Kev Comments

* November 29



Now the smoke is clearing after the gunshot Harley-Davidson announcement of its MV Agusta sale and Buell closure, it’s time to look at the old Milwaukee company’s plans for moving forward with what it’s got left. Some of the figures don’t look at all bad: while the US over-651cc sector fell by 35.9 per cent in the third quarter this year, Harley managed to gain 8.4 per cent in its market share, up to nearly 54 per cent. But while net income fell more than 70 per cent this year, the real issue is not the bike side of the business but the financial arm, which makes loans to customers to enable them to buy bikes. This lost a thumping $110 million in the last year, and things are getting no better. And as it turns out, Harley has not only borrowed some $1.2 billion (yes, billion) from various investors to tide it through, it’s also quietly taken advantage of a $700 million loan from the US government, as the major US car companies have also done.

You’d hope for some pretty inspiring and comprehensive plans for climbing out of this black hole then... except, incredibly, the plan seems to be, more of the same. The US financial press reports CEO Keith Wandell as saying: “We are intent on extending the Harley-Davidson brand by leveraging our unique strengths. Harley-Davidson is one of the most powerful brands in the world but we also have great conviction that there is much more that we can do to tap in to the power of that brand and expand it even further.”

Leveraging means using the brand across a broader range of ideas and products, like Ferrari branding laptop computers. But quite how Harley-Davidson sees useful room for leverage when it’s already been selling branded knickers, aftershaves, alarm clocks and dog collars is baffling, and indeed threatens to revive a problem during the 1990s of over-working the brand and diluting its appeal rather than enhancing it. It is anyway one of the most famous brand names in the world, so there’s not much scope for spreading the name wider either. Wandell also talks of leveraging Harley’s leadership of the custom cruiser and touring sectors – taking a bigger market share – even though it already sells more than 50 per cent! Triumph can talk convincingly of doubling its cruiser market share, for Harley it’s mathematically impossible.

The second line of attack is hardly more convincing: “We will ... develop relevant products that attract even more young adults, women and other new customers in to the Harley-Davidson brand.” You would have thought the way to attract more young people to the company would be through Buell, MV Agusta and Cagiva, but instead those have been jettisoned in favour of a concentration on the big, classically styled touring bikes and cruisers which attract the oldest buyers in the whole of motorcycling. To paraphrase well known US car executive Bunkie Knudsen, you can persuade an old man to buy a young man’s bike, but you can’t persuade a young man to buy an old man’s bike. On top of that, Harley will be lucky to get much more than five years out of a good slice of its customers, who are in their mid-50s and older.

Maybe, just maybe, if Harley built a Ducati Hypermotard rival, a sharp-handling new Sportster making 100bhp and weighing 170kg, then it might attract a younger clientele. But this is hardly building on Harley’s strengths as Wandell says they will, instead it’s completely new territory.

Well it is now MV Agusta and Buell have gone...