Will the Harley-Davidson ‘Hardwire’ strategy work?
Difficult days drag on at Harley-Davidson, but will the Hardwire business strategy turn it around?
JUST three years ago the iconic but struggling Harley-Davidson marque promised a dynamic future filled with modern bikes such as an all-new 1250cc Pan America adventure and 950cc Bronx streetfighter alongside its radical electric bike, the LiveWire, and traditional cruisers.
Harley-Davidson LiveWire video review
Called ‘More roads lead to Harley-Davidson’, the ambitious plan was unveiled in 2018 by then CEO Matt Levatich in a bid to broaden Harley’s appeal, attract new, younger buyers, and reverse a sales decline the firm had been suffering for three years.
However, continuing losses and poor share performance led to Levatich’s departure in February 2020, the abandonment of the Bronx project (although the Pan America is still due to be unveiled on February 22), and the adoption in July, under new interim CEO Jochen Zeitz of a critical review of the whole company.
That review, dubbed The Rewire, included the loss of 700 jobs, was completed in January and designed to lead to a new long term company strategy called The Hardwire. This new plan was expected to involve a near-180-degree about-face and a refocusing on Harley’s traditional cruisers and customers but, some hoped, still with some progressive ideas.
The details of The Hardwire five-year strategy were announced by Zeitz this week but, with some observers unimpressed and it coming on the back of yet another Harley loss (the company’s fourth quarter, October to December $92m loss was a surprise to many) it resulted in another share price fall.
On that basis alone it wouldn’t be a surprise if things got worse still for Harley before they got better.
The details of The Hardwire, however, along with the imminent Pan America and other developments do give hope.
First, the ‘re-focussing on cruisers, touring bikes and trikes’, the machines with which Harley has traditionally done best, particularly in the US, is surely a no-brainer. If we’re honest, the ‘More Roads...’ program had always felt somewhat unrealistic and risky, particularly if it meant H-D took its eye off the ball of its traditional cash cow.
Second, the Pan America project lives on. A Harley adventure bike may still seem something of a stretch and taking on the likes of BMW’s long-proven and respected R1250GS may yet prove a reach too far. But it’s also undeniable that the adventure touring market remains massive, a Harley-branded bike has huge potential, especially in the US, and H-D needs to take this kind of punt. We’ll know more on February 22.
Third, The Hardwire included plans to not just continue with its ambitious LiveWire electric bike but to strengthen H-D’s whole commitment to electric motorcycles with the ‘creation of a dedicated division focused exclusively on leading the future of electric motorcycles’. Love them or loathe them, electric bikes are the future, Harley is already ahead of the other leading manufacturers by producing a credible machine and this commitment can only bode well for the years to come.
There was more, too, such as the creation of a ‘BMW Approved’-style pre-owned bikes scheme, called ‘Harley-Davidson Certified’ which will surely galvanise its residuals and used bike proposition. There was also a new worker shareholder scheme and Harley, like Nike before it, also recently took its clothing and accessories off Amazon to strengthen its dealers’ experience.
But is it all enough? Well, Harley needs to learn to walk again before it can run and, in the short term, Zeitz is prudently only targeting ‘single-digit revenue growth in the motorcycles segment’, so we’ll have to wait and see.
It’ll be interesting, however, to see what difference the Pan America makes, how the future, Sportster-replacing, 1250cc custom pans out, and whether Harley’s lead in electric bikes bears fruit.
Besides, with Covid and Harley shifting its new model launches into the New Year, that Q4 figure was always going to be bad while Levatich’s 2018 boast of ‘100 new significant models’ and ‘build two million new Harley-Davidson riders in the US’ both by 2027 now sounds, not ambitious and dynamic, but pure fantasy. Doesn’t it?
Simon (AKA Toad) has been working within the motorcycle industry for more than twelve years, and a member of the motorcyclist family since birth. Growing up around British-built single and twins, it was inevitable that a life on two wheels was on the cards, from a very early age!
