I've mentioned some of this in another forum but man, this one is sure a lot more civil.
God bless Texas!
Here's the reality as I see it that is likely to destroy Harley right now:
1. There is a pervasive image problem associated with the Harley-Davidson brand, which among other things includes the idea that Harleys are for old white guys, the annoying/noisy/wannabe-tough-guy image from the likes of RoT Rally, your idiot neighbor who has his Harley with straight pipes and the one time a month he starts it up is at 8 am on a Sunday morning, and the association that Harleys are some kind of compensation for "posers". BTW, I'm not suggesting any of this is true or that it applies to all, or really any, Harley owners/riders. But it's an image that is affecting brand perception and driving potential new customers away from Harley. Unfortunately for Harley, they have ridden the wave of this image for decades while it benefited them, so it makes it very difficult for the to pivot or distance themselves from it.
2. Harley have overbuilt manufacturing facilities by failing to anticipate a reduction in demand and those factories are expensive to operate in the USA, largely requiring unionized workforce which is not only the most expensive way to manufacture something, but also the most difficult to downsize when you've made a forecasting mistake as they have. Adding to this problem is again a marketing problem, wherein they have made the "made in USA" thing be a major part of their brand identity, so for them to begin building the bulk of their motorcycles in India or Thailand where skilled labor is abundant at a fraction of the cost would undermine what has been a historically successful marketing message for them.
3. The main thing pressing on Harley right now is scale. They have scaled the business in anticipation of demand which is simply not there, and their revenue has dropped too far for them to recover effectively. They need to do a huge downsizing of the company including massive layoffs and factory closures as well as adjusting their forecast way, way down, just to stop the bleeding. But their shareholders will never buy into this. Making moves like this quickly, which they really should do for the long term health of the company, will result in a major selloff of stock and deprive them of operating income, probably forcing them into near outright closure or making it likely for another company to buy them out for pennies on the dollar of their actual value. So to keep this from happening they absolutely MUST find a way to maintain revenue or grow it in spite of what is steadily shrinking demand for their motorcycles. Making more of the same big expensive motorcycles is not a strategy that will work. They have appointed a CEO who has recent experience at a fashion apparel brand and this should be telling. They can make a lot more revenue selling Harley branded merchandise like ball caps, jackets, boots and t-shirts than they can selling motorcycles, and there is no made-in-Pakistan or Vietnam negative stigma that will impact their apparel market like it would for motorcycles. If they can ramp up production and sales of this kind of merchandise quickly enough and in sufficient quantity then it would buy them the time they need to scale down their motorcycle manufacturing capacity to match actual demand without as much of a shareholder rebellion. In the end they'd be a mass market apparel manufacturer with a side business of boutique motorcycle manufacture.
4. Harley's motorcycle market segment in light of the current and near term brand association is truly only a boutique/niche market. No other motorcycle manufacturer expects to build an entire product line of only one style of motorcycle at nearly the scale they need, or even only motorcycles. The days of Harley selling 500K/yr heavy cruisers worldwide are gone and are never coming back. But they might be able to globally sell 1/10 that many and even then they would still be the biggest player in that market. However, that means a 90% reduction in their manufacturing capacity. This is laying off over 90% of their unionized workforce in the USA and closing all of their factories, building a much smaller factory that can run at capacity building only under 50K units a year.
5. After they solidify their financial fundamentals by reorienting their production in favor of a much larger ratio of apparel to motorcycles, and they complete their downsizing of USA manufacturing, they will likely wind up with a more sustainable brand with Harley Davidson. The brand image/identity thing may be less of a problem since there will be fewer and fewer owners who are sustaining or reinforcing the negative image. This is a decade off, if they were to pull it off, but then they can begin to introduce more products that address a market besides the pirate-image crowd. But the big thing here is Harley has to understand that as a newcomer to a market segment, they cannot assume they will be the premium #1 product in that space. They need to introduce e-bikes, scooters, ADV, dirt bikes, whatever, entering from the bottom end of the market and compete on value first since they will be asking buyers to take a chance on the brand. I liken this to how Toyota entered the luxury car market back in the early 90s, they didn't introduce cars that tried to compete directly with Mercedes, Jaguar, BMW, etc.'s most premium products, and they were way lower in price. It took over a decade of this strategy before people began to trust the Lexus brand to warrant BMW and Mercedes type prices. Harley has to do the same. They can't expect to introduce an ADV bike that costs more than an Africa Twin or BMW GS. They need to introduce new products that outperform their competition at a lower price. There's no way they can do this and make money if they are manufacturing in the USA, so they need to build these new products exclusively in India or Thailand (or both) where they can make a profit at a lower-than-market price. Remember, by then they will be trying to compete with Royal Enfield Himalayan after RE has had a decade plus head start and a huge reliability track record. They need to understand that RE of today is the business model they need to follow to introduce new product into adjacent markets; RE didn't start with their 650 twins, they started with something way downmarket and slowly built trust with their customer base. And then when they did come out with the 650, they didn't make it a 900 or price it like a Triumph, they undercut a lot on price and overwhelmed the market with value. Again, Harley needs to understand that the name is just a name, not a product definition.
IMHO off course. This is how Harley can survive and even thrive into the future, IMHO. They might be trying to go down this path, but I actually think they are years behind the curve and might be too late to fix it. We'll see.
Full disclosure, I could care less about Harley's products. I'm sure some of them are good but I can't see how they are a good value if you were to strip off the brand name. That entire style of motorcycle, including the lifestyle effects, doesn't appeal to me. But I am a big fan of American ingenuity and ability to create great products that will lead the market, I just don't see how Harley currently is structured to do this. The pivot to accessories and apparel as a primary business is just a stop gap so they can weather the storm, but in the long run they are fools if they expect to sell hundreds of thousands of 600lb+ cruisers. There's just not that many of their traditional customers left to buy them.
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