We’ve been following the progress of Anoop Prakash since he was appointed head of Harley-Davidson Canada back in the Summer of 2015. It was a momentous change to the way the American bikes are sold in Canada. For more than 40 years, they’d been imported and distributed by Deeley Harley-Davidson, a set up that seemed well liked by the dealers.
So it was a brave move for The Motor Company to end its contract with Deeley and take control of the Canadian market. Prakash was appointed Managing Director, coming straight from a similar role as Harley’s first managing director in India, where he established not just the brand but an entire manufacturing facility. He’s a smart guy with degrees from both Stanford and Harvard in Economics and Business, starting his career as an Intelligence Officer in the U.S. Marine Corps before going on to the role of business director in various corporations.
We found a quiet room away from the hustle of the recent Toronto Motorcycle Show and sat down to talk business. He seems a lot more laid back than your usual executive and I hoped to get some revealing nuggets out of him, but started with an easy question. With more than a year under his belt now, what can he tell us about the changeover in Canada from cutting the middle man, Deeley, and going straight to the customer?
Prakash was obviously cautious about slighting Deeley and complimented them on the job done to date, but he was here to justify the changeover decision and started by reeling off the benefits: leaner, faster and smoother operating cycles; longer-term planning; better access for customers directly to the Milwaukee call centre; the ability to launch new models in better sync with the U.S.; and an overall coordination of all the facets of the business.
He was quick to promote the benefits to dealers, too. One of the first actions he took was to visit all the Canadian dealers, and now he’s met them all at least twice. This was key, because Deeley was popular with dealers and there was some skepticism of The Motor Company’s takeover. The visits uncovered a couple of things – both related to pricing.
Deeley was infamous for announcing price changes mid-way through the model cycle, which starts in August. The Canadian dollar is never a sure thing against the U.S. dollar and a midseason adjustment will ensure prices are kept aligned. This doesn’t seem to be an option for Prakash, and he’s trying to make them a thing of the past – a tough decision after the recent fall of the loonie and I have a hunch he may be getting some heat from the higher-ups in the U.S. about the wisdom of this decision, but he seems determined to see it through.
Then there’s the other pricing headache: cross-border parity. Most of Harley’s Canadian dealerships are within 100 km of the U.S., and a minute on your smartphone will show if you’ll get a significantly better deal on the other side. Dealers don’t want to alienate their customers by offering more expensive bikes, and potentially losing them to the American-based competition to boot, an issue that Prakash is tackling by lowering pricing.
According to our own figures from the CMG Buyer’s Guide, H-D dropped 2016 pricing across the board, by as much as 10% over 2015. And that’s with a much poorer currency exchange rate that makes the move even more aggressive. The results seem to back Prakash’s gambit. Where sales in the States are down 3.4% in the last quarter of 2015, in Canada they’re up an impressive 12.3%.
But the price drop may also have something to do with a new and dangerous competitor.
For a very long time, it’s been easy for Harley-Davidson to fend off any attacks on its brand and style of motorcycle. After all, to be an American cruiser you have first to be American, which made the company almost immune to other V-twins. But that was before Polaris introduced its own American Cruiser, the Victory — a departure from the Harley vision for sure — and now its Indian brand is mixing it all up still further.
Unlike Harley, Indian’s 2016 prices have generally seen price hikes of 5, 10 and even 15% (notably its top-of-the-line tourer, the $36,299 Roadmaster). Compare that to Harley’s closest equivalent (by genre and engine size), the fully-decked CVO Road Glide Ultra tourer costs a hefty $48,389.
Prakash started humble and said Harley will never take anything for granted, but took a cut at Indian’s Achilles heel: “We’re the longest continually-running motorcycle company in the world,” he said, “whereas every other brand has had its stops and starts … We are the market leader.”
Then he pulled out the company’s trump card – the Harley Owners’ Group. “It’s all about being close to our customers. No-one else can do that,” he stated, matter-of-factly.
It’s true. No other manufacturer has the Harley riders’ loyalty and quasi religious belief in the brand.
I can’t help but think, though, that Prakash’s optimism is as much wish as faith. Indian isn’t going away now, and it has a targeted line that nips at the heels of the Harley idols. Even the staple Sportster 883 Iron is getting a run for your money from the new Scout Sixty. For only an extra $330, the Scout Sixty offers a bigger and more up-to-date motor with more torque and almost double the claimed horsepower.
Maybe all Indian needs now is a successful Indian Owners Group? That’s no easy feat, but whatever unfolds I can’t see the likes of Prakash giving up ground without a fight.
So what does the future hold for Harley-Davidson Canada? How is it coping with the aging of its core demographic, and what new product is coming down the line? And what’s happening with the electric Livewire? Find out next week in the second part.