Hardwire Strategic Plan — Mission Accomplished

Harley-Davidson reported better than expected quarterly profit today. Below are some of the highlights:

• Q2 had a profit of $206 million, GAAP diluted EPS of $1.33, up $1.93 over Q2 2020
• Q2 H-D, Inc. total revenue up 77 percent over Q2 2020; Revenue from Harley’s motorcycles and related products nearly doubled to $1.3 billion
  North America Q2 retail sales up 43% over Q2 2020 and up 5% over Q2 2019 and Worldwide sales were up 24%.
• Delivered strong Motorcycles and Related Products (Motorcycles) segment gross margin and operating margin driven by product portfolio adjustments
• Delivered Financial Services segment Q2 2021 operating income growth of $90 million over Q2 2020 driven by a lower provision for credit losses

Announcements in Q2 2021:

• The MOCO launched the standalone brand LiveWire and introduced LiveWire ONE™ – a new more “price friendly” electric motorcycle
• Rolled out the Sportster® S, a new Sportster motorcycle built on the Revolution Max platform
• Launched H-D1™ Marketplace, an online destination for pre-owned Harley-Davidson motorcycles in North America and enhanced by the Harley-Davidson Certified™ program.

The Motorcycle Industry Council reports that the demand for motorcycles continues to surge as new motorcycle sales climbed 37% in the first three months of the year. Year-to-date sales of dual-purpose motorcycles were up the most, by 47 percent. Off-highway sales were up 45.4 percent. Scooter sales rose 34.6 percent. And on-highway motorcycle sales increased 31.4 percent. The results are an indicator of continued and growing interest in riding among new and returning riders.

In other, somewhat more important news: Oreo announced a new “Protection Program,” it’s discreet packaging so you can hide them from the kids.  The spines make the Oreos look like: A cookbook . . . or a package of frozen vegetables!  Next up will be . . . the Harley-Davidson motorcycle owner’s manual . . . as a pack of t-shirts . . . so you always take it along on the next road trip!

Photos courtesy Harley-Davidson and Oreo

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Paradise Harley-Davidson 17-Year Anniversary

We all love our rides, but what about the dealers?

If you wander into the forums, they are full of comments ranging from the good, the bad and even the ugly.

Dealers stared into the teeth of COVID-19, mixed it up with the motor company’s revenue declines, layoffs, reduced bike inventory to bolster prices, which was followed by several dealers closing down including some Bar & Shield Circle of Achievement Award dealers, permanently.

We all know it’s been a tough 14-months and that includes every Harley-Davidson dealer along with their employees.

Adding to all of this, was corporate Harley-Davidson throwing out more strategy changes (“wired”) than I change my socks.  And when corporate management dictate the “We know what is best in/for your showroom” requirements — you know how it goes, all the risers need to be symmetrical, with the right merchandise on each one, perfectly priced, labeled, and “faced” toward the customer — the dealership owner has the choice to largely accept them or not.  If they don’t accept them, then the “widget guys” from Milwaukee can say … “No soup for you!”

That’s when those inspirational corporate quotes like: “You’re here by the grace of your lineage” start to sound like marketing for the early Pilgrims.

But, I’ve digressed.

Be it clothing, parts or motorcycles, Paradise Harley-Davidson, has continued to provide what customers want. From the owner to the staff folding t-shirts and everyone in-between, they are part of our Northwest motorcycle community and they interact with us on a daily basis, selling the experience of coming to the dealership as much as of riding itself.

17-Year Anniversary Celebration

You might not recall, but it was not long ago when Harley-Davidson management forced, via franchise contracts, that dealers significantly upgrade or move and open up large “mega stores” on an interstate exit.  The corporate ethos was larger is better and location, location, location!  This mandate alone had a lot to do with dealers selling or going under in the late 90’s and early 2000’s.

The Paradise dealership has its roots grounded in Beaverton, Oregon, a small 7,000-square-foot store.  The store was mandated by its franchise “relationship” with Harley-Davidson to upgrade, however, they were in a very tight geographic footprint on SW Farmington Road.  If you lived or traveled through the heart of Beaverton you know that it meant only one thing — relocating to a new store. The then current owner determined that a new store was way too much to take on and decided to sell the dealership.

Slo-mo ‘Glider’ Wheelie (Note: Hosted on my Google site)

At the time, Ed Wallace who previously was with PACCAR, where he was a General Manager in the Kenworth Truck division was now one of America’s most successful and decorated Harley-Davidson dealers.  Wallace purchased the Tacoma dealership (Destination Harley-Davidson) in partnership with son, Ed Jr., and daughter, Christy, in 1995.  The Tacoma facility went from 7,000 to 50,000 square feet and is located just off I-5. Then in 1997, he acquired the Harley outlet in Silverdale, Washington. Christy was the majority owner of the Silverdale store and planned every detail of the expansion. Going from a 3,000-square-foot converted gas station on Silverdale Way to the newly constructed 20,000-square-foot $3 million building.

Having success in developing the motorcycle business and constructing large, multi-million dollar facilities, Ed Sr., purchased the Beaverton Harley dealer in 1999, and moved it to a new 30,000-square-foot Tigard facility, which Ed Wallace, Jr. managed.  Ed Jr., married his sweetheart from the Tacoma area and after 3+ years of running the Tigard facility, wanted to return to Tacoma.  As I recall, Ed Sr., had fully retired from the business by then, and Ed Jr., put the Tigard dealership on the market when Mike Durbin stepped in and bought it in 2004.  The name was changed to Paradise Harley-Davidson and the rest as they say is history.

Bike wash and Durbin in the Dunk Tank

On a local level, I like supporting small(er) businesses, vs. the mega-destination dealers i.e. Timpanogos in Lindon, Utah, which is one of the largest dealerships in the U.S. at 58,000 square-feet.  In my opinion, Paradise H-D has a loyal following and always a great place to visit, as they have something going on all the time. I’ve enjoyed and been working with Mel in the parts department since the good ‘ol Beaverton days! The staff gets to know the people that bought from them and for service you are never just a number that they need to get through the system! Don’t get me wrong, I still swallow HARD at some of the service pricing, but my personal experiences are of good people, good service and being treated fairly.

This past weekend Paradise H-D celebrated their 17th Anniversary.  I stopped to partake along with a few hundred or more other enthusiasts. They put on a great social event with a beer garden, live music, dunk tank, bikini bike wash, games, door prizes and more for their clientele.  What I really like is that no one talks about what you do for a living. They talk about what and where you ride.

Congrats Paradise H-D on 17-years as a standout dealership!

Glider movie and Photos taken by the author except for logo photos courtesy of Paradise H-D.

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The Harley-Davidson Pan America 1250

Manufacturing Plant for Harley-Davidson Pan America™ 1250 – York, PA

As promised, here is a post on the Harley-Davidson Pan America™ 1250.

I’ve previously posted on the Pan America all-new Revolution Max 1250 engine HERE. To recap, it’s a liquid-cooled V-twin with variable valve timing that produces 150 horsepower with 94 pound-feet of torque at 9,500 rpm and is attached to a six-speed transmission. The engine features maintenance-free valves, thanks to hydraulic valve lifters, crankshaft connecting-rod journals, offset 30 degrees creating a 90-degree firing order, forged aluminum pistons, a 13.0:1 compression ratio, which requires 91-octane fuel. The engine is a “stressed member.”  Meaning the front frame, the mid-frame, and the tail section bolt directly to the powertrain. According to Harley, this design results in a stiffer chassis and less weight. The frame is mounted to a cast-aluminum swing-arm that minimizes unsprung weight.

Start of Harley-Davidson Pan America™ 1250 Manufacturing in York, PA

The base Pan America uses conventional Showa suspension with 7.5 inches of travel at both ends, while the Special trim gets an Ohlins steering damper and semi-active electronically adjustable system with Adaptive Ride Height (ARH) technology ($1,000 option), and with Vehicle Loading Control, which senses the rider’s weight, a passenger, and/or luggage to select optimal suspension sag by automatically adjusting rear preload.  It will also lower the bike over an inch when stopped. Once moving again, the bike automatically lifts itself back to an optimal ride height. The Pan America has a bucket load of acronyms: Cornering Enhanced Linked Braking System (C-ELB), Cornering Enhanced Traction Control System (C-TCS), Drag-Torque Slip Control System (DSCS), Tire Pressure Monitoring System (TPMS) to impress all your ADV posse riders during set up of your Jetboil camp stove!

Harley-Davidson Pan America™ 1250 “In the Wild”

The motorcycle has a 19-inch front and 17-inch rear cast-aluminum wheels. Harley-Davidson worked with Michelin to create the Scorcher Adventure tires and the Anakee Wild tires that are also available with a more aggressive block-pattern tread. Tubeless cross-laced spoked wheels (additional $500) are also available. Brembo monoblock four-piston calipers that squeeze dual 320mm discs up front, and a single 280mm disc in back. The motorcycle uses a corrosion-resistant 304-series stainless steel exhaust system that’s Euro 5 compliant and features two mufflers – one below the engine and the other on the right side. The radiator shrouds are guarded by a crash bar and there’s an optional two-inch bar riser that doesn’t require lengthening the cables.

Harley-Davidson Pan America™ 1250

The motorcycle has smart rider aids that are all based on Bosch’s six-axis Inertia Measurement Unit (IMU) that makes the anti-lock brakes, traction control and other safety features lean-sensitive. In addition to traction control and ABS, the Pan America offers electronically controlled linked braking, Harley’s drag torque-slip control (this automatically modulates engine torque to reduce wheel spin) and hill hold control. The base model uses a Daymaker Signature LED headlamp, and the Special is upgraded with the Daymaker Adaptive Headlamp technology, which utilizes the ABS IMU to determine the motorcycle’s lean angle and automatically projects additional light into corners. All other motorcycle lights are LED.

Manufacturing the Harley-Davidson Pan America™ 1250

Electronics are plentiful on both models and include: Four rider modes: Road, Sport, Rain, Off-Road, and Off-Road Plus. The base features one customizable mode and the Special offers two customized modes. Both models use a 6.8-inch TFT touchscreen instrumentation that pairs with your mobile device. The screen’s touch feature is disabled when the Pan America is in motion. Missing is Apple CarPlay or Android Auto integration, but Harley instead chose to handle all the media and navigation integration with Bluetooth and an app.

The four-position windscreen is adjustable in a range of 1.8 inches by using “one” hand.  There are heated grips on the Special model with standard cruise control. Fuel capacity is 5.6 Gallons and the curb weight: 534 pounds (Special: 559 pounds).

Harley is asking $17,319 for the base Pan America and $19,999 for the Special. For comparison, BMW’s base R1250 GS starts at $17,995 with a relatively extensive list of available options. The more expensive GS Adventure starts at $20,345.

Harley-Davidson took a lot of time researching, understanding and developing a motorcycle for the ADV market. They’ve used components from the same trusted brand names that you’ll find attached to a BMW, KTM, Ducati, Honda, Yamaha or Triumph. They’ve engineered a power plant which in of itself is most impressive. They have lineage with building Baja-winning dirt bikes in the 1970s, along with dirt track racing experience and with Buell one could debate that they had a semi-Adventure Touring motorcycle back in the early 2000s.

I imagine somewhere in a Milwaukee conference room a marketing exec said “Bring It On“…  Bring on that competition!

Previous Pan America posts:
Harley-Davidson Explores The Unexpected
Harley-Davidson Announces New Movie Telling Origin Story Of ADV Motorcycles
Can Harley-Davidson Stay Relevant With Pan America and Bronx

Photos courtesy of Harley-Davidson

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Harley-Davidson Explores The Unexpected

Harley-Davidson® Pan America™ motorcycles

A lot has been written in the motorcycle media with photos of high mountains, plateaus, deep forests, beaches along the Pacific coast, fantastic riverbeds and deep mountain lakes that provide an epic backdrop for an exciting motorcycle launch.

Of course, I’m talking about what has been labeled the “real deal”—a highly capable, uncompromising large-displacement Adventure bike—the Harley-Davidson® Pan America™ motorcycle.

Harley-Davidson® Pan America™ motorcycle

Journalists cheered… remotely of course.  There were tears and applause, then more tears as the press fell apart during the historical motorcycle launch. Even Jochen Zeitz, chairman, president and CEO Harley-Davidson, made a cameo as a film actor riding — yes, RIDING — an actual motorcycle.  It was in the scenic landscape of Kenya, Africa no less.  The narrative is how he traveled to the vast wildlife preserves to lasso the twin Adventure Motorcycle and bring it back to America!

It’s the new AMERICAN adventure touring motorcycle that the motor company wants you to grab a tent stake, a Jetboil camping stove and join in on the outback camaraderie. Even the NY Times marked it as a “New Era” for Harley Davidson.

Not only were journalists drooling to throw a leg over the new Adventure Bike, Harley executives were exuberant for “knobs and tread blocks” to throw some dirt on the competition and share with the world what they’ve teased out for several years now. In this under two minute video you even get to meet workers from the H-D factory in York, Pennsylvania — the talented folks who assemble the new motorcycles. It’s pretty cool!

You might recall the new Adventure (ADV) model was revealed during an onslaught of online-presentations, keynotes and of course streamed worldwide across every social channel platform. It also included Jason Momoa (“Aquaman” actor) talking about his epic riding adventures.  Because who can’t relate to a Hollywood produced video of a multimillionaire actor’s motorcycle experiences? If you missed the initial launch you can replay it HERE. Or if you have time at work and want to watch a 25-minute video with dramatic musical overdubs about how this isn’t Harley’s first dirt rodeo check it out HERE.

I’m not sure about you, but I’m challenged to recall the last time I shipped a motorcycle overseas and tasted the bright red African soil on Kenya roads humming the tunes from the soundtrack of the Disney’s “Lion King.”

But, I’ve really wandered off the trail.

BMW R1250 GS

In this post, I’m NOT going to pontificate on the tsunami of Pan America jaw dropping impressions. I’ve previously posted on the Pan America engine HERE.  I promise that I’ll cover the Pan America motorcycle spec sheet in a future post.

I want to review the BMW Group with its four brands BMW, MINI, Rolls-Royce and BMW Motorrad. Harley-Davidson is going up against the world’s leading premium manufacturer of automobiles and motorcycles.

For nearly 3-years, (since early 2018), Harley-Davidson has been “pissing” on BMW Motorrad’s parade without the courtesy of calling it rain!  Using a drip, drip, drip teaser marketing strategy, while pre-broadcasting their intent to enter the Adventure motorcycle segment.  The same segment that BMW Motorrad owns. It’s important to note that BMW achieved it’s 2nd BEST sales result in company history in 2020 and doing so during a world-wide pandemic!  Sales stats are below.

BMW R18

After a couple of years listening to Harley’s ADV bluster, BMW launched their own salvo at Milwaukee with the new BMW R 18: a nostalgic touring and supreme cruising motorcycle. BMW borrowed from the famous R 5 models for both technology and visual impact, shifting the focus back onto the motorcycle essentials: purist, no-frills technology and the most powerful “Big Boxer” engine (1802 cc) as the epicentre of riding pleasure. This happens to be Harley-Davidson’s wheel-house.  The motorcycle features and stats are impressive, but equally important is the BMW collaboration with Roland Sands Design, Mustang seats and Vance & Hines exhaust systems.

Will the blue-and-white roundel aggressively defend its Adventure segment sales crown?  You bet, because BMW appeals to a youthful and more dynamic consumer and making money is important to any business.  But, lets get one thing out there on BMW immediately; I’ve encountered numerous riders who claim they used to own BMWs but switched brands due to the absurdly high cost of everything—parts, service and the motorcycles themselves. We could debate that Harley-Davidson follows the same premium parts, service and motorcycle strategy too.

BMW R 1250 GS Adventure – Edition 40 Years

Clearly 2020 was a tough year for the motorcycle industry, but let’s double-click on BMW.

BMW Motorrad delivered 169,272 BMW motorcycles and scooters to customers. However, the German brand sales dropped in 2020 (the first in nine years), which they considered a positive result considering the pandemic circumstances. The Bavarian press team is busy spinning its 2020 motorcycle achievements with market launches of thirteen new models and sales figures being the second-best sales (previous best year: 175,162 vehicles) result in BMW Motorrad’s history (which they are), though the success varies greatly by region.

BMW R18

In Europe as a whole, BMW Motorrad saw its sales volume drop by 5.3%, though Germany (27,516 units) and France (17,539 units) both had record years for motorcycle sales, posting 4.7% and 1.4% gains respectively. Those gains were offset by significant losses from Italy, Spain, and the UK/Ireland. BMW Motorrad didn’t provide the 2019 figures for these countries, nor their percentage drop, in its 2020 sales press release, but scrapping the internet and through mathematical deductions in my HP 12C, these sales numbers follow percentage decreases: Italy (-10.7%), Spain (-12.5%), and UK/Ireland (-23.9%).

We also know from past reports that the BMW R 1250 GS and R 1200 GS models claimed top honors as the bestseller in the lineup and the company is market share leader in the Adventure segment. In terms of motorcycle models, the GS is supreme, with over 59,000 units of the company’s boxer-twin ADV bike (R1200GS / RS1200GSA) sold in 2019. You read that correctly.  Just one model with two variants accounts for one-third of BMW Motorrad’s sales and in the U.S. it accounted for around 7.6 percent of BMW’s global motorcycle sales.

Oh, did I neglect to mention the BMW racing crew with first podium finishes in the FIM World Superbike Championship (WorldSBK) and the successful entry into the Endurance World Championship (FIM EWC) with the new BMW S 1000 RR?

And, I haven’t even started comparing the Ducati Multistrada V4 S Sport, KTM 1290 Super Adventure, Honda CRF1100L Africa Twin or Triumph Tiger 1200 lineup.

You’re likely thinking about now… Mac, you’re just one of those doubters.  That’s fair, but after reading a significant number of top tier media reports, watching a fair amount of YouTube interviews with motorcycle magazine writers, I have just one question. Why did so many riders/writers have unplanned dismounts?  Several of the riders laid down their 574 pound Pan America on the sandier trails during testing at that remote camp in the Mojave Desert, about 100 miles north of Los Angeles.

Did a year of the pandemic downtime diminish their riding skills or is it the motorcycle?

Harley has been enjoying about half of all new motorcycle sales in the U.S. over 600cc, but I remain a bit skeptical that the motor company can enter a new market segment where the Bavarian manufacturer dominates even with how good the Pan Am motorcycle is right out of the crate!

I hope to test ride the Pan Am soon.  Today, I’m having an expresso, but tomorrow I could be heading out on the TransAmerica Trail.

Photos courtesy of BMW Motorrad and Harley-Davidson.

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The Harley-Davidson “Green Value Proposition”

I’ve reached the stage of life where any compliment I get about appearance or physicality is accompanied by “for your age!”

After indulging in that “rant” about China and not posting for a few weeks some wonder if I caught the “COVID.”  No, but I’ve been waist deep in the fine art of Harley-Davidson apathy, trying to get back on track… So, let’s talk about exec salaries and how the year+ of the pandemic “rained money”… and not the eco-dollar benefits of any ‘Green’ initiative.

First, let’s establish a baseline. According to “Google”, the average Harley-Davidson salary ranges from approximately $25,000 per year for a Parts Specialist to $133,555 per year for General Manager. Average Harley-Davidson hourly pay ranges from approximately $9.08 per hour for Automotive Detailer to $39.94 per hour for Tool Maker.

Now let’s double-click on the 2020 Harley-Davidson top executives compensation:

Harley-Davidson’s current chairman, president and CEO Jochen Zeitz’s total compensation was $9.4 million in 2020 — Remember way back in April 2020 when Harley-Davidson said that its then acting president and CEO Jochen Zeitz and the company’s board of directors would forgo any salary or cash compensations? They pushed out a news release with the typical “aren’t we great” statements along with how the rest of Harley-Davidson’s executive leadership would take one for the team and also see a 30% reduction in salaries and most salaried employees in the U.S. would see a 10%-20% salary reduction.

So, “forgoing” a salary and/or cash compensation REALLY means collecting $9.4 million!

Where do I sign up?

But wait, there’s more… 2020 was the same year in which the motor company also paid over $4.1 million in severance to former president and CEO Matt Levatich, a serial overconfident exec who created unambiguously bad managerial optimism, which resulted in over 20-quarters of financial loss. In addition, two other executives departed with the same illness, let’s call it Managerial Optimism Flu (MOF).

Specifically, Matt Levatich received a lump-sum severance payment of $2.15 million in 2020, according to the company’s April 9 proxy statement. In 2020, the company also paid Levatich $343,572 in salary and stock awards valued at $5.45 million. Levatich also saw a $653,000 increase in the value of his pension and nonqualified deferred compensation earnings that brought his total compensation in 2020 to $8.7 million, according to the proxy statement.

Mr. Zeitz was named to the CEO position in May 2020. So, for his eight (8) months as chairman, president and CEO, his total compensation of nearly $9.4 million was more than the $7.6 million Levatich received in all of 2019, which was Levatich’s last full year in the job. Zeitz’s salary in 2020 was $1.68 million compared to Levatich’s $1.08 million in 2019. Zeitz also was paid a $1 million bonus, stock awards valued at $5 million, non-equity incentive payments of $1.5 million and other compensation of $206,233.

I’m surprised that line workers didn’t shout from the roof-top that they would “forgo” any salary too!

A couple of other former executives who received large severance payments of note were former CFO John Olin and former senior vice president and COO Michelle Kumbier. Olin left the company in July 2020. He was paid a lump sum of $1.34 million, according to the proxy statement. For six (6) months of filling that position, he also received $374,421 in salary and stock awards valued at $1.75 million in 2020. Michelle Kumbier received a lump sum of $660,000, according to the proxy statement. You might recall that this payment was previously publicly embargoed then it was disclosed; described as a “settlement” after she threatened litigation connected to ‘unspecified events’ related to her departure in April 2020. For the four (4) months in her position, Kumbier was paid $223,385 in salary in 2020 and stock awards valued at $1.58 million.

According to this report; CEO compensation surged 14% in 2019 (most current data) to $21.3 million.  They now earn approximately 320 times as much as a typical worker.

It’s been widely documented how exorbitant CEO pay is and how it’s a major contributor to rising inequality in the U.S.  The Harley-Davidson payouts might sound like a big cash layout, because — well, it is!

Wait. Mr. Zeitz grabbed the handlebar, replacing the “More Roads” strategy with a hard-nosed approach he called “Hardwire” and what if he turns around the company you ask?  Well, that is exactly what shareholders and the board expect…until or unless he doesn’t then it will be the next exec firing. And another multimillion-dollar severance package paid to the outgoing Harley-Davidson CEO.

There’s that apathy thing creeping back in again.  Big payouts.  It’s routine. It’s a pattern.

Full Disclosure: I don’t own $HOG shares. That said, I do watch the stock and the brand’s activities very closely, as it is of course a massive presence in the motorcycle industry, and as of late, has had its struggles.

Photo courtesy of Harley-Davidson

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The Harley-Davidson Revolution Max 1250 Engine

Revolution® Max 1250 Engine

On February 22, 2021, Harley-Davidson® officially unveiled the multi-year teased then full-frontal hyped all-new Liquid-Cooled V-Twin (Revolution® Max 1250 Engine), which powers the new Adventure (ADV) segment (Touring and Sport) motorcycle called the Pan America™ 1250. The Revolution Max 1250 engine is assembled at the Harley-Davidson Pilgrim Road Powertrain Operations facility in Wisconsin.

The new engine is tuned specifically to deliver the desirable power characteristics for the Pan America 1250, with an emphasis on smooth low-end torque delivery and low-speed throttle control applicable to ADV off-road riding.

Harley-Davidson is bent on piloting across a dusty path into the deep-sand of the Dakar trail by taking on the most iconic and recognizable adventure motorcycle — the BMW GS. The GS, a direct descendant of a Dakar winner, has spent decades proving its capability in the remote parts of the world, with each generation improving on the last.

Revolution® Max 1250 Engine

Revolution® Max 1250 Engine Summary:

Displacement: 76.3 cu in (1,252 cc)
Bore x Stroke: 4.13 in (105 mm) x 2.83 in (72 mm)
Maximum horsepower: 150 @ 9000 rpm
Maximum torque: 94 ft/lbs @ 6750 rpm
Peak RPM: 9500
Compression Ratio: 13.0:1  (Piston crowns are machined)
Valvetrain: Chain-driven, DOHC, hydraulic self-adjusting lifters, intake & exhaust VVT; four valves per cylinder
Cooling: Liquid
Transmission: 6-speed
Primary Drive: Gear
Final Drive: Belt

 

More Revolution® Max 1250 Engine Details:

• 60-degree V angle of the cylinders.
• Single-piece aluminum cylinders with nickel silicon carbide-surface galvanic coating.
• Rocker covers, camshaft covers and primary cover are lightweight magnesium.
• Liquid cooled engine and the engine oil is also liquid cooled. Oil cooling jets are aimed at the bottom of the pistons.
• The two crankshaft connecting rod journals are offset by 30 degrees which creates a 90-degree firing order.
• The engine requires premium-grade (91 octane) fuel.
• Four-valve cylinder heads (two intake and two exhaust) — exhaust valves are sodium-filled.
• Cylinder heads are cast from high-strength 354 aluminum alloy.
• The engine has Double Overhead Camshafts (DOHC) with Variable Valve Timing (VVT).
• The engine features roller-finger valve actuation with hydraulic lash adjusters and has multiple internal balancers.
• The engine has two spark plugs per cylinder, dual down-draft throttle bodies with an 11-liter air box over the engine and washable conical air filter.
• The is a unitized powertrain, i.e. the engine and transmission are housed in a common case.
• There is a six-speed transmission and the clutch is mechanically actuated with a large-diameter cable.

Harley-Davidson stated that the Pan America adventure motorcycle powered by the Revolution Max 1250 engine can achieve a top speed of 135 mph (217 kmh)!

Similar to the crossover in the four-wheeled world, the adventure motorcycle segment has now been expanded, thanks to Harley-Davidson.

Images courtesy of Harley-Davidson.

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Harley-Davidson Announces New Movie Telling Origin Story Of Adventure Motorcycles

It’s real, and it’s spectacular. Fastest I’ve ever clicked “buy.”

Wait! Not so fast. What are you talking about Mac?

Today was historic. The original film starts out greeting thrillseekers, music lovers and conversationalists all across the frozen plains.

You had me at; “You’re here by the grace of your lineage.”

But, I’ve wandered off the main trail.

Our “movie hero,” Jochen Zeitz, chairman, president and CEO Harley-Davidson, was an actor riding — yes, RIDING — an actual motorcycle.  That in of itself might be a first?!  There he was in the scenic landscape of Kenya, Africa no less.  Traveling to the vast wildlife preserves to lasso the FIRST twin Adventure Motorcycle and bring it back to Made in America!

Nothing to see here Buell owners.

The emotional exhaustion of this past year must have gripped Mr. Zeitz’ soul, as he peered out onto the Segera Retreat, where a herd of zebra graze, swishing their tails in unison to keep the flies away.  Where a long giraffe at the outer edges of the garden keeps him company as he ploughs through a lengthy to-do list waiting for the Milwaukee employees to wake up.

Today Mr. Zeitz must be just thrilled of simply being alive and to share his wisdom with the motorcycle adventure world.

At the film preview, Journalists cheered… remotely of course.  There were tears and applause, then more tears as the press fell apart during the historical Harley-Davidson Pan America launch today.  Harley-Davidson told a syrupy sympathetic story with dramatic musical overdubs on how the motor company always made off-road bikes. The film narrator described that this isn’t Harley’s first dirt rodeo. You might recall, that back in the 1960s and 70s, Harley offered a variety of small dual-sports, and even briefly got into the motocross game. Harley filled the gap in their lineup by purchasing the Italian motorcycle manufacturer Aermacchi. Not too long after, Harley gave up on the idea of small dirt bikes and sold Aermacchi, which eventually became the company we know today as Cagiva.

It’s fairly evident that the motorcycle press has become nothing but “exhausting love letters to consumerism.” I’ll save my cynicism as a more legitimate response to a product launch once I have a chance to fully review the stats vs. just post another emotional reaction.

We all know that Harley-Davidson is trying to break into the popular adventure motorcycle scene with the 2021 Pan America 1250 and Pan America 1250 Special. The motorcycle and dealer network will compete with some of Europe’s top players, including the BMW GS 1250, KTM 1290 Adventure, and the Ducati Multistrada V4. Harley-Davidson pricing begins at $17,319 for the base model and $19,999 for the Special. The models will arrive at Harley-Davidson dealerships in spring 2021.

For me, it was an immense privilege both physically and spiritually to witness the Pan America launch via film/video. #sarcasmalert

Image courtesy of YouTube: Harley-Davidson Original Film (25:45 minutes)

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Harley-Davidson Dismal Financial Performance

TAKEAWAY: The Q4 2020 Harley-Davidson retail motorcycle sales in the U.S. — the company’s biggest market — fell for the 16th straight quarter!

FINANCIAL PERFORMANCE DETAILS: Yesterday, I posted that Harley-Davidson unveiled “The Hardwire” — a new 5-year strategic plan.  My snarky responses were largely based on what I viewed as the motor company ‘selling the news’ with a lack of granular detail or disclosure around a growth path forward. It was a brutal Q4’20 and full-year financial result. Followed by executive management’s murky 2021 outlook.  The street wasn’t happy and the result was a 17% drop in share price followed by another 2% today.

My blog post today will be on the fourth-quarter and full-year 2020 financial results with less commentary.

The Hardwire Highlights 

• The Hardwire includes investing in the Touring and heavyweight Cruiser segment, expanding into untapped segments of Adventure Touring and creating a new division dedicated to electric motorcycles.
• The motor company views Inclusive Stakeholder Management in the context of people, planet and profit, as all three are now embedded in the past and future success of the company.
• The motorcycle maker plans to give stock grants to its employees, inspired by a program devised by KKR & Co Inc. executive Pete Stavros.

Q4 2020 Highlights

• Reported fourth-quarter adjusted loss of 44 cents per share. A big miss and notable executive mismanagement of expectations as the street consensus estimate was for a profit at 24 cents.
• The revenue decreased by 32% at $725 million compared to previous year.
• The company suffered a net loss of $96 million compared to the previous year’s profit of $13 million.
• The loss per share was 0.63 and the adjusted loss per share was $0.44.
• Total revenues from the Motorcycle and Related products segment, which constitute the bulk of the firm’s overall revenues, plunged 39% year over year to $531 million in the reported quarter.
• For Q4’20, Harley-Davidson retailed 33,925 motorcycle units globally, down 14.1% year over year. The company’s retail motorcycle units sold in the U.S. slid 14.5% from the year-ago quarter to 17,274. Sales in the Middle East and Africa, Asia Pacific, Canada and Latin America declined 2.2%, 9.6%, 30.2% and 50.9%, respectively, from the year-ago period.
• Revenues for Parts & Accessories (P&A) were up 13.3% from the prior year to $146.4 million. However, revenues for General Merchandise (GM) — including Motor Clothes apparel and accessories — dropped 13% from the prior-year quarter to $49.7 million.
• The selling, general and administrative expenses (SG&A) increased to $276.4 million from the $266.4 million compared to fourth-quarter 2019.

Full-Year 2020 Highlights

• Consolidated revenues for 2020 came in at $4,054 million, declining 24% from the prior year’s $5,362 million. Moreover, the company’s adjusted earnings per share for the year came in at 77 cents, tanking 77% from the $3.36 per share reported in 2019.
• The motor company streamlined the product portfolio, reducing the planned number of models by almost 30%.
• Paid dividends of $0.44 per share for the full year
• Re-set motorcycle model year launch timing to align with beginning of the year seasonality
• Exited 39 markets to focus on the approximately 50 highest-potential markets
• Reduced total dealer network by approximately 160 net global dealers in 2020

Jochen Zeitz, chairman, president and CEO, Harley-Davidson summarized the financial call: “The entire Harley-Davidson team put forth tremendous effort in 2020 and we now have the right organization, structure and strategy in place to make step changes in our performance and enhance our position as the most desirable motorcycle brand in the world.”

DISCLOSURE: The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Harley-Davidson.  The author does not own or does the author plan to purchase and/or sell any $HOG stock.

Photo courtesy Harley-Davidson.

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The Harley-Davidson “Hardwire”

Drum roll please…with a rim shot!

Harley-Davidson released the secret recipe for “The Hardwire” — a new 5-year strategic plan rolled out oddly on Groundhog Day.  You can read the press release HERE.

Groundhog Day, the comedy film starring Bill Murray, Andie MacDowell and Chris Elliott portrays a cynical TV weatherman covering the annual Groundhog Day event in Punxsutawney, Pennsylvania, who becomes trapped in a time loop forcing him to relive February 2 repeatedly.

I reviewed the Harley-Davidson press release and like the film, the motor company seems to be in a time loop spewing marketing or business verbiage that doesn’t mean anything. The release reads like quotes from the books “Crossing the Chasm“/”Blue Ocean“/”Good To Great” / “Tipping Point” / “Outliers.”  I’ve never read all of these books, but I sound MBA literate if I quote them. And, besides, most biker enthusiasts probably never read them either to call me out on it.

Below are the main topics of Chairman, President and CEO Jochen Zeitz’s, The Hardwire = with my snarky management euphemisms added for clarity:

The Hardwire Strategy

Profit Focus: Don’t leave money on the table = Be as greedy with them as possible.
Selective Expansion and Redefinition: We’re all about value-add = Unlike our competitors who seek to add no value.
Lead in Electric: It’s best-of-breed = We hired a market research firm to say that.
Growth Beyond Bikes: This is the next big thing/new thing = Some of our 20-somethings have told me this is really cool.
Customer Experience: We’re customer-focused/proactive/results-oriented = That can’t be bad, right?  This is motherhood and apple pie stuff.
Inclusive Stakeholder Management: We need to monetize/strategize/analyze/incentivize = When in doubt, stick “-ize” on the end of a word and it will sound action-oriented.
People: I know you’ve been burning the candle on both ends = Get ready to do some more.
Planet: It’s basic New Green Deal blocking and tackling = How could you screw this up? I also played high school football and those were the best days of my life.
Profit: We want this to move up and to the right = I failed high school algebra but someone said this means we’ll be making a lot of money if this happens.
Financial Targets: It’s about synergies/1 + 1 = 3 = I don’t get the math either, but it sounds like more and more is better, right?

Metaphors or marketing euphemisms are always interesting to me.  Eu·phe·mism — a word or expression substituted for one considered to be too harsh or blunt when referring to something unpleasant or embarrassing. For example, a famous feature of the World Fair in New York in 1964-65 was something called the Dynamic Maturity Pavilion — basically a garden with benches where those of mature years could rest.

Maturity is a positive concept; it implies that a person is fully developed in body or mind. And as a “seasoned” motorcyclist I’ll need to wrap my head around reliving The Hardwire.  We’ve seen this film before. I’ll need to sharpen my pencil and circle back to fully understand the paradigm shift.

In the meantime, I know we’re all on the same team here, rowing in the same direction, and it’s not about me, it’s about us.

Photos courtesy Columbia Pictures and Harley-Davidson.

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The H-D 21 Virtual Launch

H-D 21 Virtual Broadcast

The H-D 21 virtual broadcast was an all digital event to announce new 2021 motorcycles, parts and accessories.

The new model launch yesterday came less than a year after the motor company reported plans to streamline its product portfolio by 30% while overhauling its launch timing (historically every August) and go-to-market practices for maximum impact.

As soon as the media, dealers and consumers logged into the Harley-Davidson online portal, I knew this year’s product launch was going to be … different.

The event opened with a long video montage on the joys of the motorcycling experience.  I watched Jason Mamoa gush about his Harley family, or “Ohana” — you’ll remember him as Aquaman.

As someone who has served time in the trenches creating marketing campaigns, this was the traditional entertainer-as-a-promotional vehicle initiative.  The idealized figure introduced Harley-Davidson CEO Jochen Zeitz who teased the audience with a number of motorcycles and projects that he apparently can’t speak about yet.

Huh?

As the motorcycle launch wore on, with a selection of motor company smooth-talking prognosticators from various departments sharing bits of information about updates to Cruiser, Touring and CVO models, the value of an all-virtual Harley-Davidson product roll-out actually became less clear. The new products, which we usually look forward to, felt less exciting. It’s hard to determine the viability of any product by watching a slick video about it in a browser. The discussions about the Harley-Davidson future of motorcycling felt less like revelatory conversations and more like a TED Talk that I’d scroll past in my Twitter feed.

For me the serendipity of discovery was gone. One of the most exciting parts of a product launch has been finding out about something or learning about something new through pure chance. At a virtual H-D 21, that’s a virtual impossibility.

Street Bob 114

But, I’ve digressed.

Cruiser Updates
Harley stated that the Street Bob 114 is the lightest Softail model to be equipped with the Milwaukee-Eight 114 engine. The legendary Fat Boy receives refreshed styling for 2021, getting brilliant chrome instead of satin chrome on the engine and exhaust, the front end, the rear fender struts and console.

Touring Models
The 2021 Touring lineup includes three baggers that feature the Milwaukee-Eight 114 motor: Road King Special, Road Glide Special and Street Glide Special. The Street Glide Special and Road Glide Special get new two-tone paint options, and a choice of a blacked-out or bright chrome styling treatment – a choice between dark and sinister, or brilliant and more traditional.

Fat Boy

Road King Special and Street Glide Special models get a new brilliant Daymaker LED headlamp. All Harley-Davidson Touring models that are equipped with the colour touchscreen Boom! Box GTS infotainment system that now have Android Auto and Apple CarPlay compatibility. The feature requires a wired connection to a smartphone rather than going through Bluetooth.

CVO Models
Custom Vehicle Operations (CVO) motorcycles are the poster child for Harley-Davidson’s styling and performance. The Milwaukee-Eight 117 V-Twin engine is exclusive to CVO models as standard equipment. For 2021, the CVO Street Glide and CVO Road Glide models receive all-new Harley-Davidson Audio provided through an exclusive partnership with Rockford Fosgate.

CVO Limited

The audio systems, featuring speakers and amplifiers, were designed specifically for Harley-Davidson motorcycles. These components will also be made available through Harley-Davidson Genuine Motor Parts & Accessories for 2014 and newer Touring models equipped with a Boom! Box infotainment unit.

The 2021 CVO models (CVO Street Glide, CVO Road Glide, CVO Limited and CVO Tri Glide) all feature new paint options and styling features. All four CVO models are also equipped with RDRS safety equipment, including Cornering Enhanced Electronic Linked Braking, Cornering Enhanced ABS, Cornering Enhanced Traction Control, Drag-Torque Slip Control, Vehicle Hold Control, and Tire Pressure Monitoring System.

Pan America 1250

Pan America Global Reveal
The upcoming and over exposed Pan America 1250 adventure tourer was previewed in the virtual launch broadcast, but the most important details weren’t provided as it’s official launch is set for February 22nd. Mark your calendar and register for the event HERE.

It will be interesting to compare how this virtual launch broadcast performs in attracting potential motorcycle buyers and if it will drive demand for products or make an emotional connection to the Harley-Davidson brand.

It’s been my experience that: “People don’t buy “what” you do, they buy “why” you do it.”  — Simon Sinek

Photos courtesy of Harley-Davidson

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