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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

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NHTSA Highway Crash Data For 2018

The U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) released highway crash fatality data for 2018.  While the overall trends of Motorcyclist fatalities declined 4.7 percent is encouraging, the report shows that 4,985 motorcyclists died in crashes in 2018 (244 fewer from the 5,229 fatalities in 2017) is still too many.

Sadly in Oregon, the number of motorcyclist fatalities increased significantly in 2018!

Below is a snippet of some report details:

Nationwide:
■  2018 vs. 2017 Motorcyclists Fatalities — 244 fewer fatalities, 4.7% decrease.
■  Motorcyclists Killed in Traffic Crashes — 2017 (5229); 2018 (4985)
■  From 2009 to 2018 the proportion of motorcyclist fatalities increased from 13% of the fatalities to 14%
■  Alcohol-impaired drivers involved in fatal crashes — Motorcycle riders had the second largest percent decrease (-10.1%) from 2017 to 2018
■  Motorcyclist fatalities in urban areas increased by 33% since 2009 versus rural areas decreased by 15%

Map of Oregon Motorcyclist Fatalities (2018)

Oregon:
■  2018 vs. 2017 Motorcyclists Fatalities — 20 additional fatalities, 38% increase
■  Motorcyclists Killed in Traffic Crashes — 2017 (54); 2018 (74)
■  Motorcyclists Killed Involving Speeding — 2017 (27); 2018 (23)

Important to note with this release, NHTSA introduced its new Fatality and Injury Reporting System Tool (FIRST), a modernized crash query tool that lets users not only query fatal crash data but also generate estimates of crashes and people injured in crashes. The upgraded functionalities in the new tool include generating multi-year trends, estimates of alcohol involvement, and charting/tabulation/mapping of query results. The tool, along with instructions on its usage, can be accessed HERE.

Photos courtesy of NHTSA

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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

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As you know, I’m a motorcyclist licensed in the State of Oregon.  I’ve written many blog posts that represent motorcyclists and advocate for the passage of laws that improve motorcycle safety and result in motorcycle awareness and driver accountability.

My perspective comes from years of riding motorcycles and having first hand knowledge of friends who have been injured when drivers don’t see motorcycles and the dramatic consequences.

Speaking of motorcycle accidents, the following are examples of common motorcycle accident causes:

• A car makes a left-hand turn in front of a motorcycle, usually because the driver is not looking for, or does not otherwise see, the oncoming motorcycle.

• A vehicle pulls out of, or into, a side street or driveway, also usually because the driver does not look for, or otherwise see, the motorcycle.

• A car rear ends a motorcycle because the driver is inattentive or distracted, usually by a mobile electronic device.

• And the all-to-common motorcycle accidents involve only the motorcyclist!  There have been a number of motorcycles that inexplicably missed a curve on a clear, dry road and left the roadway.  Many suffered injuries or death after striking a tree, roadside sign, utility pole or boulder.  Be it age related (yes, I said that!), pushing the limit of the riders skills or the capability of the motorcycle, driving impaired — both by drugs and alcohol — or by fatigue and exposure — riders need to constantly tweak riding habits to stay sharp.

In tracking the U.S. states information, searching and following-up on the Oregon data of various motorcycle accidents in the news, it seems that negligent drivers are often not being cited for any violation when they cause a motorcycle accident. Moreover, careless drivers are typically only being cited for routine traffic violations, and reckless drivers are being cited only for careless driving.  I’ve also read about simple cell-phone tickets being cited when drivers cause severe accidents.  If you try and track motorcycle accident cases, they are usually not referred to the District Attorney’s office unless there is a fatality or a drunk driver involved. Careless and even are facing very little to no criminal repercussions for their conduct and instead being given a traffic violation or no traffic violation at all.

That’s all about to change!

Back in 2017, Oregon began to address this issue by passing HB 2598, which expanded Oregon’s Vehicular Assault Statute, ORS 811.060, to protect motorcyclists and their passengers from reckless drivers, making it a Class A Misdemeanor for a reckless driver to injure a motorcyclist or passenger. That same year, Oregon passed SB 493, which made it a Class A Misdemeanor for a criminally negligent driver to seriously injure a vulnerable user.

However, under the current statute, motorcyclists, moped operators, and their passengers are not, even though they are equally susceptible to being directly struck and seriously injured by a careless, or criminally negligent, driver as the other road users.

But, effective January 1, 2020 is Senate Bill 810.  Signed into law back in June, the Bill modifies the definition of “vulnerable user of a public way” to include persons operating or riding on moped or motorcycle.  The law (801.608, “Vulnerable user of a public way”) enhances penalties for motorists who kill or injure motorcyclists, as well as other vulnerable road users such as pedestrians, highway workers or bicyclists.

Oregon has taken an important step to protect riders and their passengers. Oregon now joins the State of Washington along with several other states by treating motorcycles and mopeds the same as other vulnerable road users by significantly enhancing the penalties against careless and criminally negligent drivers.

Thank you Governor Brown!

UPDATED:  November 1, 2019 — Removed the 1st – 4th priority scheme under motorcycle accident causes paragraph (see comment below) as it was misleading.  Added a reference HERE to the NHTSA Highway Crash Data for 2018.

Photos courtesy of ODOT and GHSA

Oregon Crash Statistics & Reports    |    Invest in yourself and Stay Sharp HERE!

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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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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

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Real ID Driver License Example

Do you remember the $300 million in federal taxpayer money wasted for Cover Oregon?

The State of Oregon shutdown its planned healthcare exchange in 2014 which never launched. Former Governor Kitzhaber had staked his reputation and his reelection bid on promoting State-based health and welfare programs.

Given all the in-fighting and blame among employees in the Oregon Health Authority, Cover Oregon was becoming a political liability so, the state quickly pivoted to a blame-Oracle narrative and instructed Attorney General Rosenblum to justify and pursue litigation.

Real ID Information

Now it’s Déjà vu all over again.

I’m talking about the Real ID Act and the State of Oregon Driver License.

The state and/or the Oregon Department of Transportation (ODOT) looks to be unwilling to take responsibility for its own system failures in trying to comply with the federal Real ID Act.

 

Here are some facts:

• Oregonians are not required to change their standard driver license or ID card. The current card will continue to be valid until it expires, and you can use it for everything you use it for today – including air travel until October 2020.
• When your driver license or ID card expires, you have the option of renewing your standard license or ID card (prior to July 6, 2020) or getting a Real ID version on July 6, 2020.
• From the DMV stats page: There are approximately 4.1 million registered vehicles in the state of Oregon. Of those, about 3.2 million are passenger vehicles with nearly 3.1 million licensed drivers.  Those drivers are served by 60 DMV offices around the state.
• The State of Oregon is not yet compliant with the standards of the Real ID Act and CANNOT provide a Real ID option until July 6, 2020.
• The Department of Homeland Security (DHS) has given Oregon multiple extensions to-date, but their last and final extension means the state has to provide a Real ID option prior to October 2020.
• The DHS will not recognize driver licenses with out Real ID for air travel after October 2020.

The State of Oregon has received constant warnings about being prepared and providing Real ID licenses, but the project, its problems, its scope, its goals, its costs, its risks, its timing, its milestones, its deliverable, and its schedule didn’t seem to be understood by many until DHS extensions stopped.  I’m not certain, but I anticipate government representatives making the rounds on TV pontificating whining how the State of Oregon teams faced so many legacy issues, including complex IT structures, manual processes, insufficient visibility into systems and dwindling resources to comply with this federal act.

Oregon DMV Locations

Let’s do the math — assuming all 3.1M Oregon licensed drivers get a Real ID license during the “90 day window” (July 6, 2020 – Sept 30, 2020) that is 34,444 drivers renewing licenses per day.  Divide 34,444 drivers by 60 (# of DMV offices across the state) that is 574 drivers per day, filing paperwork and renewing their licenses.  Of course the 90 days isn’t totally accurate as the DMV offices are not open 7-days a week and in addition, the highest number of drivers will be in a smaller number of the overloaded metro offices.

I’m not going all Chicken Little on you, but it looks like the “sky is falling on the Oregon DMV” and at best, this is a political embarrassment for Governor Brown.  At worst, it’s another example of Governor Brown’s administration  accountability or lack there of, for procedures in important areas and may set off another round of state employees lobbing rocks over the fence in a defensive, accusatory and inaccurate ways.

In fact, earlier this week it became all about offense as government officials started amplifying the spin on TV and recited:  “Avoid the long DMV lines next year and instead either get one or plan to use your current passport for air travel.”  Clearly this is an effort to change the narrative of Real ID implementation delays which I read with deep skepticism.

Who will help rescue the state from its own incompetence this time?  Why has the state kept key details on the reason for Real ID delays concealed from the public?  Why has no media outlet demanded an answer on the reasons of the delay?  How will the state triage and combat lengthy wait times?  Will the state redirect employees from the DMV headquarters and staff from other state agencies and departments— to reduce the wait times at field offices?

The State of Oregon owes the public a duty of transparency on the Real ID project!

 

Real ID Background:
On September 11, 2001, America was attacked.  While prior to September 11th, states were already implementing numerous security measures to counter issues with counterfeit driver’s licenses (DLs) and identification cards (IDs) and dated licensing procedures, after September 11th states accelerated these efforts to ensure that their driver’s licenses and identification cards were secure.

The Real ID Act was passed by Congress in 2005.  On May 11, 2005, President Bush signed into law the “Emergency Supplemental Appropriation for Defense, the Global War on Terror, and Tsunami Relief, 2005” (H.R. 1268, P.L. 109-13), which included the “Real ID Act of 2005.” Title II of Real ID—“Improved Security for Driver’s License’ and Personal Identification Cards”—it was based on recommendations from the 9/11 Commission that the federal government “set standards for the issuance of sources of identification, such as driver’s licenses.”  It establishes standards that state-issued driver licenses and identification cards must meet in order to be accepted for certain federal purposes.

More information on the Real ID Act, federal funding and extensions is:  (HERE)

Photos courtesy of Oregon DMV and Google Maps

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