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Harley’s Last Ride?

Harley, Buell, MV Augusta, Wandell, Iacocca, Branding,

The news from Harley Davidson lately seems to indicate that Harley, under new leadership, has totally lost its way, and may well be on its Last Ride.

 

 

First of all, Harley is not a Motorcycle --- it is an Image, a Dream, an Ideal, a Lifestyle --- and one of the best examples of Branding ever.

 

 

Coke and Harley may just be the two best known Brands in the World.  As for Coke, it once tried to make a change, and they almost lost it! 

 

 


OK --- Harley has been on a good ride until the last couple of years.  Baby Boomers as they aged came up with enough expendable income to Buy that IMAGE …. it also helped that they could pull a bunch of equity out of their over appraised houses to buy that DREAM.

 

 

And it was not just the Bikes --- Harley Merchandise was selling at close to $100 Million a year!  Folks who loved the ALURE of Harley so much, that they spent 4 times more for a shirt, hat, belt buckle or jacket --- just because it had the Harley Name and Logo on it.

 

 

Harley represented AMERICAN FREEDOM --- roaring down the highway with a bunch of buddies (HOGS) – wind in the hair (bugs in the teeth!), often going nowhere further than the next drinking hole.

 

 

But Harley was even more than the symbol of American Freedom --- it was an EQUALIZER --- whether you were a Welder, a Plumber, or a Physics Professor, the Harley Club embraced all Equally.

 

 

Harley also represented a SENSE OF PRIDE in AMERICAN MADE!  This was a Bike made in America, with well paid UNION WORKERS, who took PRIDE in building the BEST DAMN BIKE IN THE WORLD.

 

 

And a little of the BAD BOY IMAGE did not hurt either!      Every Walter Mitty with a black leather jacket sitting on a Harley saw himself as Marlon Brando in The Wild One.

 

 

So What Now?

 

 

Baby Boomers as they age are more concerned with the price of a Hip Replacement, than getting on a motorcycle.

 

 

Those who still have the inclination for a bike, are going to be more concerned about the Price than the Image, and the collapse of the housing market has turned off the 2nd mortgage financing of Senior Dreams.

 

 

Harley has a very tricky situation to deal with --- it has to maintain its loyal base (Boomers) and it has to tap into the younger markets, the X’rs, the Y’rs and all the other ‘rs ……….

 

 

When you see a Harley on the road, the rider more often has either white hair or no hair.

 

 

The younger riders are the ones flying by on the crotch rockets --- with their heads leaning forward and their feet way behind.

 

 

Other young riders are attracted to what they consider the more technologically advanced bikes like BMW – and they is quite a Scooter crowd building – not your grandma’s scooter, but get up and go Piaggio’s  that are easy to maneuver in the city, but have no problem doing 70 mph on the highway – the larger ones are even comfortable for touring.

 

 

With the wild success that Harley had in the mid- 2000’s, it forgot about the bottom line, and raised their overhead costs to unsustainable levels, once the market cooled. 

 

 

Harley’s dealers took their customers for granted --- going for every penny they could get out of even their most loyal customers.

 

 

Like a pendulum swinging from one extreme to the other --- Harley has brought in a new CEO, Keith Wandell, to shake things up and slash costs to the levels needed with the lower sales volume.

 

 

The problem is that the slash and burn approach that Wandell is taking, will only work in the short run, and may well be the beginning of the final end to the Harley story.

 

 

Mr. Wandell comes from an automotive OEM background --- which is a different world from a consumer oriented company.

 

 

His former employer sells to the Consumer Companies --- in the thousands --- an order could be for 30,000 seats, or 50,000 batteries, or 15,000 interiors. 

 

 

Ford has a Harley Edition F-150 Pickup Truck.  There is the Harley Badge and Logo on the special edition truck – and Ford has used the “Branding” that Harley created to help sell those trucks to the True Harley Believers.

 

 

Everyone knows it is a Special Edition Harley Truck --- but nobody knows who made the seats for the trucks, or whose battery is in the truck, and who makes the interiors.  All of those components may well be made by Mr Wandell’s former employer --- but Ford knows it is the Harley name that sells the truck.

 

 

A Company Like Harley Has to Sell One Bike At A Time To One Customer --- RETAIL SALES – NOT WHOLESALE.  Mr Wandell does not have that acumen.

 

 

Again, Harley needs to keep its present customers, and to attract the younger riders to the Harley name.

 

 

Instead, the new Harley administration is taking steps that seemed to be designed to alienate almost every demographic they need:

 

 

1)      Buell was a good opportunity for Harley to attract the crotch rocket crowd to the Harley family.  Instead of giving the support to Buell that it needed, it squandered the potential of Buell and then closed it down.

2)      Augusta MV represented a wholly unique segment of the motorcycle world, and its acquisition by Harley was probably not the most clever idea they had --- but again, instead of working with the brand to Harley’s advantage, they gave up and sold it.

3)      Although Harley often brags how almost every demographic buys their bikes, the fact of the matter is that the Blue Collar guy who works hard is their core.  The doctors and lawyers may like their new toys, but their loyalty to Harley is fleeting at best.  As Harley puts the screws to its Union Employees --- the guys (and gals) on the factory floor --- they are showing that there are Two Harley Families --- one for the Overpaid Executives and another for the Disposable Blue Collar Worker.

4)      MADE IN AMERICA --- for How Long?  Harley already imports a lot of parts from overseas --- but has made a point that the engines, transmissions and assembly are all here in the USA.  But as they screw the Union Folks and look towards low wage states like Kentucky, just how long will it be before their engines are stamped “Made in China”?

5)      BREW CITY -  GREAT PLACE ON THE LAKE – HARLEY TOWN --- Maybe Not So Much --- Harley has made it known that there is no loyalty to its Hometown, and they will move it all someplace else, to save a few bucks.

 

 

 

What Harley needs is a Visionary --- a Salesman --- a Personality, the likes of Lee Iacocca, who took a failed Chrysler and brought it back from the grave to a viable company.

 

 

Of course Mr Iacocca had to cut back --- when he took over the reins of Chrysler he found that their breakeven point was about 105% of capacity ! (from my memory)

 

 

But cutbacks by themselves would never have saved Chrysler. 

 

 

It took Excitement, Innovation, Working Together with all the Players Involved --- and a Leader who could put all those things together.

 

 

If Harley wants to survive, it must find ways to Retain Present Loyalties and to Create New Ones --- it CANNOT do that by DISMANTLING.

 

 

Unless it Steers a New Course Now --- Harley is About to Win Nothing but a Race to the Bottom.

 

 

 

WHAT DO YOU THINK?  YOUR COMMENTS ARE WELCOME!

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