For many onlookers, Harley Davidson have been making many decisions in recent years that have led to declining global sales and profits and the very latest strategy to address this has many commentators wondering if this will be the magic ingredient to restore the American motorcycle brand’s fortunes.
Acting H-D CEO: Jochen Zeitz is heading the company on a new 5 year plan that is refocussing the company intent and largely abandoning much of the ‘More Roads To Harley Davidson’ strategy under the direction of former CEO Matt Levatich.
At a statement delivered during the release of the company’s 1st Quarter results for 2020, which has seen further slumps in performance right across the board, the company outlined their ‘REWIRE’ strategy which it will elaborate upon over the next few months.
Excerpt from Harley Davidson 1st Quarter 2020 Results statement:
The company is executing a set of actions, referred to as The Rewire, that will be further developed over the coming months, leading to a new strategic plan. These actions are part of a comprehensive Rewire playbook designed to address top priority opportunities, drive consistent execution and reset the company’s operating model in order to reduce complexity, sharpen focus and increase the speed of decision making. The company expects The Rewire actions – those already taken and those that will be implemented over the coming months – to lead to the definition of a new 5-year strategic plan that will incorporate key products and initiatives from the More Roads plan but will focus more on the markets and products that can drive performance in terms of profitability and growth. Key elements of The Rewire:
Enhance core strengths and better balance expansion into new spaces
- Return focus to the strength of brand and company, starting with dealers, customers, stronghold products and committed employees globally.
- Re-evaluate strategies to reach new riders and build ridership.
Prioritize the markets that matter
- Narrow focus and invest in the markets, products and customer segments that offer the most profit and potential. This includes building on Harley-Davidson’s strong position in the U.S.
- Establish a simplified market coverage model and take cost out of the process.
Reset product launches and product line up for simplicity and maximum impact
- Continue to be guided by the voice of customers and dealers to optimize value and profit delivery.
- Simplify and retime launches to reflect the new reality, align with the start of riding season and better suit the capacity of the company and dealers.
- Expand profitable iconic motorcycles to excite existing customers. Remain committed to Adventure Touring, Streetfighter and advancing electric motorcycles.
Build the Parts & Accessories and General Merchandise businesses to full potential
- Develop a comprehensive strategy across P&A and GM businesses that focuses on assortment and distribution opportunities, maximizes channels, improves ecommerce capabilities and grows revenue and margins for both the company and dealers.
- Align P&A and GM strategies with motorcycle strategy for a holistic presentation to the market.
Adjust and align the organizational structure, cost structure and operating model to reduce complexity and drive efficiency to set Harley-Davidson up for stability and success
- Create a framework including an organization that is more focused, profitable and nimble; a cost structure that is adjusted to the new realities of the market post crisis; and an operating model designed to increase empowerment and accountability.
- Establish commercially led central and new regional structures to gain a deeper understanding of customers and to return focus to dealers and selling.
- Elevate the role of Motorcycle Management and sharpen marketing strategy and execution to enable a bigger impact with an improved go-to-market process.
Each of these key elements of The Rewire playbook includes actions that have been implemented or are currently being developed. The company plans to share more about The Rewire in its Q2 update.
Much speculation has ensued since this statement was released and what that will mean for future motorcycle programs and the existing range. Whilst there are no specifics as yet, it is believed that the imminent release of the Pan America and Bronx will continue but future models and prototypes may fall by the Rewire sword.
For some, this news will be most welcome. It will mean that the company will concentrate on stalwarts tastes and markets where the sales and profits will best suit the future of the company. For others, this may mean the final nail in the coffin.
The More Roads program was ultimately designed to attract new riders to the brand and this new strategy may not fare so well, however in the short term this may be exactly what the company needs. To appeal to its supporter base and reinvigorate the confidence and enthusiasm for what the company does very well.
In the next few months, the wider world will see how the Rewire strategy will play out, but for now there are already positives. The HOG stock price has rebounded somewhat and there is chatter amongst the masses breathing a reserved sigh of relief at what it sees this as where the company should have been heading the whole time.
Only time will tell