Harley Davidson Inc.
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Leaving the downward quest to reach new types of riders is returning to the basics of building bigger, more expensive motorcycles for its most dedicated customers.
New Chief Executive Joachim Zitz, former head of German-born Puma Se Pum 1.91%
And collectors of African art, spreading back to foreign expansion, U.S. In Harley is shrinking supplies and delaying or abandoning new models for the purpose of appealing to smaller model makers.
It’s a hair-raising turn from the strategy given by his predecessor, Matt Levatich, who tried to expand into new markets with smaller motorcycles.
Mr Zitz said Harley should reduce costs and make its motorcycles more desirable. It is cutting up to 0% of the models in the lineup and encouraging dealers to close some stores.
Harley’s staff is also dwindling. The Milwaukee-based company has laid off 500 workers or about 10% of its employees globally, and according to people familiar with the matter, the group is involved in production teams developing several motorcycle models. Mr. Zeitz has also brought in outsiders to run the finance, digital, marketing and commercial departments.
Despite a coronavirus-related increase in demand for motorcycles, the company is expected to post a year-on-year decline in its third quarter on Tuesday, according to analysts.
Harley says the change is not a response to the coronavirus epidemic. The health crisis has really boosted the demand for bigger motorcycles from people who are socially distant entertainers from the outside, as Harley is putting fewer bikes on the market than its models 37M models Dello.
Some dealers say they are getting about a third less bike than last year due to Mr. Zitz’s strategy shift and supply-chain disruptions. Mr Zeitz said he wanted consumers to pay more for feature-packed 40,000 or more feature-packed models for discounted motorcycles in recent years in response to fluctuating sales and competition from used Harleys in the market. He said he believes original customers can be counted on to buy more Harleys.
“I have often heard that our customer is getting older. Well, I’m getting old, as they say, and I feel like riding right now, ”Mr. Zitz, 57, told analysts earlier this year.
According to people familiar with the project, Mr. Zeitz has a film crew documenting his work as CEO. Harley said it regularly films its leader for internal and external communications, as well as for its newly launched video platform, Harley-Davidson TV.
Harley declined to make Mr. Zeitz available for the interview, saying he was still developing a new strategy.
Adam Smith, a Texas-based owner of one of Harley’s largest dealer groups, said Mr. Zeitz’s strategy has allowed dealerships to focus on selling the most expensive and profitable bikes.
Mr. Smith said, “The brand is coming back to what we have always been. “We don’t make cheap, cheap, small-displacement motorcycles.”
Mr Smith, who said he had discussed the strategy in a phone call with Mr Zeitz earlier this year, said Harley had been finding that there were many more places to sell than luxury auto toy manufacturers.
Mr. Zeitz aims to reduce the number of Harley dealership locations in the U.S. to at least 100, said Harley’s investor, who is currently familiar with dealers and those plans. They said the company pays dealers thousands of dollars to close underperforming stores.
Happy Craig, Harley Dealership’s independent sales representative, said: “They’re just getting the dealership out.”
Harley-Davidson just launched the world’s first full-size electric sport bike. Porto, re re to take livewire for auto tow columnist Dan Neil Spin. Gone. Photo: Harley Davidson
Mr. Zeitz is also closing down some international operations, including in India, where Harley’s factory opened in 2010. According to people familiar with Harley’s plans, efforts to sell Harley outside of North America will now largely focus on more established markets such as Japan and Europe. Harley said it will focus on about 50 markets, primarily in North America, Europe and parts of the Asia-Pacific region.
Mr. Zeitz has a plan called Hardwire, which provides guidance for growth until 2025, a Harley spokesman said. He said the company will upgrade to existing motorcycles early next year. Mr Zeitz said he was committed to new electric motorcycles despite the disappointing sales of the first model, Livewire.
Mr. Levatich, who has been in the top job for nearly five years, wanted to add 100 new and updated models by 2027, many of them small, inexpensive bikes designed for overseas markets such as China. He is a U.S. citizen. Aims to add two million new riders using dealer-sponsored learn-to-ride programs. Mr Levatich declined to comment.
Over the years the introduction of the company’s new models also failed to attract customers and left the current lineup loaded with slow-selling motorcycles. Eleven models combined accounted for about one percent of retail sales volume last year, while sales of 10 popular models accounted for more than two-thirds of production, according to research by Keybank Capital Markets.
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Other motorcycle manufacturers have found new customers by selling smaller and alternative bikes. Smaller motorcycles in favor of smaller riders have boosted U.S. sales in recent years for Harley competitors, including the Polaris. Inc.
Eicher Motor Ltd.
The Royal Enfield brand, which specializes in small, affordable motorcycles, reached 3,322 bikes last year, an 81% increase in North American sales. Last year, the India-based company had global sales of over 800,000 bikes.
Harley’s U.S. Bike sales, meanwhile, declined in five straight years during 2019. Growth in overseas sales fell short of expectations.
Mr Levatich resigned in February. Mr. Zitz, a longtime director of the company, closed dealerships in the U.S. before Covid-19 and the company’s U.S. Embodied the factories.
Factories remained closed for two months, a disruption that dealers say prevented Harley from meeting the epidemic demand for motorcycles this summer. Harley deliberately throttled back production after a resume to keep fewer bikes on the market.
“It’s a momentary painful eater, given where my demand is,” said Brent Ledla, a trader near Los Angeles. Added that it is about 10% ahead of its sales last year. “There won’t be an excess of motorcycles, as has been the case in the past.”
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