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Interbrands Ranking of the Best Global Brands

Brand impact.  That’s what H-D desires.

Trust and customer loyalty are the words that matter most in today’s economic market place.

Let’s recap the various statements made by CEO, Keith Wandell on the Harley-Davidson brand.  I found it interesting and thought you might too:

October 2009 — “As our announcement regarding Buell and MV Agusta indicates, we are moving with the speed and decisiveness required to bring our business strategy to life,” said Wandell.  “The fact is we must focus both our effort and our investment on the Harley-Davidson brand, as we believe this provides an optimal path to sustained, meaningful, long-term growth.”

January 2010 — “Focusing our investment behind the uniquely strong Harley-Davidson brand provides the most attractive path to sustained, long-term growth,” Wandell said. “We also expect to achieve substantial gains in the efficiency of our operations through continuous improvement.”

April 2010 — “Throughout the past 16 months we have taken a number of actions to address the immediate challenges and establish a bold, clear direction that will maximize our opportunities going forward,” said Wandell. “We have come a long way in a short amount of time, and I could not feel better about the progress we have made and where we are headed.”

July 2010 — “Despite the decline in second-quarter retail motorcycle sales, we believe interest in the Harley-Davidson brand remains strong among riders of all generations. In fact, Harley-Davidson is the U.S. market share leader of on-road motorcycles among young adults. We will continue to focus our resources on expanding the global reach of the brand and developing new products that will reach even more riders going forward,” Wandell said. “I would like to thank our employees for their continued hard work and support of our strategy.”

How’s all that brand focus working out Mr. Wandell?  Check it out.  According to Interbrands 11th annual ranking of the “Best Global Brands,” Harley-Davidson (#98) saw a decline of 24% in brand value!! For the first time ever, it nearly fell OFF the top 100 list of global brands.

Quick to provide an “interpretation” and point out their view of the pitfalls of Interbrands ranking system – Harley-Davidson spokesman Bob Klien stated“Given the financial focus of the Interbrand rankings, the results aren’t really all that surprising,” and then went on to say “It’s to be expected given the economy and the effect it’s had on the motorcycle industry and Harley-Davidson.”

Not that surprising.  Huh?  If it’s a financial focus let’s contrast the H-D brand with the auto industry which has had a difficult time in this economy too.  Mercedes Benz (#12) and BMW (#15) were able to sustain and build their value through innovative design and a focus on delivering premium value vehicles with luxury features. Award-winning products like the Q5 helped Audi (#63) lead industry growth this year with a 9% increase in its brand value.  Even the media’s preoccupation with the Toyota (#11) recall which caused the brand to lose -16% of its brand value was handled in a way that it out performed H-D!

What about other luxury brands?  Even with the economic downturn, luxury brands Cartier (#77), Armani (#95), Louis Vuitton (#16), Gucci (#44), Tiffany & Co (#76) and Hermes (#69) all saw the value of their brands increase in 2010 by continuing to invest in their heritage and legendary status. Outstanding customer service and a focus on unique in-store and online experiences allowed them to stay strong, even while consumers cut back spending.

Interbrand publishes the ranking of the top 100 brands based on a unique methodology analyzing the many ways a brand touches and benefits an organization, from attracting top talent to delivering on customer expectations. Three key aspects contribute to a brand’s value; the financial performance of the branded products or services, the role of brand in the purchase decision process and the strength of the brand to continue to secure earnings for the company.

The Harley-Davidson brand investment does not seem to be working.  Now what?

Photo courtesy of Interbrands.

All Rights Reserved © Northwest Harley Blog
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K1200 GT

This week Toyota paid a $16.7M civil penalty for not notifying the NHTSA of a dangerous pedal defect.

Certainly Harley-Davidson has had its fair share of defects and needed to recall motorcycles in 2008 HERE, 2009 HERE and then again in 2009 HERE.

Now it’s the German motorcycle manufacturer BMW’s turn.

This week they launched a global recall of 122,000 motorcycles owing it to front brake problems.  The company uncovered a risk of leaks in the braking systems on its K1200 GT motorcycles and other models built on the same base.  The recalled models are R1200 GS, R1200 GS Adventure, R1200 R, R1200 RT, R1200 ST, and K1200 GT.  The recall concerns motorcycles built between August 2006 and May 2009, some of which have already been checked, according to a BMW spokesman.

“Over time, it emerged that even corrected braking systems did not resolve the problem 100 percent,”

The culprit seems to be vibration generated by the motorcycle’s operation which were found to cause leaks that affected the front brake.  The company stated that rear brakes continued to function normally.  BMW has not heard of any accidents linked to the problem.

As of this writing, BMW has yet to post information to the Office of Defects Investigation or onto the NHTSA site (Safecar.gov) about this recall notice.

UPDATED: March 17, 2015 — Edward Walker of the About Automotive Industry Action Group provided this:  Complete Road Safety Overview: Global Issues, Safety Laws, New Road Safety Measures, Car Safety Technology, Car Safety For Kids, Teenage Drivers

Photo courtesy of BMW

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eROCKIT Electric Motorcycle

eROCKIT Electric Motorcycle

Building a better mouse trap.

It’s about engineering.  It can be a daunting task, especially after 105 years in the market with the leading heavy cruiser segment share locked up.  It seems impossible to surpass.  With success like that why would anyone at Harley-Davidson do anything different or even consider trying to break a proven success?

But, that’s exactly the point, right?   Remember what happened to the record companies?  They cruised along, making buckets of $$ selling overpriced CD’s with one good song and Napster came along and ruined the business model.  What was the response?  They tried to keep the future from happening by suing those who wanted to live in the future, then blaming the artists, then demanding 360 degree of rights for almost nothing rather than jump ahead of the curve, retool part of their business and innovate for what didn’t exist today, but clearly would in the future.  Does Harley have visionaries who see the electric transportation future? Or are they doing a “Detroit”…  denying what’s possible and booking the profits… extracting cash, but failing to reinvest it… only changing when forced to by the government or when consumers go elsewhere?

Toyota has been showing the world it has engineering prowess.  It has a proven piece of hybrid propulsion technology that set the de-facto standard of the world when the hybrid Prius debut in Japan in 1997.  Honda was second with the Insight, but Toyota is perceived as the world’s hybrid leader — and estimates it has saved consumers more than 135 million gallons of gasoline worldwide via its technology.

Brammo Enertia Motorcycle

Brammo Enertia Motorcycle

With Harley-Davidson’s engineering I’m not referring to a different headlamp configuration, paint scheme, or removing a few pounds from the overall weight to improve fuel consumption or save $$ in raw material costs.  Difficult as each of those may be, it’s not a better mousetrap and will do nothing to set them apart from traditional players.  The present always rests on the foundation of the past, and when it has taken shape, it incorporates the essence of the future. Where is Harley-Davidson’s electric motorcycle future? Do they have the intellectual and engineering capabilities to get ahead of the customer and entice them when they finally catch up?  Providing more not less.  Sure the motorcycle business is altogether different than automobiles with shorter development cycle times and the visceral passion shown by customers who literally feel exactly what the motorcycle is doing.  But, is Harley stretching their design ethos to showcase their engineering skills and expand into new segments?  They are either dark with a double top-secret projects or in denial.  My hope is they take motorcycle design in a new direction and show people there is something unique about the engineering of their bikes and demonstrate that electric motorcycles have a place in their line-up.

There is a lot going on in this space ranging from electric assist bikes ($1-$5K) to the fully functioning electric motorcycles ($15K).  There is the 30-employee Zero Motorcycle company that builds a 140 pound dirt bike called the Zero X that uses clustered lithium ion batteries which fully charge in 2 hours.  Then there is the 12-man eROCKIT (.pdf) company building a variety of bikes, mixing the aesthetics of a motorcycle with a battery motor and adding bicycle pedals to come up with a totally unique two-wheeled vehicle.  There is Electric Motorsports and their model called the GPR-S that sells for approximately $10K.  There is the world’s fastest (0-60 in 0.9 secs; 7 seconds in the ¼ mile) electric motorcycle which has been showcased at the National Electric Drag Racing Assoc.  In Oregon, there is the Ashland-based Brammo Enertia Motorcycle manufacture which is selling motorcycles via Best Buy while the state is working on a bulk purchase agreement for EV charging stations open to private industry as well as local governments.  And in Hillsboro they announced the planned installation of 16 charging stations.

Clearly electric motorcycles are coming of age and not only for the fuel economics as there are military stealth implications.  So, what is Harley’s position on electric motorcycles?  Is the Harley sound of silence the inevitable sound of the future?

Photos courtesy of Brammo and eRockit.

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GTOI’m fascinated by the rapid decline of the American car industry. 

And given Harley-Davidson’s consideration of closing its main assembly facility in Pennsylvania and moving production elsewhere is it déjà vu all over again?  GM and Chrysler went through the same China and Mexico facility debate to lower cost and cope with sales downturns now H-D wants the same experience?!  Huh?

A couple weeks ago there was an interesting article in “New York Times” on the GTO.  I recall hearing the Ronny & The Daytona’s song, but didn’t truly appreciate the “goats” until several years later when the Pontiac was a sleek ride on the boulevard.  At the time I had no idea that Jaguars were an exclusive make.  I’d see an XKE now and again, but if you wanted a real car, a hot rod, one that sparkled in the sunlight and impressed the girls, you got an American car.

In our family we had an string of American cars.  Trained as an engineer, my dad started off with GM/Chevy.  He purchased a sporty rear-engine Corvair Monza that caught fire on the way home from the dealership, but that’s what the brand stood for, great engineering.  There were several models purchased after, but not before the in-line six cylinder C-10 Chevrolet pickup that we must have drove 89,000 miles.  No matter how hard it was driven it got 9 MPG’s!  I remember a partially dismantled block in the driveway at one point theorizing how to boost the gas mileage with a timing belt change. At the end of the sixties and armed with a premonition of gas station lines my dad purchased a new 1970 Toyota Corona.  A Canary Yellow practical four door for a family of four with a dog.  A 1900cc (1.9L) 4 cylinder (3R-C) engine with a 2-speed Toyoglide automatic transmission.  After that Corona purchase I don’t remember much in the way of American car’s in our family.

My love affair with the automobile was not that much different from what I suspect was many of yours.  I studied “Car and Driver.”  I debated buddies what machines we were going to own.  Had friends with Cuda’s and “Stangs.”  But with the early-70’s oil embargo, Yom Kippur War and then later on with Jimmy Carter inflation and national energy policies… I went foreign and never looked back.   People made fun of that Fire Engine Red Corolla that looked like a thirty year old vehicle, even though it was brand new.  But then almost overnight the Datsun 510, 240Z and Celica converted the masses.  Who knew driving could be so much fun?

The usual suspects at GM have run that outfit into the ground.  And it’s hard not to compare analogies to the current state of the Harley motorcycle business.

Detroit said it was just giving the public what it wanted.  So let’s slap the backs of all those Detroit execs for ignoring the coming rise in the price of oil, the environmental concerns and just sell more SUVs.  It’s taken years.  But the Harley-Davidson world seems to be in a similar place as Detroit.  After years of coasting, it’s collapsing, and it’s not sure what the path out is.   Could it be that the blame lies on the pros who drove the business to the cliff, milking millions all the way, believing they’re entitled to their riches?  Is it union busting or “negotiation tactics?”  Where is the next act that H-D can rally around and declare great?  Not marketing noise.  Or accountant speak….like saying Britney might book revenue, but you’ll have a hard time finding any believer in her music.  Her music is not seen as necessary to most people’s lives.  It’s too discordant, or made for the cash register, not humans.  

Be it GM, H-D or Britney…until they change the product, we’ll remain in the doldrums.  It can be done, but only if the execs stop worrying about their lifestyle and get honest.

Photo courtesy of NYT.

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