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Posts Tagged ‘Hispanics’

Harley-Davidson CEO Meets POTUS

Earlier this year, the President met with Harley-Davidson exec’s and put a spotlight on the company in his address to Congress, yet there was no “Trump Bump” as the motor company reported earnings which included sharp declines in revenue and profit for the first quarter of the year.

Some of the key Q1’17 stats:
— $186.4 million in net income, or $1.05 per share, for the period ended March 26, down more than 25% from $250.5 million, or $1.36 a share, in the same period a year ago.
— Revenue was $1.5 billion, down from $1.75 billion in the first quarter of 2016.
— Motorcycle sales in the U.S. were down 5.7% in the quarter compared with a year ago and International sales fell 1.8%
— Reported motorcycle shipments fell 14.7% to 70,831 in Q1
— Market share in the 601cc-plus segment was up to 51.3%.  Execs stated that the Victory liquidation helped market share.

Nothing screams Americana more than deep vehicle discounts and Harley-Davidson jumped head first into that pool by offering its dealers financial incentives to clear out the leftover 2016 motorcycles.  And in an unusual move the company has purposely constrained the supply of its 2017 hottest-selling new models, including bikes with the new Milwaukee Eight engine, leaving some customers waiting to conquer the open road.  All of this is happening with only 4-months until the 2018 model-year launch.

If you listened to the earnings call this week there was a lot of “feel good” expressions from management about the way the company is performing yet, there are tepid sales, a downbeat outlook, and consumer confidence numbers that don’t reflect spending behavior.  Clearly households worldwide are slow to embrace new motorcycles as a way to enjoy life.

According to Harley-Davidson this is the 9th year in a row (based on IHS Market New Registrations) for motorcycles with 601+cc where they were the number one seller of new on-road motorcycles in the U.S. on both their “outreach” and “core” customers.  “Outreach” is defined as four segments — young adults ages 18-34, women, African Americans and Hispanics.  “Core” is defined as Caucasian men aged 35-plus.

Harley-Davidson reported that more people than ever before are discovering motorcycles and claimed that they are dominating the motorcycle market as well as being recognized as the leader in addressing key demographics — women, younger riders, African Americans and Hispanics, however, the patterns of growth remain elusive.

So whats going on?

Let’s drill down:
— Press and media continue to push negative motorcycle narratives (motorcycle crashes, distracted driving, club violence (last years Waco example) etc.).
— Increased pricing on new motorcycles have pushed out the average length of ownership.  For example new autos reached 6.5 years in Q1 2015.
— In the northwest along with parts of California the wet weather has limited the number of days to ride in 2017.
— Increasing Insurance rates  — on auto, home and health care biting into the discretionary funding of a motorcycle hobby.
— Income growth has declined.
— Interest rates have increased (in past years people pulled $$ from their house to buy a “toy” and now there is no where else to pull $$).
— Fewer “Outreach” customers (aged 18-34) own vehicles or don’t drive as much, they UBER.
— Apathy of the motorcycle hobby/life style as a form of entertainment

All or some elements of this could be weighing down new motorcycle purchases.  But I’m an optimist, and Harley-Davidson has a 10-year strategy to train 2 million new U.S. riders, grow international business to 50% of sales (currently about 32%) and launch 100 new “high-impact” motorcycles.

As it turns out and according to this report, about 22% of all new motorcycle purchases come from first-time buyers. This figure has remained relatively stable since 2001.  It’s very likely some of those 2M new riders will buy a new “high-impact” Harley.

Photos courtesy of CNBC and Harley-Davidson

Full Disclosure:  I don’t currently hold or intend to hold any $HOG shares.

All Rights Reserved (C) Northwest Harley Blog

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donnellyReally?  Or at least that is what Harley-Davidson’s chief marketing officer (CMO), Mark-Hans Richer hopes for with the new Sportster Iron 883.  Richer was hired as CMO in July 2007 after leading the marketing efforts at General Motors’ Pontiac unit.  So, I ask Mr. Richer have you truly met with today’s youth (see illustration) to understand their eclectic buying style and randomness?

Don’t get me wrong I like the gothic stylized Iron 883 bike, but in an economic acknowledgment of the challenges of selling premium motorcycles, Harley introduced a print ad aimed to play off the Iron 883’s low price with a focus on appealing to youth and non-traditional audiences. The message:

“About six bucks a day. Cheaper than your smokes, a six-pack, a lap dance, a bar tab, another tattoo, a parking ticket …”

This might be Mr. Richer’s idea of an “off the hook” marketing offensive, but I don’t see how it will attract younger buyers.  Especially blacks or Hispanics.  Wouldn’t applying principles of the “urban-suburban hip-hop settings” provide better reach?”  It seems that Harley-Davidson is trying to be everything to everyone all the time.  They look to uptick their image with riding mom’s of all shapes (soccer and hockey) to traditional geezers and even one-armed midgets if they didn’t think it would hurt the brand!

harley_883No disrespect to ethnicities or “height challenged” members of society, but I think Harley has fallen down in delivering a motorcycle rider message.  They have become just part of the blah, blah, blah advertisement (nausea) “noise.” Isn’t it time to reach out beyond the comfort zone and get a ‘hip-hop’, bump-pumping gangsta makeover?  I’m talking about an extreme makeover with a page borrowed from Gravediggaz.  Melding the dark and gothic themes of the Iron 883 with a hardboiled gangsta rap phenomenon.  Include a bundled switch-blade skull knife along with models named; Grym Reaper, De La Soul, Dubsteppah or Aristacrank if you have too.

Do keep in mind that I’m only one customer’s viewpoint and statistically there’s always a significant chance that a reinvention attempt will not only fail to revive the brand, but indeed may actually succeed in killing the “bling.”  Tangential, do you remember country singer Garth Brooks as Chris Gaines?  Pretty much a textbook example of an extreme makeover and once people listened to the album – supposedly the greatest hits of a fictional musician with a…oh, screw it, Brooks’ career went totally Tom Cruise cold and now he’s doing Saturday morning cartoons in clown pants!

Memo to Mr. Richer – know your customer/demographic.  For example, during a press conference for Valkyrie in Rio de Janeiro, Tom Cruise greeted the Brazilian press with ‘Hola’ and ‘Gracias’ before saying he fell in love with Brazil while watching movies about Tango.

They speak Portuguese, the idiot. And dance the samba!

Photo courtesy HD and illustration courtesy Australian artist Eamo Donnelly.

All Rights Reserved © Northwest Harley Blog

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