HD addresses over supply of new and used motorcycles

Clifton

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I don't know what supply and demand is in Europe, I assume lower demand as tariffs have increased prices, but there's been an over-supply here and HD's new CEO is addressing it. It's probably the best course for them, try to remain profitable while selling fewer motorcycles.
The new Pan America and Bronx have been placed on the back burner for now.


WSJ NEWS EXCLUSIVE BUSINESS

Harley Plans for Fewer Models, Simpler Factories After Coronavirus Shutdown

Motorcycle maker is turning away from plans for a wider range of new models to revive sales

By Bob Tita
Updated May 20, 2020 1:12 pm ET

Harley-Davidson Inc. is reopening its factories this week at lower production rates and sending dealers a narrower range of motorcycles, steering away from more expansive plans to stop a year's long sales slide.

Milwaukee-based Harley’s U.S. assembly plants and most of its dealers closed in March as part of a nationwide effort to slow the spread of the new coronavirus. As many of the company’s 698 U.S. dealers were making plans to reopen, Harley’s director of product sales, Beth Truett, told them in a memo earlier this month that about 70% of them likely wouldn’t receive any additional new motorcycles this year.

“We are using this time to course correct and rewire the company in pursuit of making Harley-Davidson one of the most desirable brands in the world,” Ms. Truett said in the memo, which was viewed by The Wall Street Journal.

Harley’s shares rose 7.3% to $23.44 on Wednesday after the Journal reported on Harley’s strategy reversal.

Used, on-road motorcycles sold weekly at wholesale auctions declined when retail dealers closed in March,but prices have been rising lately, reflecting rising demand and a lower supply of bikes.

The shift shows how some companies are pivoting in response to the economic turmoil caused by the pandemic, reviewing operations or products that may not work amid an uncertain recovery.

Former Chief Executive Matt Levatich had planned to offset declining sales of the big, expensive bikes favored by Harley’s core baby boomer customers with dozens of new models by 2027, many of them smaller, cheaper and aimed at foreign markets. Mr. Levatich stepped down in February under pressure from shareholders threatening to initiate a proxy contest for board seats after Harley closed its fifth consecutive year of falling U.S. sales.

He has been replaced by Jochen Zeitz, a longtime Harley board member, former CEO of German athletic-apparel company Puma SE and founder of a new contemporary art museum in Cape Town, South Africa.

Bumpy Road

Harley-Davidson has tried to offset declining shipments of motorcycles in the U.S. by adding more smaller models to the lineup and increasing foreign sales.

On an earnings call last month, Mr. Zeitz said expanding the motorcycle lineup and chasing new markets diverted attention from Harley’s more profitable models and made factories too complex. He said the production revamp is warranted by deteriorating demand for motorcycles. New models that would have made their debut this summer will roll out early next year instead, he said, on a new schedule of releases before the peak spring buying season begins.

By having fewer motorcycles in the market, Harley said it is trying to appeal to customers of premium-priced brands with limited availability. That approach is common among makers of sports cars and some luxury products that keep manufacturing volumes well below demand for them.

“Our strategy to limit motorcycle product in the showroom is purposefully designed to drive exclusivity,” Ms. Truett said in her memo.

Harley is reopening its plants in Wisconsin and Pennsylvania this week and said it would accelerate production in phases. The motorcycles that Harley will start making again this month will be limited to bestselling models in a limited palette of colors and without customizable features for the remainder of the year, Ms. Truett wrote.

Wrong Way

Some U.S. dealers said the production cuts will sap further sales at dealerships that were closed for nearly two months. “You’re not going to catch up,” said Zoli Dudevsky, owner of a Harley dealership near Cleveland.

Some dealers said they have enough new motorcycles to cover a month or two of sales, but that those stocks would be depleted sooner if demand rises. Several said customer traffic at their reopened showrooms has been better than they expected, in part because motorcycle riding is an alternative to other types of recreation discouraged under social-distancing rules.

“We’ve noticed a lot of people getting bikes out of storage that haven’t been running in years,” said John Lyon, a dealer in Vermont.

George Gatto, owner of two dealerships in the Pittsburgh area, said he isn’t expecting any new motorcycles from Harley until August, when the company plans to deliver two motorcycles to one of his dealerships. The company is urging dealers to sell more used motorcycles, a market that Harley executives in the past regarded as detracting from sales of new models.

“If Harley is taking all the new bikes away from me, I’ll have to make that up with used,” Mr. Gatto said.

Mr. Gatto said he is trying to acquire more used motorcycles, but so are other dealers. Prices for used Harleys purchased at auctions have risen by about 20% in recent weeks, he said. Dealers who need new bikes to fill orders say they will have to buy them from other dealers, in some cases at a premium.

Harley projects that dealers’ stocks of new motorcycles will fall by 65% by year’s end, Ms. Truett’s memo to the dealers said. “Dealers should plan for an extremely tight year from an inventory perspective,” she wrote.


https://www.wsj.com/articles/h...feature_below_a_pos1
 
I thought they finally had a chance of attracting new customers with the new models such as the Bronx and Pan America

I think by clinging on to the old models will see them die out as the current customer base dwindles into old age
 
I thought they finally had a chance of attracting new customers with the new models such as the Bronx and Pan America

I think by clinging on to the old models will see them die out as the current customer base dwindles into old age

The customer base is dying big time, look at the fuckers who ride Harleys, fat fucking oldies and if Covid don`t get `em summat else will soon....:D:D
 
As if covid19 wasn’t bad enough. Sounds like a good strategy (intentional or not) to cull the herd and lean out the dealership network. I feel bad for the independent Harley dealers in the US who will see their business investment go up in smoke.
 
... Sounds like a good strategy (intentional or not) to cull the herd and lean out the dealership network. I feel bad for the independent Harley dealers in the US who will see their business investment go up in smoke.

I as well feel for the dealers that HD corporate pressured into going into big debt in order to "promote the franchise". Forcing them to relocate to super high dollar "visible" locations and or be forced to build expensive HD boutique stores in order to maintain their stupid franchise. Unfortunately Honda and BMW are the same.
 
I as well feel for the dealers that HD corporate pressured into going into big debt in order to "promote the franchise". Forcing them to relocate to super high dollar "visible" locations and or be forced to build expensive HD boutique stores in order to maintain their stupid franchise. Unfortunately Honda and BMW are the same.

It is ridiculous !The Scottsdale store even has a wedding chapel !
 
I know of thee HD dealerships -

Reading
Maidstone
Guildford

At two the dealer principles ride EVOs and at the other the master tech does....

Perhaps that says something...


It certainly says they are too expensive for the guys that work there..
 
It’s all a part of Trump’s, “Make America great again” campaign. The man’s a genius.
 
I don't see how this is going to stop their current freefall, it is just so short term, there appears to be no long term strategy to revive the brand.
 
No point having a long term strategy if your company collapses in the short term.
You need to start with the immediate problem and move on to the mid and long term when, or if, that shows dividends.
 
The customer base is dying big time, look at the fuckers who ride Harleys, fat fucking oldies and if Covid don`t get `em summat else will soon....:D:D

Oi tit head!

Define oldie.

I'm nearly 6' and fairly slim (32" waist on a bad day) so your generalism is not appreciated!

Wan shite!
 
IMO it's the correct course. Total motorcycle sales in the US are now a bit over 500,000 a year, 15 years ago it was over double that, the total market here is shrinking. The three options I can think of for Harley are; get new riders by coming up with a way to make people who are uninterested in motorcycling, interested. Convince riders of other brands to buy Harleys. Or take what the market offers meaning cut back and streamline manufacturing to be profitable selling fewer motorcycles. I believe either of the first two options would be the more difficult if not impossible. The younger generation is simply not interested in motorcycles to the extent previous ones were, and it's not just motorcycling but activities like skiing and golf are down as well. A lot of dealers will have to close down unless they can come up with additional product to sell. One of BMW's problems is too few dealers for instance there's not one in the entire state of WV. HD dealerships now have too much floor space, and too few bikes because not enough demand for Harleys. My thought is for HD to relax the demand that their dealers be exclusive Harley Davidson and encourage all of them, that are located where there's currently not a BMW store, to carry BMW. BMW is another "premium" brand with product that would compliment rather than directly compete. Win, win.
 
As I see it you have to make a motorcycle that people want to buy, if you do not do this, then you have to create a market, I had to do that myself from scratch and used the media in all it`s guises to do that.(Not a motorcycle)

HD have an ideal opportunity to make a product that would sell, as they already have brand awareness and I suppose a certain prestige, I don`t know, it is just a brand and I will never understand "brand aspiration" I know what I like and what I want, the label on it makes no difference to me.....But back to the point, HD can hit the ground running moreso than most, just seems they don`t know how to do that, or are financially compromised to such and extent that they do not have the resources.....I cannot see any other problems, they have all the cards to play, perhaps they don`t know which card it is they should be playing.

If they were an individual, I would say that they are lacking confidence and would need to go into counselling in order to improve for the future and make their life more fulfilling and rewarding.
 
I know of thee HD dealerships -

Reading
Maidstone
Guildford

At two the dealer principles ride EVOs and at the other the master tech does....

Perhaps that says something...


It certainly says they are too expensive for the guys that work there..

Doesn't Noble at Guildford rise a Shovel ?
 
As I see it you have to make a motorcycle that people want to buy, if you do not do this, then you have to create a market,

I see your point, the problem is there just aren't enough people that want to buy motorcycles here now. So at least for the near term they have to cut back. Then they can work on "creating a new market". The problem they have is every time they have tried to deviate from their traditional market they've failed, losing money in the process; Buell, V-Rod, Street 500/750, Livewire. So I think your observation of them lacking confidence now is accurate.
The Pan America might help and IMO has a better chance of success than the previous attempts, certainly the Livewire, but it must either be somewhat unique (which it doesn't look to be) or as good as or better than its competition such as BMW GS1250, KTM 1290, etc. That's a tall order. One thing I thought that would have been a no brainer was for Harley to have bought Motus and further developed a line around the "baby block" V4 which is as American as apple pie. The money being far better spent than what they blew on Livewire. https://www.roadandtrack.com/car-culture/a23340313/motus-dead/
 
I see your point, the problem is there just aren't enough people that want to buy motorcycles here now. So at least for the near term they have to cut back. Then they can work on "creating a new market". The problem they have is every time they have tried to deviate from their traditional market they've failed, losing money in the process; Buell, V-Rod, Street 500/750, Livewire. So I think your observation of them lacking confidence now is accurate.
The Pan America might help and IMO has a better chance of success than the previous attempts, certainly the Livewire, but it must either be somewhat unique (which it doesn't look to be) or as good as or better than its competition such as BMW GS1250, KTM 1290, etc. That's a tall order. One thing I thought that would have been a no brainer was for Harley to have bought Motus and further developed a line around the "baby block" V4 which is as American as apple pie. The money being far better spent than what they blew on Livewire. https://www.roadandtrack.com/car-culture/a23340313/motus-dead/

I actually think that if the US market is not big enough, bearing in mind you have a population in excess of 300 million, then motorcycling has to be soon a thing of the past:eek:

I guess they will go the way of the horse in the Western World, since most can now afford a car from the start, not like in the old days when we bought them because it was all we could afford.
Perhaps the financial suicide that the West has just embarked upon will see a resurgence, in which case HD need to be building affordable motorcycles for the masses:thumb
 


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