Harley Davidson published a report on the first quarter of 2020 and spoke about measures to reduce the damage from COVID-19, as well as unveiled a new strategic plan for promoting the company.
It comes as no surprise that the first quarter results are not very encouraging, given the recent resignations of CEO Michael Levatich (as it was) and COO Michel Cumbier, plus an attempted proxy battle (a proxy battle is a union (read: conspiracy) multiple shareholders to recruit a joint controlling stake or vote and push for decisions that are inconsistent with current company policy) by the minor shareholder of Impala Asset Management. And all this even before the COVID-19 crisis showed its true colors.
For those interested in the numbers, Harley Davidson reports sales of 40,439 units of motor vehicles for the quarter, down 17.7% from last year’s result for the same quarter of 49,151 units. International sales grew 20.7%, while domestic sales in the US market, which is Harley’s main market, fell 15.5%. According to Harley, US retail sales were up 6.6% until the coronavirus crisis hit the economy in general and motorcycle manufacturing in particular in mid-March.
Revenue fell across all segments, including motorcycle sales (-6.8%), resulting in Q1 operating income of $ 84.6 million (-22.0%). Harley Davidson’s financial services division also faced operating income of only $ 22.9 million (-60.9%) despite a 5.1% increase in revenues due to “increasing the provision for loan losses associated with the impact of the COVID-19 crisis” (HDFS Financial Services is a branded “credit department”offering loans, insurance, assistance in the resale of BOTH motorcycles and even bank cards – such a small bank for their)
Harley Davidson has outlined measures to tackle the crisis and prepare for recovery from it. Measures include cost savings (including a freeze on hiring, bonuses, and temporary pay cuts), as well as rescheduling new product launches, maintaining liquidity, supporting dealers and, of course, continuing to protect the safety and health of employees. Harley says it has already restarted a number of production facilities and will gradually remove restrictions on remote work.
In addition, Harley Davidson announced a new five-year strategic plan called “The Rewire” (Traditionally, HD marketers come up with rather capacious and multifaceted names, which cannot be adequately translated. Here it is something like “re-electrification” or “new wiring”, in a word – new energy through fresh wires). The Rewire will make changes to the current plan “More Roads” (More roads for Harley Davidson). The new plan will take full effect in the coming months and will focus on refocusing the company’s core capabilities on critical markets.
In practice, this probably means that Harley Davidson will return to core products – cruisers and heavy luxury touring. That said, Harley says they still have interest in the tourenduro, streetfighter and lightweight electric motorcycle markets, so Pan America and Bronx still make sense to expect this year (some rumors about new models), and LiveWire remains an important part of the HD line. In retrospect, it becomes clear that Harley Davidson has invested a fair amount of resources in the development and marketing of these products, so they can only continue the work they started, but set more honest and achievable goals. But the fate of other products announced earlier is still less certain – we are talking about smaller e-bikes, e-bikes and new models of liquid cooling of the Custom series. (We can judge about electric bicycles and electric bicycles by indirect news)
Harley davidson pan america
Harley plans to focus on key, most profitable markets, which means that their targets in the European market will be reduced. The new liquid-cooled Revolution Max models and platform are an essential part of the company’s European strategy, but Harley Davidson has enough work on the current lineup as most current models still fall short of the Euro 5 econo- mies, which will likely become mandatory later this year. Some manufacturers are petitioning for a deferral, and Harley is likely to support this effort.
The Rewire plan also includes changes to the structure of the company that will allow it to be more mobile and easier to adapt to new realities after the COVID-19 crisis ends. In part, this will also affect the timing of the launch of the products – traditionally it is the end of August – the beginning of September – to better match the beginning of the motorcycle season.
Details of The Rewire’s plan will be announced during the second quarter of 2020.