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

Matt Posky
by Matt Posky

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.

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Markf Markf on Jan 30, 2020

    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

  • Pwrwrench Pwrwrench on Feb 03, 2020

    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!"

  • Redapple2 Do Hybrids and be done with it.
  • Redapple2 Panamera = road porn.
  • Akear What an absurd strategy. They are basically giving up after all these years. When a company drinks the EV hemlock failure is just around the corner.
  • Graham The answer to a question that shouldn't have been asked LOL
  • Bill Wade I live in AZ. I don't think you'd find very many LEOs that would pay the slightest attention to kids on e-bikes.