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Archive for July 30th, 2009

SportsterI called it – sort of!  I questioned Harley-Davidson’s marketing tactics HERE and HERE in rolling out a guaranteed trade-in value program on its Sportster model.

I disagreed because I just didn’t see the value prop or customer pull this program offered in these difficult economic times.   Especially when you compare it to other “protection” programs (Hyundai) which garnered the public’s attention span and given the massive layoffs across the country.  I did miss the uptick of non-buying people the program brought into the dealer, however.  But, the end result is that people are not going to go for a less-expensive Harley-Davidson model just because it has a guaranteed trade-in value when what they really want to ride is a Street Glide, FatBoy or Trike.  Buy a Sportster because it’s cheaper, ride it for a year and then trade-up, huh?  There were NO provisions for incremental custom modifications or enhancements and I don’t know about you, but I rarely see a bone stock Harley.  This was innovation at it’s worse — a re-do of an ‘80s program and then 6 months after the initial roll-out the marketing department rereleased it again with date changes… sort of a Hollywood sequel mentality… Sportster: Part Deux!

Genius_BarSure I’m being a bit harsh, but it wasn’t a big surprised to read in The Business Journal that Keith Wandell, President and CEO, “threw marketing under the bus”… saying the company mistakenly thought the recession would push consumers toward Harley’s Sportster and other less expensive motorcycles. It also turns out that Harley management stepped up the Sportster production line even though retail sales didn’t materialize.  Now dealers have a glut and plant slow downs are the theme of the day.

Motorcycle enthusiasts will rarely purchase a model they don’t want just because of a discount.  Would it have made a difference had Mr. Wandell come to the CEO position with leathers and at least one motorcycle in his garage prior to re-approving the Sportster program?  I suspect yes, but we’ll never know.  At any rate, this is a fairly significant miscalculation and the pool of talent seems to be limited to people who are used to thinking alike and are doing things the same way.  It’s time to shake things up and catch people’s attention.  My suggestion is to make the Harley buying experience less like going to the DMV and more like going to the Apple “Genius Bar!”

Photo courtesy H-D and Flickr.

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HSC55In June, Honda celebrated the 50th anniversary of its arrival in the U.S.  I posted an article on the event HERE.

Sadly, this week Honda re-confirmed in the Tokyo Nikkei, its intent to indeed wind down the U.S. motorcycle production due to declining demand.  The closure this month ends a 30 year run of motorcycle production in the U.S.  Honda launched U.S. production in 1979 and was the first among Japanese firms to make motorcycles in North America.  The plant in Marysville, Ohio produced the Gold Wing, a heavy-weight class 1,800cc touring bike, and had an annual output capacity of about 70,000 units.

1963_AdHonda launched its first overseas subsidiary in the U.S. on June 11, 1959.  Honda bought an old photo studio in Los Angeles and sent its associates off in Chevy pickups to pitch their bikes to local hardware stores and motorcycle shops.  The lead products were the Dream, Benly, and Super Cub (called the Honda 50, in the U.S.).  An ad campaign and slogan “You meet the nicest people on a Honda” reshaped how Americans looked at motorcycles and by 1968 Honda had become the bestselling motorcycle with sales exceeding a million.

Honda quickly followed up and entered the U.S. car market in 1969, selling a handful of its tiny sedans in Hawaii before launching on the mainland in 1970.  The oil crisis of 1973-1974 helped put the company on the minds of all Americans.  Honda became the first Asian automaker to set up production in the U.S., with the first motorcycle rolling off the Ohio assembly line Sept. 10, 1979, and the first car built Nov. 1, 1982.  In 1988 Honda began exporting the U.S.-built Accord to Japan ending any debate as to doubts as to whether quality standards could be maintained.

We’ve witness the American motorcycle market shrink to 1.32 million units in 2008, down almost 30% from a peak of 1.79 million units in 2005. Honda’s Q1’09 net income plummeted 95% and motorcycle/ATV units were down 32% from a year ago.  We’ve seen dismal financial results from Harley-Davidson too.

Affordability is a strong theme with motorcycle manufactures these days and Honda seems to prosper in difficult times.  They’ve concluded that the advantages of local motorcycle production have faded and will now export products from Japan to the U.S. market instead.  Despite the closure, its worldwide motorcycle business is fairly solid and they are boosting production in regions where demand is growing, mainly in Asia.

Photo’s courtesy of Honda archives.

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