The latest headlines are talking about Harley-Davidson is moving manufacturing overseas. Specifically, it’s being tied to tax and tariff policies that President Donald Trump has announced. What it largely fails to do is place the current Harley-Davidson story in perspective of it’s past announcements, as well as the changing markets.
For background, I’m posting a few past announcements made by Harley-Davidson, which I will also refer to by another name, the “Motor Company”.
Let’s take a little more spin-off the current news cycle. They’re not doing a good job of truly informing you…
In 2014, an article came out about the changing fortunes of the Motor Company.
Sales were significantly down in 2014. They still had profits.
Forbes Announced in 2015 –
Harley-Davidson Pre-Earnings: U.S. Retail Sales Could Return To Strong Growth In Q1
In 2017 — “While we expected the U.S. industry to be challenged, we were disappointed by the unexpected magnitude of the industry softening in the quarter,” Harley CEO Matt Levatich told analysts.
But investors are concerned that Millennials aren’t interested in the “hog” lifestyle that energized previous generations.
Levatich said Millennials were buying used bikes in encouraging numbers, but the company must persuade them to buy “their“ new motorcycles.
“It’s up to us to inspire even more of them to ride and to engage with Harley-Davidson’s products and experiences ..” he said.
Here’s what happened…
“It’s unlikely the news will lose Harley-Davidson any fans it hasn’t already lost to cheaper, smaller and more reliable brands that are often foreign-owned. The “Made in the U.S.A.” crowd has merged with the “Make America Great Again” masses, and neither really seem to care that red baseball caps are sewn in China. And in recent years, Harley-Davidson has been courting a younger, more culturally diverse audience anyway.” – Ad Age June 2018
That’s because the “Baby Boomers” are retiring or dying, Ad Age, and the millennials aren’t the target market. Asia and Europe are, and that ship has sailed before this latest June 25, 2018 news cycle started generating stories about Trump trade policy an it’s effects.
“The core customer base for Harley comprising baby boomers is aging, and millennial customers have looked to hold off on extravagant purchases, a term which can be associated with heavyweight luxury motorcycles, especially after a prolonged period of slow economic activity. However, 2015 could be different.” – Forbes April 2015
“In 2013, Americans purchased nearly 466,000 motorcycles, with the iconic Harley-Davidson (NYSE:HOG) laying claim to a good chunk of those domestic sales. But riders — and investors — might not realize that there’s a world full of cycle enthusiasts outside our borders that dwarfs the U.S. market.”
“With the understanding that foreign markets, especially the Asia-Pacific region, are the key to generating millions of motorcycle sales on annual basis, I offer this challenge: Can you guess which motorcycle brand is the world’s top seller?”
“.. if you said Honda (NYSE:HMC) then you should have real bragging rights as you correctly guessed the world’s top-selling motorcycle brand.” – Motley Fool Investor August 2014
The adoption of electric and hybrid motorcycles to emerge as a prominent trend in the global market
A recent trend observed in the motorcycle market is the increase in the adoption of electric motorcycles in some regions such as Europe and South Africa. With the governments focusing on electro mobility and reducing pollution, zero emission vehicles are being increasingly promoted through attractive incentives and schemes.
Chasing younger riders, Harley Davidson announces plans for a production electric motorcycle
It shouldn’t come as a surprise, but it still does to anyone who’s grown up with a very fixed image of what Harley-Davidsons are all about: outlaws, choppers, carefree big-bore dinosaur burners that never moved with the times because they never had to.
Matt Levatich, H-D President and CEO, summed up his company’s view thus: “The EV motorcycle market is in its infancy today, but we believe premium Harley-Davidson electric motorcycles will help drive excitement and participation in the sport globally. As we expand our EV capabilities and commitment, we get even more excited about the role electric motorcycles will play in growing our business.” – New Atlas 2014
Royal Enfield set to buy Ducati as new 210 hp 1100c V4 Stradale engine. They have plans for their own super bike.
If you’re “ShocKed” by the news of Harley-Davidson, recognize there are larger forces at play on the world stage than Presidents and political alliances. Changing demographics are driving this and other changes. The best HD can do, or for that matter any company, is adapt to survive.
I still stick with what I own… A 750cc Honda.