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Pan America™

At the EICMA (Esposizione Internazionale Ciclo Motociclo e Accessori), motorsports show in Milan, Italy, earlier this week — Harley-Davidson debuted two new bikes.  Important to note is the difference in the terms “launch” vs. “debuted.”

The Milwaukee MoCo has aimed one of motorcycles at a market segment in which Harley-Davidson has never really participated.

It’s my view that Harley-Davison is slowly trying to build higher walls to keep “enemies” (competitors) from invasion. Marketing types call this “relevance” and “barriers to entry.”  Multiple financial reports from the company clearly indicate a struggle to fire up a new generation of riders.  The growing presence of electric vehicles is undeniable, but the premium-priced electric (LiveWire) motorcycle — is a non·start·er in terms of revenue!

And at the same time, there’s been an invading army (BMW, KTM, Triumph, Yamaha, Honda or Ducati counterparts) of adventure touring bikes (ADV).  Importantly, this segment is where customers seem particularly excited to buy new models year-after-year.  Even Italy’s floundering boutique bike builder, Moto Guzzi, has had to double the workforce in its Mandello del Lario plant to keep up with demand for the new V85 TT adventure bike ($12,990).  It’s simple.  A fresh new design, a fresh new motor, and a capable around town, comfortable on freeways and durable enough for off-road riding gets customers excited to put down money!

We could have a long-debate on why Harley-Davidson spent millions of R&D dollars much too early as part of their electrification strategy and if the mainstream motorcycle market is ready to encourage motorcyclists to switch to electric vehicles.

But, lets return to the point at hand.

The first new motorcycle is an adventure touring bike (ADV) called the Pan America™.  Astute readers are likely to have déjà vu as it looks very similar to the Pan America concept motorcycle teased out back in 2018.

The Pan America has a new liquid-cooled 60-degree V-twin engine labeled the Revolution Max that displaces 1,250-cc and is reported to make 145 horsepower and more than 90 pound-feet of torque. Impressive stats, especially for the MoCo, which typically has built larger displacement engines with less power and more torque.  The new ADV motorcycle differs from traditional Harley models.  The first item, is exchanging the belt-style final drive for a chain drive that allows simpler gearing changes and improves on the ability to repair if something goes sideways on the trail.  The ADV also leverages a rear trellis-style subframe for strength and reduced weight, which allows motorcyclists to mount different types of adventure-isk luggage to it.

Other advancements include new radial monoblock four-piston caliper brake system developed in collaboration with Brembo and an inverted fork setup, which is common on ADV bikes.  From a styling perspective, you’ll either love the bird-beak nose and squinty cyclops-like headlight or not.

Harley-Davidson® Bronx™

The second new motorcycle is a middleweight class and called the Harley-Davidson® Bronx™. It’s reported to have a smaller 975-cc version of the Pan America’s Revolution Max engine and produces 115-horsepower and 70 lb.-ft. of torque.  Style wise, the Bronx looks somewhat cookie-cutter in this crowded “streetfighter” market segment.  From press photos the motorcycle appears to be belt-driven.  Both motorcycles will roll on new co-branded Michelin tires.

Harley-Davidson says that it’s aiming to have both the Pan America and the Bronx in showrooms by the end of 2020.

Huh?!  A year away?

I like the adventure touring bike (ADV) lineup, but if I was in the market to purchase, it’s unlikely that I’d stall buying for a year to purchase an unproven ADV motorcycle.  I also think it will be a mistake if the MoCo expects its Harley-Davidson name to garner an ultra-premium price in this new segment as it has in the EV market with the LiveWire.

The Pan American should launched and be in showrooms in March 2020, not “late” 2020.

Photos courtesy of Harley-Davidson

All Rights Reserved (C) Northwest Harley Blog

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It became evident today, that creative instincts, an innovation mindset, deep brand and consumer experience along with bottom-line orientation is no longer enough for Harley-Davidson executives.

I’m talking about Neil Grimmer (Twitter) — a San Francisco-area entrepreneur and previously, the Founder/CEO of a personalized nutrition life science company Habit, joined Harley-Davidson on April 5, 2019 as president of Harley’s global brand development.

200 days later it’s been reported by the Milwaukee Business Journal he is “no longer with the company.”  Of course that is an executive management euphemism for ‘You’re Fired’ — however, in the parlance of our times and to clarify he was — sacked, dumped, bounced out, canned, axed, eighty-sixed, let go, ran-off, given walking papers, given the pink slip, or given the old heave-ho.  To put a more cheery spin on it:  one could say he was “constructively discharged,” or “freed up for the future.”

In a memo to employees it was communicated that Harley-Davidson management received multiple complaints about Grimmer’s code of business conduct.   I’m being snarky, but apparently, those day-long seminars in workplace sensitivity never paid off?!

It’s been my experience that company execs get fired because of poor change management, maybe ignoring customers, or for tolerating low performers, or for denying reality or worse, for too much talk and not enough action.  But, it could be as simple as his ‘left coast‘ leadership style was just inappropriate for the MoCo’s particular culture.

I’m sure Mr. Grimmer is an extremely accomplished executive, but the reference by CEO Matt Levatich of multiple violations is a BIG deal.  The MoCo has a set of core values and principles along with a Code of Conduct HERE for employees and suppliers.

It’s not clear if Harley-Davidson has an executive non-fraternization policy, but clearly they prescribe to conducting business with honesty and integrity.  In addition, they prescribe to providing a workplace free of harassment based on personal characteristics and do not tolerate harassment of employees by managers or co-workers.

Harley-Davidson (HOG) stock was up today!

 

Harley-Davidson Code of Business Conduct:  HERE
Harley-Davidson Supplier Code of Conduct:  HERE

Photo courtesy of Harley-Davidson

All Rights Reserved (C) Northwest Harley Blog

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Harley-Davidson, Inc. (NYSE:HOG) reported the third quarter 2019 financial results in a press release HERE.

Key indicators the motor company reported was revenue from motorcycle and related products fell 4.9% Y/Y to $1.07B in Q3.  Motorcycle shipments were down 5.8% to 45,387 and gross margin fell one point to 29.9% of sales.  The company stated it expects shipments of 38,500 to 43,500 motorcycles in Q4 and 212K to 217K for the full year.

In other interesting financial sound bites; Harley’s Q3 marketing spend was up over 30% with efforts on the LiveWire and LowRider S television spots running in major markets across the U.S.  International retail sales were up 2.7% driven by growth in both developed and emerging markets.  In addition, Harley-Davidson gained 2.2 percentage points of market share during the quarter within the Touring and Cruiser segments, which represents approximately 70% of the total 601cc plus industry.

In the attracting more people to riding and keeping riders riding space (i.e. the 2027 strategic imperative) — in Q3 the company gained deeper analysis and insights on why people engage, participate and disengage from riding.

Lets call it a “participation lifecycle!”

H-D Marketing and Brand Amplification

Harley-Davidson now has an acute focus on how to influence each customer at their buying decision points to build the total number of committed Harley-Davidson riders.  By 2027,  the company will expand to 4M total Harley-Davidson riders in the U.S., grow international business to 50% of annual HDMC revenue, launch 100 new high impact motorcycles and do so profitably and sustainably.  Lastly, Harley added Amplified Brand as a growth catalyst in the More Roads to Harley-Davidson’s growth plans.

For example Harley-Davidson refreshed their brand look at major events during Q3 including Sturgis, World Surf League and Spartan races and recently announced we will be the presenting sponsor at next summer’s hotly anticipated Hella Mega music experience tour featuring Green Day, Weezer and Fall Out Boy.  The Hella Mega Tour being promoted by Harley-Davidson is the co-headlining tour of rock bands Green Day, Fall Out Boy, and Weezer. The tour was announced on September 10, 2019 and includes dates from March to August 2020.

Navigating Section 301 Tariff Process

You can’t have a finance report these days and not talk about TARIFFS!  The dizzying series of trade and tariff events over the last few months has pushed the trade war front and center into Harley-Davidson.  How to navigate the Section 301 Tariff process, prepare for any impact etc., is a challenge in of itself.  For the full year 2019, Harley-Davidson now expect impacts of recent EU and China tariffs to be approximately $105 million. This is a $5 million increase from prior expectations and is driven by an increase in Section 301 tariffs, which continue to shift with the breeze as part of global trade negotiations.

It appears that some developed nations will slip towards recession, and governments and companies keep hoping the signs of economic weakness in China would push all the parties to a “deal” table faster.  Harley-Davidson looks to continue mitigating the impact of tariff increases through tariff classification, tariff engineering, first sale, and other methods.  Some of which may have an impact on U.S. manufacturing jobs.
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Q3’19 Press Release:  HERE
Investor Slides:  HERE
Transcript of Q3’19 Financial Call:  HERE
More Roads Plan:  HERE
Hella Mega Tour:  HERE
Section 301 Tariffs:  HERE
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Photos courtesy of Harley-Davidson
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All Rights Reserved (C) Northwest Harley Blog

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Harley-Davidson LiveWire

The Harley-Davidson LiveWire electric motorcycle was officially unveiled in January 2019 at CES.  A lot of marketing hype surrounded the unveiling of the motorcycle with claims of it being the start of “a new focus for the brand that would inspire the next generation of riders.”

Then yesterday, Reuters broke the news that Harley-Davidson had stopped production and delivery (temporarily) of the LiveWire electric motorcycles, after discovering an issue related to the vehicle’s charging equipment. It was reported that the company discovered a “non-standard” condition during the final quality checks of LiveWire, which it already started shipping to dealers in late September.  There were glitches found in the product which has prompted additional testing and analysis.

Interestingly, Webster defines glitches “as a sudden, usually temporary malfunction or irregularity of equipment.”  A glitch like this is not something riders want in a $30,000 purchase!

The LiveWire motorcycle uses a Combined Charging System (CCS), which is a single connector pattern that offers enough space for a Type 1 or Type 2 connector, along with space for a two-pin DC connector allowing charging at up to 200 Amps.  As part of the announcement, the motor company informed current owners to NOT charge the motorcycles through standard home outlets and use only ChargePoint (direct-current stations) charging stations at authorized Harley dealerships to reload the battery.

Well isn’t that “a jolt” of inconvenience?!

For most riders, you’d like to start your day fully charged!  Meaning home charging is normally done at night while you eat, play with the kids, watch TV, and sleep!  There are two Harley-Davidson dealers in the Portland, Oregon metro area that have installed ChargePoint stations.  Finding an alternative direct-current charging station to reload the motorcycle battery on the way to work and then waiting for a couple hours is certainly not ideal.

Charge Locations – Portland, Or. Metro

There are couple of things to know about public charging: the 3 different levels of charging, the difference between connectors and the charging networks.  Riders can go directly to a dealer or try and locate charging stations using ChargeHub.

Knowing your motorcycle’s capabilities is very important and consult the dealer if not understood!

Public Chargers Levels:
Level 1 is the standard wall outlet of 120 volts. It is the slowest charge level and requires tens of hours to fully charge a 100% electric vehicle.
Level 2 is the typical EV plug found in homes and garages. Most public charging stations are level 2.
Level 3 chargers, also known as DCFC or DC Fast Chargers are the quickest way to charge a vehicle. Not every electric vehicle can charge at level 3 chargers.

In general, electric motorcycles are in a phase of adoption known as “the chasm,” (See: Geoffrey Moore’s technology adoption curve) a gulf separating early adopters from the majority of consumers.  It’s a treacherous position in the life of new technology/products, and often determines their success or failure.  One could debate that Harley-Davidson is targeting a market that does not really exist: young, “green” and affluent first-time motorcyclists.

This unattractive “glitch” will be over soon enough, but it does little to promote value creation and owning a Harley-Davidson electric motorcycle.

UPDATE:  October 16, 2019 — An unidentified H-D source tells Forbes:  “This is an issue with the 120v [charging] system, which includes an on-board charger, so it could be a vendor issue with that charger, a wiring harness issue, etc. The point I’d make is that the QC [Quality Control] process worked…there’s an issue, it was discovered before the bikes were shipped to dealers and customers, and I assume it will be fixed.”

UPDATE: October 18, 2019 — TechCrunch reported that Harley-Davidson has resumed LiveWire production.  “After completing rigorous analysis this week, we have resumed LiveWire production and deliveries,” Harley-Davidson said in a comment emailed to TechCrunch. “Customers may continue riding their LiveWire motorcycle and are able to charge the motorcycle through all methods. Temporarily stopping LiveWire production allowed us to confirm that the non-standard condition identified on one motorcycle was a singular occurrence.”

Photos courtesy of Harley-Davidson and ChargeHub

All Rights Reserved (C) Northwest Harley Blog

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Customize It And Stand Out

According to Reuters, Harley-Davidson Inc. has laid off 40 employees in Milwaukee at their general merchandise division.

It’s not a large number of employees, but most unfortunate if your career “rug” was just pulled out from underneath you as someone impacted by this reorganization.

Important to note is that Harley-Davidson’s second quarter earnings report, released July 23, 2019 reported general merchandise sales of $64.6 million, a 5.8% decline from 2018. The company saw a 4.2% decline in the first half of 2019 from 2018 in general merchandise.  It’s also no secret that Harley-Davidson continues to see a decline in motorcycles sales in the U.S. and abroad as it works to adapt to changing clientele.

In the Reuters report the motor company stated the general merchandise division re-org was to manage it’s business with “focus and discipline.”  That statement reads like a quote from the Six Disciplines playbook.  Was the division previously an over-committed reactionary one with no focus and discipline?  That euphemistic “focus and discipline” term seems to be more about flattering management because at the end of the day it’s a “reduction in force,” which is an old school straightforward term.

SAVE, SAVE, SAVE

And speaking of general merchandise — have you noticed the significant up-tick of emails from Harley-Davidson corporate or your local dealer?  I follow Harley-Davidson on multiple channels to stay current on their events and product announcements and always get a number of emails, but I’ve seen a dramatic drum-beat increase over the last couple of months.

It’s starting to have a feel of desperation to survive and meet sales quotas.  Here are a couple recent examples:

Motorclothes, Last Chance to Save Up to 50%…
Harley-Davidson VISA…Reap The Rewards…
End of Summer Sale…
Customize It and Stand Out…
Finance Interest Rate Specials…
Schedule a test ride today…
The 2020 Models are here…
Ride into Fall sale…
Performance Workshop this weekend…

Why is email solicitation so popular?  Because it’s a free alternative to tele-marketing and direct-mail campaigns.  The cost of sending an email is minimal compared to the cost of printing and mailing paper and the email “opportunity” goes directly to your inbox for review.

I predict we’ll see more and more sales email as the motor company works even harder to capture and retain our interest.

Photos courtesy of Harley-Davidson email blasts

All Rights Reserved (C) Northwest Harley Blog

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2018 Softail Lineup – Eight all-new models

When is “new,” “all-new,” “brand new,” “built from the ground up new,” “the newest,” “newer and refreshed,” advertising claims of an existing or previous Harley-Davidson really new?

Is there no objective basis by which to measure when a motorcycle is actually “new?”  What do you think?

It’s been reported that motorcycle enthusiasts are holding on to their old, reliable wheels for longer stretches of time, but Harley-Davidson wants to change that and has rolled-out the “brand new” 2018 #FreedomMachine models. Dealer launch video is HERE.

Send in the millennials and let’s make a deal!

Or in other words,  what the company is hopeful for after the ‘largest ever product development project’ was undertaken.

All-new Softail mono shock rear suspension

They may not look very different, but the 2018 changes to the engine, frame and suspension over shadow any “new” colors, new handle bar position or new seat thread design.  “All-new” is really what we’ve been promised to modernize these traditional bikes and it’s not a rehash of the old.

The quick read is that the Softail and Dyna product lines, as riders have known them previously, are gone.  The Dyna family is discontinued and the Dyna nameplates are now Softails!

Softail Big-Twin cruiser models

That’s the provocative and on the 2018 model revamp, all of the models that used to be in the Dyna’s lineup — the Fat Bob, Low Rider and Street Bob — rolled into the Softail lineup — Softail Slim, Heritage Classic, Deluxe, Fat Boy and Breakout — Harley completely redesigned the Softail chassis.  Not a minor cosmetic change, but a complete overhaul of the entire frame and suspension.  The new under-seat mono shock rear suspension aims to offer improved ride quality, traction, and control while the triangular swingarm maintains the classic lines of a hardtail frame.  The revamp also includes key accommodations for last years release of the Milwaukee-Eight, the first four-valve-per-cylinder heads engine packaged into the classic 45-degree V-twin.

From the styling department, all the new 2018 bikes have a much darker and aggressive paint scheme.  It’s largely a brooding “protester” feel with colors matched and with a “masked” or blacked out engine. There are smaller changes to individual models such a color-coded inner fairings, new wheels (including a 21” one for the Road Glide) and different exhaust finishes.  Oh and don’t forget that riders can now pair Bluetooth headsets with the stereo to remain wirelessly “connected” — on its top-of-the-line touring models.

I’ll address the hype right here: Your motorcycle and your smartphone are starting to have a lot in common, though only one can be used to take a selfie — at least for now.

115th Anniversary Eagle Badge

Lastly, the motor company announced the 115th Anniversary edition motorcycles.  There will be two limited-edition, serialized designs with 115th Anniversary Eagle and special anniversary paints available on nine different models in 2018 to celebrate the birthday.

But, what about that peculiar

In the social media and PR launch extravaganza for the 2018 line up earlier this week, Harley-Davidson quietly discontinued the V-Rod.

Discontinued V-Rod

The 2017 V-Rod Muscle and Night Rod Special are the final iterations of the VRSC (V-Twin Racing Street Custom) line.  You may recall this motorcycle had the Revolution engine that was co-developed with Porsche and based on the VR-1000 Superbike that Harley used in competitive drag racing.  It had a hydro formed tubular frame, a gas tank under the seat with round-topped airbox cover up front posing as a gas tank.

This was often referred to as the Harley for the non-Harley motorcycle rider and was a testimony that engineers and the brand were capable of doing something very different.  It was introduced in 2001 and discontinued 16-years later.

It would seem that Harley-Davidson is no longer “building products that fulfill customers dreams on the drag strip!

Photos courtesy of Harley-Davidson

All Rights Reserved (C) Northwest Harley Blog

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Harley-Davidson Press Release

In mid-August, Harley-Davidson rolled out a press release (on the Canadian news wire) to announce the launch of a global campaign that embraces “The Freedom of The Open Road.”

It’s part of a 10-year global strategy to build the next generation of Harley riders and the new brand platform is “All for Freedom, Freedom for All” which comes to life with videos containing user-generated and filmed content that shares moments of the open road by riders past and present.

The ambitious campaign goal is to increase Harley’s brand relevance and inspire those “sleeping license holders”  to experience the same freedom that all current Harley riders feel with the wind in the face and ultimately to purchase a motorcycle.

The Harley-Davidson marketing group is using the #FindYourFreedom hashtag to generate social media awareness.

It’s common knowledge that when using a hashtag, you are categorizing your post and is viewed as a valuable tool when marketing your brand.  The objective of course would be to find a hashtag that has never been used previously and one that would really set the campaign apart from all the other social media noise.  However, there is another large company with an equally large brand that is already using the #FindYourFreedom hashtag with an associated marketing campaign.

They spell it:  J E E P  — you know, the company with an adventurous lifestyle that requires an adventurous vehicle!

While you can’t legally own a hashtag, the marketing 101 manual suggests that you chose one that people will associate with your brand, by leveraging a distinctive phrase or word associated with your company and messaging that marketing execs would, at best, like to see go viral or, at worst, contribute to the marketing campaign in a very positive way.

Think about it.  Harley-Davidson just launched a multi-year campaign and is encouraging motorcycle fans to join the social media conversation of a larger Jeep fan base!

The marketing folks may have actually “muddied” the Harley-Davidson brand or made it vulnerable by this hashtag gone wrong.

Photos courtesy of Harley-Davidson and Jeep.

All Rights Reserved (C) Northwest Harley Blog

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