Tag: harley davidson

Harley-Davidson faces tough situation in motorcycle business

Motorcycle Business

The news for Harley-Davidson, America’s most famous motorcycle manufacturer, looks bad.

In business for 116 years, Harley disappointed Wall Street this week by saying it actually did not make a fourth quarter profit. He cited tariffs imposed by President Donald Trump that hurt Harley in growing markets outside of the United States.

This was a worrying sign, because while Harley has been under commercial pressure for years – its owner base is aging and motorcycle sales in the key US market are in terminal decline – it has also been a mainstay of revenue. Since 2006, the company has had exactly one quarter in which it grossed less than $ 1 billion, and that was during the financial crisis.

Harley’s top of the line is enviable, but it’s based on selling big bikes at high prices. This market has been dominated by HOG for decades, with alternatives provided by Japanese cruisers – great bikes, but without that Harley attitude, roar and V-stomp and, of course, outlaw credibility. .

Read more: Here are 4 big opportunities that Harley-Davidson will tackle in the future

But nowadays Harley faces local competition from a resurgent Indian Motorcycle, a historic rival that faded in the 20th century to come back under a new owner in the 21st. Brands such as Ducati and Triumph have made a better pitch with young riders, while urban and entry-level markets are under attack from new entrants like Royal Enfield.

The outlook for Harley isn’t as bad as the headlines. Trump’s damage is undermining the brand’s growth and profitability in Europe and Asia, but Harley already has her hands full to develop the right product for those markets. The major problem is the timing of the decline in the United States.

This deadline is almost a classic business school case study. It could take decades for Harley to enter a serious decline. With its flagship product, bicycles with displacements greater than 600 cubic centimeters, it controls half of the American market. It’s like General Motors in the 1950s – and although GM’s business declined after the Eisenhower era, it took 59 years for the automaker to go bankrupt.

Hard work for the CEO

Harley-Davidson CEO Matt Levatich.

Thomson reuters

CEO Matt Levatich has a tough job ahead of him. He could presumably sit down and communicate to investors that even though stocks have fallen 45% over the past five years amid rapidly growing major stock indexes, Harley is paying a
from 3 to 4%, well ahead of the inflation rate. Those quarters of over $ 1 billion will continue to arrive. In the long run, everyone’s dead, but until then the only ride we could do is in the “Wild One” subdomain of Elon Musk’s Mars-based World Simulation.

Instead, Levatich tries to keep the business relevant, developing smaller bikes for new markets and younger urban riders, while also offering an electric bike, the $ 30,000 LiveWire, in the US market later this year. Harley has been here before – in the 1990s and early 2000s he supported a sports motorcycle brand called Buell, but put it to rest in 2009.

Harley has also tried to create a buzz around the legacy brand through merchandising, but it is more helpful to think of this as advertising. And it’s a big step to go from a $ 25 t-shirt to an entry-level $ 7,000 bike. (For starters, you have to learn how to ride it – something Harley does a great job of teaching through its dealerships – but it’s expensive and time-consuming.)

The news makes it look like Harley is doomed to fail. But it’s no more doomed than, say, Ford. The automaker is also over 100 years old, has seen its stock prices fall, is reinventing itself – and has made money for nearly a decade selling highly profitable full-size pickup trucks.

Obsession with Growth on Wall Street Makes Driving Difficult

The Harley LiveWire electric bike.

Harley davidson

Both companies are victims of Wall Street’s obsession with growth. Growth companies, historically, have been risky investments with stories to sell. You buy them knowing you could lose everything. Amazon changed that logic by fueling seemingly endless growth by forgoing stable earnings; the giant will not give in until the government accuses it of being a monopoly.

Harley doesn’t really need to grow, but because of that, investors have to pay a low stock price to access the company’s cash flow. Sadly, it’s a timed proposition, even though it will be the second Ocasio-Cortez administration before the last pig hits the road in the United States.

Meanwhile, Harley will stay cool. His product is glorious. Tariffs are generally bad business and could eventually go away. Electric motorcycles could become a thing. None of this will free Harley from the clutches of Wall Street short-termism, with markets pricing the stock for access to dividends rather than big future returns.

Worse yet, the sales trends and brand demographics are unlikely to reverse in the United States. But they’re not going to collapse either. This is why Levatich is in an impossible position. All About Harley makes a case for the stewardship of this latest group of baby boomers on their final commutes before heading to that big biker bar in the sky, while simultaneously bringing up a small group of members of Generation X and Generation Y on “real” motorcycles so that Harley’s decline was extremely gradual.

No CEO wants to oversee such a depressing narrative; as the generals say, nothing is more difficult than a combat retreat. What’s likely going to happen is that Harley will continue to struggle, at least until the next one.
– unless, of course, the company becomes delusional and borrows more money to continue growth, which adds to an already high debt situation.

Look, I know this is a little sad. But sometimes you have to accept that you are in the last chapter. Luckily for Harley, this chapter could take decades to write.

Motorcycle brand Buell relaunches production in Grand Rapids

Motorcycle brand Buell relaunches production in Grand Rapids

Motorcycle Brand

GRAND RAPIDS – Executives of an iconic American superbike brand are breathing new life into the company and relaunching production of “boutique†motorcycles in Western Michigan.

By establishing low volume production of EBR motorcycles in Grand Rapids, owner Bill Melvin hopes to bring sustainability to the company founded by famed motorcycle rider Erik Buell 35 years ago.

The discontinuation of a high volume business keeps EBR Motorcycles in the market and allows the brand to maintain its “panache” as a specialty limited edition manufacturer, Melvin said.

“It’s the only US-built superbike, a 185 horsepower track street bike that you can go right to the track and compete with a Ducati,†he said.

Melvin’s Liquid Asset Partners LLC, a Grand Rapids liquidation, auction and appraisal company acquired the assets of East Troy, Wis. Erik Buell Racing LLC in 2016 for $ 2 million after the company went into receivership.

Former parent company Harley-Davidson Inc. had designed the East Troy plant for high volume production of approximately 10,000 units per year. After operating the business for about a year after the purchase, Melvin realized the business needed to downsize.

“We made a big push in Wisconsin, we tried the old college and went with the full plant and trying to increase production volumes,†said Melvin, who has shut down production and switched in the fall of 2017 to an electronic commerce. Grand Rapids based model to support motorcycle parts orders.

“The high-volume factory is a great proposition,†he said, noting that the company is now taking a page of bespoke supercar makers, most notably Lotus or Koenigsegg, with production of handcrafted motorcycles and in limited series. “What we’ve done now is something more durable and special – and now they’re being built in Grand Rapids, Michigan. ”

As of late 2018, the company has built three EBR 1190 superbikes that cost around $ 20,000 and are capable of exceeding 185 mph when racing. As word of the new production series began to spread, the company had a list of more than 30 people interested in buying a motorcycle, according to Melvin, who expects demand to continue to exceed. the production.

“Erik Buell and his designs are highly regarded,†he said. “With the volumes that we do, they will fly away.”

EBR Motorcycles serves a small, high-end niche market in an industry that continues to be dominated by heavy touring motorcycles. Harley-Davidson, which discontinued the Buell Motorcycle lineup in 2009, remains the market leader in the United States, where it accounts for 46% of all motorcycle sales.

In recent years, however, the company’s sales have plummeted as customers shifted from heavy motorcycles to smaller, more affordable models, analysts said. As a result, Harley-Davidson sales fell 10% year-on-year in the first nine months of 2018, the most recent data available.

Meanwhile, sales of motorcycles with engines below 600cc are on the rise, according to a report by the United States International Trade Commission, reflecting the fact that more millennials are coming of age and looking for entry-level models. and baby boomers are aging out of the market. .

KEEP SMALL

For the initial production of three units late last year in Grand Rapids, EBR worked with a team of eight, including two former Wisconsin builders, to build each motorcycle.

“We start directly from the crank. It’s all put together and put together in town, â€said Melvin.

The superbikes all feature a handcrafted 1190cc V-twin engine capable of 10,600 rpm and a top speed rivaling “America’s fastest production vehicles”, according to Melvin.

The company sources worldwide from its historical suppliers, but uses a custom paint shop in Grand Rapids, which will allow the company to fulfill orders for specialty paint to meet customer needs, a- he declared.

By moving production to Grand Rapids, Melvin said the company now has better visibility and cost control over the manufacturing process.

“We’re from here, so we have more oversight, a more manageable cost structure,†he said. “We have a great team here who can help support the brand. ”

For 2019, the company plans to continue to introduce various upgrades to the EBR models, which still use Buell’s unique design, such as a fuel tank integrated into the motorcycle’s aluminum frame to help lower the center of gravity. and improve handling.

Melvin expects production at Grand Rapids to increase, albeit at a manageable level for the company.

“I think it’s really cool that we’re doing it in Grand Rapids. I think it’s exciting for Michigan to have a superbike being built in Michigan, â€said Melvin. “It’s an iconic brand and the design is super exotic. You put him on a race track next to the fastest production vehicles built and he’ll beat them. “

Does loyalty to the motorcycle brand still exist?

Motorcycle Brand

Thoughts on Motorcycle Brand Loyalty

It used to be conceivable that if you were happy with buying a new (or even used) motorcycle, you would be more inclined to buy a newer model from the same manufacturer. But after seeing most of my cycling friends not following this trend, I started to question this thought process. This led to the inevitable question: “Is there still such a thing as motorcycle brand loyalty? In fact, I didn’t have to look very far to find an answer, I was a perfect candidate. I have owned many motorcycles over the years and have moved from an older model to a newer model made by the same manufacturer only once (eg a 1987 Kawasaki Ninja 750R to a Kawasaki ZX-7 of 1992).2017-motorcycle-brand-loyalty-400x274-1So my answer to the proposed question would be a “no”. Whether it was style, price, technology, or a number of other factors, I chose to buy a competitor’s product from the current brand I was driving at the time. Now, if I said “yes” to that question, I’d probably be on my third or fourth generation Honda by now. But I am not. And I wondered what it would take for a company to build a brand that not only attracts customers, but also retains those customers three, four or five years later? Nowadays, motorcycle manufacturers have to accomplish both of these tasks. (and more) to increase their income and stay financially stable. That said, only a few in today’s market have a well-known and respected brand and have built a substantial relationship with their customers. For example, I would put Ducati on my list of super recognizable brands. The Italian brand understands how to not only market their product, but also the need for their customers to have a connection to the business…a family if you will. Jason Chinnock, CEO of Ducati North America, spoke about it at the launch of Ducati’s XDiavel: “The passion for two wheels, twin engines and beautiful roads is shared by everyone…as riders, we are part of a tribe, but we also embrace our individuality.

2016-ducati-record-breaking-sales-1-1024x681-1 Ducati XDiavel

Similar to Ducati, Harley-Davidson would absolutely be on the super recognizable list. While they may not be leading the landscape with cutting-edge technology, there’s no denying the fact that Harley-Davidson has built a brand and it’s recognized around the world. As Willie G. Davidson said, “When you look up the word ‘motorcycle’ in the dictionary, there’s a picture of a Harley next to it..“You could draw comparisons to other companies (BMW Motorrad is one that comes to mind), but these embody and embrace customer obsession. To test this view, I conducted an informal and asked poll: “Would you buy another [insert current motorcycle manufacturer here] and why/why not“The results? Ducati and Harley-Davidson riders are more likely to buy another ‘Duke’ or ‘Hog’ than say a rider who is only interested in maximum horsepower. I will point out that almost all the major players were represented (minus the MV Augustas and Benellis of the world. Aprilia, KTM, etc.) held their own despite their reduced marketing budgets I accept that these results may be skewed due to the small number of applicants and obviously does not reflect the shopping habits of the motorcycling community as a whole.What it does do however, is an insight into how important brand recognition is to a business.

2017-harley-davidson-street-glide-special-review-motorcycle-touring-6 Harley-Davidson Street Glide Special

Which brings us back to the original question:Is there still such a thing as motorcycle brand loyaltyI guess it depends on how you define loyalty. If you define it by “number of units sold to existing customers” and your numbers are off the charts, then yes, there is (and you have) brand loyalty. If however you define it as “the brand that has the cheapest product a customer would buy”, then no, there is no brand loyalty. operating costs are high and profit margins are slim Whether or not you drink one manufacturer’s Kool-Aid and spend your hard-earned cash on another motorcycle from the same manufacturer that you currently ride totally depends on you. In the meantime, it will be interesting to see which companies adapt their branding and marketing campaigns to an ever-changing atmosphere, in order to produce another model year of motorcycles and grow in the process.

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Farm of 35 years of activity of Harley-Davidson motorcycles in Atascadero

Motorcycle Business

A long-time reseller of Harley davidson motorcycles and clothing closed the doors of its 27,000 square foot Atascadero building in the 7900 block from Avenida San Luis Sunday after 35 years of activity.

Gary Bang Harley-Davidson Director Kristy Bang-Popowich said on Thursday that the local market is simply not big enough to support the business.

At its peak, Bang-Popowich said, the store sold around 125 motorcycles a year, but sales had fallen to around 50 in recent years. She said Harley-Davidson has slowly increased the number of outlets authorized to sell its motorcycles and cost the store much of its business outside the county. Harley-Davidson’s push towards online sales then slashed their clothing sales, she said.

“It’s just not an area big enough for our size and we really needed to have that ground traffic,†she said.

The company, owned by Bang-Popowich’s parents Gary and Mary Bang, began as an aftermarket supplier in the San Fernando Valley and began selling the American icon exclusively in 1980.

When it closed, the company had seven employees.

Bang-Popowich said she, her co-manager and sister Lisa Bang and their parents plan to stay in the county.

This story was originally published December 31, 2015 5:09 p.m.

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Enjoying the ride: the motorcycle company celebrates its 50th anniversary | Jackson County Chronicle

Motorcycle Business

Cassandra Colson Reporter

The late Al Muth’s passion for motorcycles was so strong that he couldn’t understand why others didn’t feel the same.

“He just could never understand why everyone in the world didn’t have a motorcycle,†said Muth’s wife Jeri. “He just enjoyed this endless bike.”

Muth’s love for motorcycles – and especially the iconic Harley-Davidson models – is what paved the way for a successful Jackson County business that is known across the country. Al Muth Harley-Davidson marks its half century this year after operating in the city of Adams for just over 50 years.

“The people of Black River have always accepted motorcycles,†said Mark Muth, one of Al’s sons who currently runs the business with his wife, son and 15 employees. “We love it here.

“It was a lot of work, but it was also very rewarding. We have a lot of clients who are good friends – really.

Al got his first motorcycle, a Harley-Davidson, at age 17 after his father sold a cow to pay for the motorcycle, which at the time cost around $ 65. Al eventually went to work as a cycle mechanic, performed at fairs, and traveled across the country on his bicycle before returning to his parents’ farm in Adams town in 1958 with Jeri to milk the cows.

This is what the couple did exclusively until 1960, when they started a chainsaw dealership on the property and began exploring launching a local Harley-Davidson franchise in 1964.

But it wasn’t as easy as approaching the motorcycle company and getting the green light.

Harley-Davidson officials did not want a franchise in the Black River Falls area due to anticipated sales potential: Geographic analysis indicated the Muths could only sell one or two motorcycles from their farm property rural on Snow Creek Road.

“They said no to daddy. He said, ‘That’s good, but I’m going to sell motorcycles, so if it’s not Harley, it will be something else,’ â€said Mark.

Al Muth Harley-Davidson has proven the projection to be wrong. The company sold 10 motorcycles in the first year and 38 years later, in 2003, the franchise sold 199 new motorcycles – the most new cycles in operating history.

The company, which moved to its current location on Highway A in 2000, continues to thrive as it sells new and used motorcycles, Harley-Davidson merchandise, and has a very active after-sales service.

Customers come from near and far to visit the Muths’ business, Mark said.

“That’s the good thing is we’ve been here long enough that the word covers the whole country with t-shirts and different things that we’ve done for people,” he said. . “We’ve been here long enough that people know where we are in the motorcycle business – all over the country, that’s my feeling.”

Dave Holcomb, the company’s service manager, said he was drawn to working at Al Muth Harley-Davidson because of his own passion for motorcycles. He then graduated in agriculture after high school, but jumped at the opportunity to work as a mechanic in the Muth service department when he saw the opening.

He said he was fortunate to work with Al, former mechanic Neil Knudson, and play a role in the motorcycle business which continues to evolve as technology advances.

Motorcycles make people feel like part of a family, he said.

“My heart was in bikes and snowmobiles and there was an opening,†said Holcomb. “It seems (riding a motorcycle) is like joining a family.

“It’s so easy to go to a cycle rally and find good people.

The business has always been a family business, with Al operating it until his death 27 years ago. Jeri worked as an accountant over the years and Mark eventually took over the business. One of Mark’s earliest memories is riding in the sidecar of his parents’ motorcycle, and he would also love rides and races.

“(Getting into the sidecar) was fun – it was exciting,†he said. “I grew up with (motorcycles). That’s why I’m doing it. I’ve grown up with this my whole life. “

Jeri said she had fond memories of the trips she and Al had taken with the motorcycle club they helped found, and she remembers one in particular they took in Nashville that was particularly hot.

“I’m telling you, I think that year we had the very first new air-conditioned car. It was so hot there and when we got to the motel, I said to Al, we were almost toast, and I said, “You know, we have our first new air conditioned car and where is it?” He’s sitting in the garage at home, â€she laughed.

“We had a lot of fun on the bike.

Al Muth Harley-Davidson is planning a 50th anniversary celebration July 8-11 at its N6630 Highway A location with live music, a show with well-known stuntman Bubba Blackwell, a vintage bike tent and other shows from ‘horse riding. For more information visit www.almuth-harleydavidson.com or call (715) 284-4725.

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Polaris Acquires Brammo Electric Motorcycle Business

Motorcycle Business

Big news coming from the electric motorcycle camp today, as Polaris announced that it has acquired the electric motorcycle business from Brammo Inc. In addition, Polaris is acting as a leading investor in a Brammo recapitalization that allows the company to focus exclusively on the design, development and integration of electric vehicle powertrains.

Going forward, the two companies will leverage Polaris’ leadership position in the global powersports industry to market a variety of electric vehicles using Brammo’s lithium-ion electric transmission technology. In the meantime, this will allow Brammo to continue developing its electric vehicle powertrains. Brammo supplies these products, including the Brammo Power battery pack and Brammo Power vehicle management systems, worldwide to a wide variety of OEMs. As part of this transaction, Polaris will use the acquired assets to begin manufacturing electric motorcycles in the second half of 2015 at its plant in Spirit Lake, IA.

“We have enjoyed our involvement with Brammo Motorcycles over the past three years, and our enthusiasm for their advanced lithium-ion electric drivetrain technology has grown with their improvements in cost and performance. Polaris and Brammo share a goal of adding the most advanced, high-performance electric solutions to Polaris’ powersports product portfolio, â€said Scott Wine, President and CEO of Polaris.

The deal allows both companies to be more agile during the development cycle with a clear responsibility for selling products that exemplify Polaris’ standard for delivering world-class vehicles.

Polaris has been a strategic investor and partner of Brammo since 2011. During this time, the companies have collaborated on a number of projects in motorcycles, all-terrain vehicles and on-road.

“Today’s announcement not only reinforces Polaris’ commitment to providing lithium-ion electrical solutions to our consumers, but also the ability of this partnership to continue to innovate and develop power transmission technology of tip, â€Wine said. “We anticipate a return on these investments and believe the new alignment brings us much closer to providing world-class electrical solutions for all of our products. “

Considering Polaris’ stake in Victory and Indian Motorcycles, the experience, resources and capital that Polaris brings to the table can only be seen as positive in the e-bike landscape.

While we don’t know about Polaris’ long term plans with Brammo, a more immediate prediction is of Polaris / Brammo / Victory / Indian beating rival Harley-Davidson and Project Livewire to the punch of the electric motorcycle. Either way, Polaris is clearly positioning itself to become a major player in the e-bike / alternative energy game.

Klock Werks Kustom Cycles Saw Revenue Increase 650%

Motorcycle Business

Laura and Brian Klock at Bonneville Salt Flats, Utah.

Crosswinds of 50 to 60 miles per hour can appear out of nowhere, even on a sunny day, and this is especially dangerous when trying to overtake a much larger vehicle, such as a semi-truck.

“A motorcycle has an elevator,†said Brian. “And the faster you go, the more it lifts, which creates a dangerous wobble.”

Klock Werks Kustom Cycles set out to resolve this issue.

Brian Klock started Klock Werks in 1997 as a one-car garage in the city of about 15,000 people. He offered motorcycle customization, which was a natural consequence of what he had been doing for years. In 2004, he and his wife Laura also began to design and sell their own pieces.

“It was a lot of buddy trading and sweat equity,†he said. “I was driving from Chicago to California to test an exhaust or other part; a magazine editor got wind of it, took a picture of the bike and put it on the cover. It has helped publicize our name. ”

Related: Hot Business to Start Now

Klock said he made a profit during those years, with annual sales of around $ 350,000, much of which was spent on developing new parts.

But it wasn’t until he created the Flare Windshield that the business really exploded.

Klock had the idea for a custom shield when he and his family were driving home from the Bonneville Motorcycle Speed ​​Trials in 2006. Laura had set records of 137 and 146 miles per hour on a Harley Davidson intended for the cruise. But even though the bike was customized for high speed, it wobbled when it hit around 125 miles per hour.

“On the way back I had my hand out the window, and it made me think, ‘How do we tilt the windshield so we can add downforce?’†Said Brian.

Upon his return to Mitchell, he began to design the prototype of a curved windshield, which would essentially act as a spoiler and prevent heaving.

“There had been a lot of crashes on those bikes at 80 or 90 miles per hour,†he said. “It was dangerous and the bike was basically floating.”

Related: Renaissance of America’s Dead Factories

With the materials they had in store, Klock designed the Flare Windshield, a curved polycarbonate shield that makes the front of the bike more aerodynamic and much more stable.

In December 2007, Klock introduced it to its biggest distributor, who thought they could sell 500 a year.

“I went in front of their fifty national sales reps and said ‘I’m going to sell 20,000,’” Klock said. “I had a year to prove it.

Six years later, the Flare Windshield – which sells for between $ 179 and $ 199 – is the best-selling part for Klock Werks, accounting for around 80% of the company’s revenue.

“We sold 18,500 in the first year,†Klock said. “We’ve caught the attention of every powersports magazine. And we’ve sold about 20,000 every year since.”

He said revenue had grown 650% since 2006. Sales have been strong even during the recent downturn: they made $ 2.5 million in sales in 2008, largely because of the Flare.

Related: The Craft Beer Craze Is Finally Hitting The South

What started out as a store with seven employees selling eight pieces now has 17 employees and 485 pieces. The boutique – and the Flare – has always been a family affair.

“This windshield is my baby,†said Laura Klock, who is in charge of marketing for the company. “And our philosophy is that people buy from people. That’s why we have a ‘try it before you buy’ guarantee.”

The Klocks and their daughters Erika, 23, and Karlee, 20, who also hold land speed records, regularly go to motorbike shows and races where they sell directly to customers, helping to install windshields. broken.

The Flare is made in Minnesota, and all of Klock Werks’ products except one are made in America. Klock emphasized how important it is for him to keep it that way.

“Everyone told me I couldn’t do it since Mitchell, SD,†Klock said. “Even though I distribute worldwide, I feel like it’s a moral obligation for me to do it at home and try to make someone else’s dream come true.”

CNNMoney (New York) First published on May 22, 2014: 7:03 AM ET