes competitive and slapped it in a bike that was too modern for their core customer, but not modern enough to get new blood into the showroom.

      Buells were sweet riding, modern feeling bikes sans the motor. Even so I liked them. Still they were overpriced if you did an apples to apples comparison and sportbike/adv riders weren’t into paying more for less like HD’s cruiser buyers.

      Add to that HD dealers treating you like second class citizens and the brand never had a chance.

      So yeah, they thought about it and decided those riders weren’t worth the effort. Now 15 years later there core segment’s mode of transportation on 2 wheels is more likely a wheelchair than a road King and those buyers they abandoned by mismanaging Buell have no fondness for the brand and many actually see the brand as a negative now.

      If you want my generation of rider in a showroom you simply have to build bikes better than the competition. We aren’t willing to pay a tax for a brand we see in a negative light. Token efforts like the live wire aren’t good enough. I need viable competition to the class leaders and not just cruisers. How about you take a 600 and a liter bike racing…and win.

      But otherwise,my generation just doesn’t care.

      • 0 avatar
        JimZ

        Buells weren’t some heaven-sent models of perfection either. Erik Buell is clearly one of those people who have “engineer-itis;” always trying to reinvent the wheel with some more complicated way to do something that is already a solved problem.

    • 0 avatar
      Lou_BC

      Harley Davidson has become a victim of their own success. They mastered the cruiser and cruiser based touring bike which appeals primarily to boomers playing wannabe bad-boys.
      I’ve run across the “odd” hipster or younger dude on smaller Harley’s but that demographic prefers scramblers. Triumph and Ducati have that market nailed down tight.

      The other big market is for adventure bikes. The ADV bike market is very crowded with some amazing bikes and some very cheep bikes. Harley has the PanAmerica that will be released but only boomers fixated on the HD brand will buy it. Harley doesn’t stand a chance in this market.

      Polaris killed the Victory line and now is running under the Indian banner. The only bike that has been a success for them is the FTR1200 V-twin streetfighter.

      Harley Davidson does not know how to be innovative. Rehashing 1950’s or 60’s styling and technology is no different than marketing a 70’s hair band revival. All a case of diminishing returns.

  • avatar
    S197GT

    buddy bought a 2020 HD iron 883 for $8500 out the door this past december. The msrp is $8999.

    he also grabbed a pair of HD gloves with no price on them and was shocked to find out at the register they were $100. he is new to HD and I told him it stands for Hundred Dollars.

    • 0 avatar
      Art Vandelay

      The best thing about the Iron 883 was back in 2013ish the Harley Davidson rep on Kandahar in Afghanistan would ride their display around. I enjoyed hearing it in that environment. It was flat desert tan and looked sort of cool for what it was as well.

      On a side note, when your “Forward Operating Base” has a Harley Dealer and a TGI Fridays, the war has gone on waaaaaaaay too long.

  • avatar
    Russycle

    FWIW, reviews by people who have ridden the LiveWire are very positive. Too expensive, of course, but a good first step. Good to hear they’re coming out with a new motor, that’s crucial if they want to shake their cruisers-for-old-dudes image. Hopefully it can rev over 5000 rpm.

  • avatar
    cprescott

    What part of “Truth About CARS” do I not understand? This article is not topical to your website.

    • 0 avatar
      ToolGuy

      You should get hold of Harley-Davidson CEO Matthew Levatich, too. Not only is he making pronouncements about cars and trucks, he seems to *like* EV’s:

      “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.””

  • avatar
    Zipster

    The just deserts of a company that has catered to a base of thoughtless, idiotic men. The streets will be much quieter without them.

    • 0 avatar
      Right_Click_Refresh

      Okay, zoomer.

    • 0 avatar
      Hummer

      That’s quite ridiculous, the majority of bike manufacturers and even automakers for that matter would love to have an average consumer income as high as HD consumers. Those consumers did not get wealthy by being “thoughtless”, “idiotic”, or in your case sexist.

    • 0 avatar
      SSJeep

      Stereotype much? HD caters to American riders who cruise on American highways with big-bore V-twin motors that are well suited to the task, primarily. That doesn’t make a Harley buyer a “thoughtless, idiotic man”. You must be a lot of fun to have a beer with…

  • avatar
    SCE to AUX

    “we have growth trajectories that are part of our strategy”

    To quote from “The Untouchables”:

    Canadian mountie: “Surprise is half the battle!”
    Kevin Costner (Elliot Ness): “Surprise is half the battle. Many things are half the battle. Losing is half the battle.”

  • avatar
    22_RE_Speedwagon

    Just read the article twice

  • avatar
    Master Baiter

    I never understood how cacooning oneself in a helmet and suit of kevlar is more liberating than simply driving a convertible with the top down.

  • avatar
    Lokki

    About 2 years ago, I saw a Harley “Street 750” at the Dallas Bike show. I hope the Bronx at $15,000 is more than twice the bike the Street 750 is at $7500. I was rather unimpressed. It seemed like a a very old and not very good bike compared to the completion in the same price range.

    • 0 avatar
      JimZ

      the “street” was meant mostly for Asia, I wager selling it here was simply a “why not” decision. Plus dealers get them for their motorcycle training classes.

  • avatar
    Maymar

    I assume Harley is copping the Porsche attitude, that their entry-level model is pre-owned? The Street 500 and 750 aren’t great efforts, that feel like a significant downgrade from even a Sportster, and unless they’ve done something about their dealers, I shudder to think how bad the service is for anyone who goes in trying to buy a smaller bike.

  • avatar
    markf

    Harley is already the Buick of motorcycles with one demographic exception, women. Harleys are ridden by old men and women. Trying to appeal to the “youth’ is going take more than a couple of warmed over models with Hipster bait names and an un-affordably electric bike.

    They had plenty of time and capital to invest in new models and bike types but they feared pissing off the “purists” Now the purists are dying off and the company seems to be flailing.

    I don’t agree with the future of motorcycles being electric. The technology excites folks but not most motorcyclists I know. Most bikes a much lower range than cars because of fuel tank capacity limitation, same with batteries. Unlike a car there really isn’t a lot of room in a motorcycle to jam more batteries.

    But it sounds like the branded “lifestyle” business to going well so they have that…….

  • avatar
    jthorner

    Harley’s brand image is very specific and focused … and doomed.

    • 0 avatar
      dima

      +1

    • 0 avatar
      MeJ

      I’d agree with you. It’s a little sad actually.
      I’ve toyed with the idea of buying a HD for a few years. A recent bout of vertigo from an inner ear problem pretty much kibosh’s that idea.(lack of proper balance and a motorcycle probably don’t work).
      I don’t think I would pull the trigger now on one regardless. If I was still in the market I think it would be more fun to find some kind of vintage or classic bike. Maybe a Zen Bmw or similar.

  • avatar
    eggsalad

    Craigslist near me is positively flooded with 2-4 year old Harleys at half of MSRP or below. I think a lot of people buy them with visions in their heads that never materialize.

    I can’t even understand the logic of buying one at a dealer when you can buy one a few years old with 4000 miles on the clock for half price.

    • 0 avatar
      hubcap

      “I can’t even understand the logic of buying one at a dealer when you can buy one a few years old with 4000 miles on the clock for half price.”

      This is true for just about all bikes. IMO, there’s little reason to buy new and it’s part of the reason new motorcycle sales are down and used bikes sales are up.

  • avatar
    Art Vandelay

    How about just build good bikes Harley? Then take them and race them and win.

    People tend to reject the stuff their parents saw as “peak cool”. This is why my generation put Nirvana on the radio instead of Motley Crue.

    Toyota had the same image problem but the cars are actually good so people still buy them. HD motorcycles are just expensive.

  • avatar
    Art Vandelay

    Oh and if only you had some other brand, bred from a racing heritage and meant to get young people into the showroom. One you didn’t compromise in the name of not outshining your core product and overprice because you slapped engines that were technically inferior to all of your competition but you somehow felt that they should cost more because Harley Davidson.
    And you could even not treat potential buyers like they had genetalia growing out of their forehead when they wanted to check them out.

    Yeah, Someone said 10-15 years ago was when you should have addressed this.

    Hmm…what was that cool looking bike in HD showrooms back then? Yeah much easier to keep selling boomers 2 wheeled Fleetwood Broughams than invest in Buell product and cultivate that customer base.

    Man I wanted a Ulysses so bad. Too bad they were charging KTM and BMW prices for a bike with a mill that was technically right up there with a KLR650 or something. But the rest of those bikes were great. Nope, can’t put that V-Rod mill in the one bike in the showroom that it makes sense to put it in (ok, all the Bills other than the Blast). Gotta neuter it…like the Corvette folks nerfing the Fiero because it could be good.

    Well enjoy selling bikes to 70 year olds because nobody in my generation or younger cares about your brand.

    • 0 avatar
      hubcap

      Harley has a racing heritage. From the boardtrackers, to the AMA Grand National Championship, to the BOTT (Battle of the Twins), to modern day dirt trackers. For whatever reason, they choose to ignore it. Ducati even got a taste of Lucifer’s Hammer.

      • 0 avatar
        Lou_BC

        @hubcap – Indian is the king of dirt track right now. Harley tried their hand at AMA Pro SportBike racing but among the Japanese teams, they placed bets not on Harley winning but on which lap it would break down.

  • avatar
    MBella

    They should have never shut down Buell. That was a brand that had some appeal with young people and could have gained more in the future. An electric Buell might have even fund a few buyers. An electric Harley is DOA, because the Harley buyer want’s a particular experience that is not possible with an electric powertrain. You need the vibration and noise from their stupid unbalanced firing sequence.

    • 0 avatar
      DougD

      Yup, they fully committed to this path when they dumped Buell. A dead end but highly profitable in the short term.

      The second photo sums the whole thing up for me. The guy is leaning the wrong way, turning left but leaning right.

  • avatar
    Matt Foley

    Too bad Harley didn’t pursue their V4 engine project. Purists would never accept a foreign-made Harley and probably wouldn’t accept an inline-four, but they might accept a V4 if they left cooling fins on it.

    I see they’re introducing a 131ci version of the Milwaukee-Eight. Each cylinder displaces more than a liter and it’s still only ~120hp/135 lb.ft. torque. C’mon, guys, your hottest engine should be more powerful than a 30-year-old V-max…or a 15-year-old Cavalier.

  • avatar
    ajla

    I’m a Millennial and I like HD motorcycles enough that I aspire to buy to buy a new one some day. I don’t want a sport bike or a racing bike or an adventure bike. I just want a full-on cruiser that looks like it fell out of 1965.
    Unfortunately for the brand not many people share my affection.

  • avatar
    markf

    Pleasing the purists is what will kill Harley. No one under 60 (except some women) care at all about the brand. Buell ha it’s own small following. I was never a fan but a lot of folks were. Too bad Harley saddled it with the crappy lump of a V-Twin. They should have gone to Rotax much earlier.

    Some genius at Harley decided the “youth” want electric bikes. 20K plus electric bikes apparently.

    The good news is all the purists baby boomers will be gone in 10-15 years giving Harley a chance to start over

  • avatar
    pwrwrench

    1st this is an anecdote from my experience, but from talking to many other riders at the time, 15 years ago, it was shared across a wide swath of the American motorcyclist.
    I was looking for a new street/sport bike and Buell was being heavily promoted. Even advertising test rides, a rare thing for bikes. So I went and rode one. The guys at the dealer were very enthusiastic about the Buell and were willing to knock off quite a bit off the price, throw in a jacket and helmet, etc. It was a very nice bike to ride. The suspension was well sorted and the engine ran well. It did not vibrate anywhere near what I expected from riding other HD stuff.
    However some things bothered me about the Buell. Because of the ancient engine they had a drive belt tensioner pulley, a electric cooling fan for the rear cylinder (so it would not be “cooled by accident”), and some other weird bits.
    So I ended up with a Suzuki SV650S. Sure it needed the suspension fixed (like every Asian bike I have seen). And within two years HD announced they were closing out Buell. That was after recalls for rear wheel bearings, tensioner spring failures, and other bits.
    BTW I got quite a good deal on the SV as the dealers had plenty of copper (some say it is “orange”) SVs. The silver ones having sold out months before. There was a ridiculous rumor that the copper ones were “slow”. Hunh? Exact same motor, but that gives a window into the mind of some riders.
    Yes HD/Buell should have used the V-Rod motor or similar, but from what I read Harley told Eric, NO.
    Also some 15 years before the above experience, when I was doing some club road racing, HD was (briefly) sponsoring a series for the Sportster. There were some nicely turned out bikes and some fast riders going for the HD (Hundreds of Dollars) money.
    In the pits there was a lot of jokes about HD sponsoring a race series for the Road King/(Big)Glide bikes. One remark was that the track would have to get a bigger crash truck and if one of them went down in turn 8 it would be like throwing a metal filing cabinet out of a truck at 80mph.
    “Imagine the noise!”

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