How to Save Harley-Davidson – Step 2

A&R presents part 2 of  How to Save Harley-Davidson.  Folowing on their marketing advice, they start by pointing out the problem with Harley’s product line.

35 motorcycles, 7 model lines, 4 chassis, 3 motor families, & 1 market segment, that’s Harley-Davidson’s product line by the numbers. Where many large production motorcycle companies might have 30 or so motorcycles that span the entire gamut of motorcycling’s different sub-markets, Harley-Davidson has put all of its eggs in the heavy cruiser market. This singular pursuit of one market segment has not only been the cause for Harley’s success, but also a significant contributing factor to the company’s recent downfall, which has led to a recently rumored leveraged buyout. [One of the reasons for Harley’s stock price increase over the last few weeks is rumors of an impending private-equity buyout.– Ed.]

As the old idiom goes, one should not put all their eggs in one basket, which is exactly the faux pas being committed here by Harley-Davidson in its product offering. Businesses, especially public ones, should always have an eye on sustained long-term growth, and a key element to that goal is a well-diversified position in their appropriate industry. Taking this lens and applying it to Harley-Davidson, one can immediately see a portfolio that has been extensively mismanaged by focusing on only one segment of the total motorcycle industry: the heavy cruiser market.

What this has effectively created is a motorcycle company that looks like Alfred Hitchcock’s take on Baskin Robins: 31 flavors, but they’re all Rocky Road.

If you count the new Trike, Harley really has 5 motorcycle models, although one of the Models, the Sportster, has two engine sizes, albeit they use the same engine with different cylinder bores.  Essentially, those five bikes come in 35 factory option packages.

As A&R points out, what Harley doesn’t have is any sort of light, performance oriented machine, like a cafe racer or scrambler.  I would go a step further and say they also don’t have any sort of lighter, entry-level cruiser.

Even if HD has no interest in getting into modern sport-oriented bikes–and there’s nothing wrong that attitude–they don’t even offer a lighter, smaller-engined entry-level cruiser.  Their”entry-level” offering is a 600-lb, 1200cc Sportster.  And whatever else it may be, the Sporty is by no means an entry-level motorcycle.

They already have the basic tools and expertise to build smaller, more performance oriented cruisers, and entry-level bikes.  But they’ve invested so much of the company in catering to the baby boomers, they arean’t offering bikes that appeal, by and large, to new entrants into motorcycling, or to riders that want even a small amount of get-up-and-go in their rides.

That’s been a fantastic strategy for the past 30 years, and it’s served the company well.  There’s only one problem with their strategy of selling to the Baby-Boomers.  The Baby-Boomers are starting to die.  So, it’s not a market with a lot of growth potential moving forward.