July 30, 2018, may go down as the most significant date in modern Harley-Davidson history.
Harley changed gears this week from its traditional cruiser formula and announced it will be building an adventure bike. And a streetfighter. And experimenting with multiple electric vehicle formats.
So how’s this going to work? For decades, there’s been very much an Us vs. Them culture in the motorcycle world: some Harley-Davidson riders want nothing to do with other brands, and there are plenty of owners of European or Japanese bikes who aren’t impressed by Harley-Davidson. Until now, only the European and Japanese OEMs have built adventure bikes and streetfighters. Will the naysayers ever be convinced to buy made-in-Milwaukee machines?
We talked to Steve Lambert, Harley-Davidson’s U.K.-based International Marketing Director, to find out what’s going on.
Lambert says the key for Harley-Davidson’s success will be actually building its new bikes and showing them to consumers as proof that they work well.
It’s “changing those perceptions that people may have of the brand,” says Lambert. “Proof will be when people get to ride the product, proof will be when people get to own the product, and I think we will be judged exactly on that when we deliver exceptional product and exceptional customer experiences.
“We can’t tell people to change perceptions, we have to allow proof to do that.”
He says these machines will not just be styling exercises, they’ll actually perform like they’re supposed to.
“We’re going into the market to be competitive. We’re not turning out a bike that sort of looks like an adventure bike or looks like a streetfighter. These are going to be genuine, bona fide competitive models in each of those segments.”
There’s some serious backing behind this commitment. Harley announced it will invest about $200-$250 million each year until 2022 in capital spending, introducing several new models each year. The plan is to increase revenue by at least $1 billion by 2022, with an annual operating income by then of up to $250 million.
The plans are even more ambitious in the longer term. By 2027, Harley wants to have two million new riders around the world, with half of its business outside the United States. It intends to launch 100 new “high-impact” models by then. It will achieve its overhead efficiencies by “reducing costs through prioritization, automation, continuous improvement and closing gaps to best-in-class benchmarks,” and will “reallocate investment and resources to growth opportunities.”
News of the new bikes coming from Harley-Davidson was greeted with a mixed reaction on social media; some of the online peanut gallery was happy their favourite brand was changing things up, while others waxed cynical on the news, labeling it a desperate move, an emergency shift in direction to boost sales. After all, there’s been plenty of talk about dropping sales numbers for Harley-Davidson in recent months.
That’s not the case, says Lambert: the announcement is the result of extensive behind-the-scenes work, particularly with confirmation the LiveWire electric motorcycle will be launched next August.
“Launching our first EV motorcycle is not just as simple as saying ‘Here’s a motorcycle.’ There’s obviously infrastructure, dealer readiness and all those sorts of things which we need to take into account,” he says.
The electric vehicles are a new direction for Harley-Davidson, but a jaded consumer might say Harley-Davidson already had a pretty good streetfighter and an adventure tourer in the company fold not that long ago — the Harley-owned Buell company built them both, although neither carried the Harley-Davidson badge. Harley-Davidson axed Buell in 2009, and since then those markets have just grown tougher: there’s more competition in the naked bike and adventure bike segments than 10 years ago.
Lambert won’t comment on Buell; he says he wasn’t with the company then. But he does say that Harley-Davidson did a lot of research before it settled on the streetfighter and adventure bike markets. While some are writing off the ADV trend as a movement in decline, Lambert says the adventure bike scene is just like the SUV craze of the 1990s: people thought it was over, but there’s still strong demand.
Company research shows adventure bikes and streetfighters are both machines that are appealing to new riders. That’s a market segment Harley-Davidson very much wants to grow if it’s to create those two million new Harley-Davidson riders within the next decade.
Lofty goals indeed, but the new liquid-cooled V-twin platform introduced Monday is a key part of that plan. The new engine will come in four different displacements: the company pressers indicate a 500 cc, 975 cc and 1250 cc version, without mentioning the fourth size.
“Without a shadow of a doubt, the smaller displacement makes our products more attractive to people who are new to the sport,” says Lambert. And while he didn’t talk about price tags, he did say that “as a big major brand, it’s our duty to make sure the sport of motorcycling is sustainable and one which is always exciting for new people.” Translation: Harley-Davidson knows it has to make affordable motorcycles to attract new riders.
There are a few extra tidbits in the Harley-Davidson release to its investors this week: talk of strategic partnerships with other companies to build bikes for the Asian market, machines in the 250-500 cc range. These bikes are intended to grab just a tiny bit of the market share in Asia, but the market there is so huge that even a small percentage is big business.
For now, Lambert says those bikes won’t be coming to North America — they’ll be built overseas for those markets. He also confirmed that global production of the Livewire electric bike will be based in the United States. But as for the rest of the lineup, Lambert wouldn’t say either way.
Given US President Donald Trump’s trade war with the European Union and other countries, it’s becoming harder for Harley-Davidson to sell made-in-America motorcycles overseas. Harley-Davidson already has a manufacturing presence in other countries, and it might make sense to build the new bikes in Brazil or Thailand to take advantage of trade loopholes. However, all the bikes sold in the US will be built in the US, Lambert says.
The investors’ document talks about a plan to “Launch new urban and flexible format storefronts.” Lambert says this is to try out new downtown storefront retail space, bringing the bikes into people’s consciousness — something that’s lacking in today’s increasing urbanization, which sees more and more downtown motorcycle shops heading to the outskirts of the city, or folding completely. How can millennials and other city dwellers get excited about motorcycles if they can’t even visit the showrooms easily?
These new stores won’t be a complete dealership, says Lambert: “Obviously we don’t have the ability to show complete breadth of range, but we can bring technology to the environment, we can put the brand in front of people, and of course clothing, merchandise, experiences, all of these things are a key part of that as well.”
Maximizing profits? Moving motorcycles back into public spaces where people can see them? Maybe the future is brighter for Harley-Davidson than the naysayers want to believe. With the new bikes supposedly coming on the market, we’ll know either way soon enough.