Following a tough second financial quarter for 2020, Harley-Davidson’s leaders have laid down the rough outline for the company’s future. Spoiler alert: Things are changing.
Everybody expected Harley-Davidson to have a tough Q2. The company’s fortunes have mostly been in decline for many months, with market share and total sales usually slumping. However, Harley-Davidson has still turned a profit, and still sold a lot of motorcycles.
However, in Q2, Harley-Davidson saw $92 million in losses; total revenue was $865 million, down 47 percent year-over-year from 2019. US retail sales dropped 27 percent, and H-D dropped to 38.5 percent of the heavyweight bike market in the US. Sales dropped 51 percent in Latin America, and 30 percent in Europe/Middle East/Africa. Harley-Davidson Financial Services saw operating income drop 94 percent (but revenue only dropped one percent, thanks to some financial moves). The Moco’s revenue from motorcycle and related products was $669 million, down 53 percent from 2019’s Q2.
That’s tough news, but remember, all the other OEMs had a rough spring as well. Some of Harley-Davidson’s decline is simply due to the company’s production stoppage. There’s still a demand for its machines, but the company isn’t building them. Earlier this spring, the company said 70 percent of its dealers would receive no new motorcycles this year, which has driven up the used Harley market.
Still, the current situation is dire enough that former CEO Matt Levatich left the company earlier this year, replaced by Jochen Zeitz, who promptly announced he was overhauling the operations.
Zeitz detailed more of his plans, after the financial announcements. For the rest of 2020, Harley-Davidson will be in the middle of a transitional program called Rewire, followed by a five-year plan called Hardwire.
What’s coming, then? A few less motorcycles, for one thing. Levatich’s plan to aggressively expand the lineup is out; Zeitz is planning to sell fewer models, “balancing investments between current stronghold categories and new, high-potential segments.” Translation: Zeitz wants to focus on the categories that Harley-Davidson performs well in, and focus on segments where Harley-Davidson can make money. Specifically, H-D’s press release mentions the 1250 Pan America adventure bike … and interestingly, does not mention the future of the LiveWire electric bike, or the Bronx streetfighter, which was supposed to debut around the same time as the Pan America.
It does say Harley-Davidson is “shifting annual product launch timing from August to early in the first quarter,” so don’t expect many, if any, new models this year. Also, the company says it’s “Reinvigorating launch efforts including collaborations with key influencers to bring the brand and new products to life drive brand desirability.” Jason Momoa (star of Aquaman and Game of Thrones) is the first Hollywood star tapped to promote H-D.
Harley-Davidson is also planning to re-evaluate its current markets, with the company pulling out of less-profitable areas.
More details should be coming on the Hardwire plan in coming months, but whatever they are, expect big changes ahead for the MoCo.