Harley-davidson Inc. reveals expansion to electric scooters
Harleydavidson Inc. unveiled a plan to expand motorcycle ridership and increase global sales with bikes that will be hardly recognizable as Harleys — among them electric scooters and small bikes destined for foreign markets.
The plan — perhaps the most aggressive in the company’s 115year history — is part of a broad effort to reverse eroding market share, attract new riders to replace older ones aging out of the sport, and correct a stock slide that has seen Harley’s pershare value drop nearly in half over the last four years.
President and CEO Matt Levatich said in an interview the initiative will require a reversal of corporate mentality.
“We are shifting our mindset from ‘we build bikes’ to ‘we build riders,’ ” Levatich, 53, said.
He also defended his company’s decision, much criticized by President Donald Trump, to meet increased European Union tariffs by expanding production operations overseas.
“Our preference is to make motorcycles in the U.S. for the world market,” Levatich said. “But at the same time, we have to protect our business and preserve our market strength and serve our customers” in the EU.
The strategy will come at a steep price. Levatich said the company’s multiyear expansion could require a total investment of up to $825 million through 2022. But he added that the company expects to increase annual revenues by $1 billion to $1.5 billion by then. The investment goal can be met by “selffunding,” he said, without raising new equity or debt.
“We aim to do this with the same investment, return and cashflow profile that we have today — without dipping into shareholder returns,” Levatich said.
The product shift will be dramatic for the company, which specializes in heavy highway motorcycles powered by some of the industry’s largest engines.
Harley will for the first time enter the Adventure Touring segment, with two proposed Pan America bikes, and will add at least five new machines to its promised Livewire electric motorcycle family, the company’s first foray into batterypowered twowheelers.
Harley will also build at least five new “Custom” models and nine new “Streetfighter” bikes — many as small as 500cc — in an effort to push further into those categories, especially in overseas markets that demand smaller motorcycles.
At the same time, the Milwaukee company will attempt to retain market dominance with the fullsize touring and cruiser motorcycles that are the backbone of its international sales.
Skeptics are likely to suggest Harley risks alienating core consumers, or diluting its legacy position, by trying to attract new riders.
Veteran industry consultant Robert Pandya said Harley’s identity is both its strength and its liability. Appealing to a nonharley consumer will require a toptobottom company reeducation.
“If you’re trying to draw a new young customer or a female customer, you might win them with the marketing campaign but lose them when they walk into the shop, unless there is a real overhaul,” Pandya said. “Everyone in the entire organization has to buy in on the marketing message. That’s asking a lot.”
Levatich said Harleydavidson will continue to serve its traditional audience — which skews older, male and white — with con tinually improved versions of its traditional product.
“We are not running away from our core,” Levatich said.
The electric motorcycle effort will include several of what he called “lightweight, urban” transportation products that are designed specifically to appeal to “young adults, globally, living in dense urban spaces.”
Calling this an “unmet need,” Levatich said sales of these small electric motorbikes, designed to compete with beginnerlevel mopeds and the electric scooters, bring firsttime consumers into the Harley brand in markets where the company has not enjoyed strong sales — or any sales at all.
Levatich said internal studies show his company created 32,000 new Harleydavidson riders in 2017, after first announcing a 10year plan for growth.
“We know that only 2.9 percent of U.S. adults ride motorcycles,” he said. “So that makes us special, as riders. We get something that other people don’t get, or haven’t yet gotten. There is tremendous potential in that number.”
In fact, according to the industry trade group Motorcycle Industry Council, new motorcycle sales in the U.S. dropped from a record high of 716,268 units in 2006 to 371,403 new bikes in 2016.
“This whole plan to create new riders is a bold, ambitious and borderingonaudacious goal,” Levatich said. “But there is no other option.”