American Motorcycle Dealer AMD 224 March 2018 - Page 4

Shark Bait A s this edition of AMD Magazine went to press, Harley’s stock price was trading at a three-month low of around $45.00 (in fact $45.27 as I type), which is not far above the one-year low of $44.78 seen last November and showing every sign that it could get into the February 2016 five-year low territory of $38.72 again at some stage in the next few months. There has been considerable share holder churn in the weeks since the company unveiled its 2017 numbers, though mostly with investment houses adding shares at what looked, at the time, like bargain prices – the share price plummeted from $55.29 the evening before Harley’s Jan 30 fiscals were released, prompting a flurry of activity in the upper $40.00 region. As it turns out, any ROI on those punts is clearly going to be longer term than the investors concerned would have been hoping for. As business news agency Reuters pointed out in their Feb 6 interview piece with Harley CEO Matt Levatich (see page 8), the share price has dropped a massive 23 percent since the 12-month high of $62.94 seen on March 15; that is a loss of some $18.00 a share in barely a year at a time when, blips notwithstanding, Wall Street has been setting records and pulling up trees. Indeed, in losing approximately $10.00 since the January 30 announcement, more than half of that decline has come in just the last three months alone. The share purchases seen since have not stopped the haemorrhage, and neither has Harley’s continued adherence to the gospel of (theoretical) shareholder value by yet again pimping an increased dividend for 2018, one the company clearly can’t afford, given the other priorities that it should be focussed on. Priorities such as marketing, product development, and above all, dealer programs and support, and the kind of consumer incentives that might help shift metal at these difficult times. It is all well and good Harley bitching about discounting by competitors, but while CEO Levatich’s determination not to be drawn into a discount war maybe be righteous (agreed, in terms of brand value that way madness lies), it doesn’t need to preclude providing help to their dealers, their retail shop window, and getting creative where programs are concerned. tandard playbook initiatives would be zero percent on the finance for the first three years/warranty duration; further extended warranties; free H.O.G. membership for the duration of the finance/warranty; guaranteed trade-in and resales; free insurance for the duration of the warranty/finance; free labor on interval servicing for the duration of the finance/warranty; accessory packages – at Harley’s Screamin’ MRSPs relative to PAG item unit costs, it wouldn’t actually cost the factory very much at all to be able to offer anything up to 20 percent or more of bike MRSP in freebies, allowing them to preserve the motorcycle MRSP and protect the brand itself, as such, from the scourge of discounting. Is Harley doing any of these things? Everybody bemoans the problem as being potentially viable new generations of customers not showing inclination to engage with motorcycles. Actually, isn’t the problem one of motorcycling not showing an inclination to engage with those potentially viable new generations of customers? I don’t care what the issues are, they have long since been identified – now is the time to be “working it,” not still trying to figure it out! We Boomers were the radical new business challenge once, and look how that played out. Engaging customers on their own terms has always been a cornerstone of capitalism – this is nothing new. If the motorcycle (and other) markets want to persuade generations of sofa surfers to sample their goods, then start by getting the message right before you, and worry about how to deliver it later. Start by talking their language as consumers rather than by trying to teach them ours. Make it easy for them to say yes. Oh, and those incentives I was talking about? Where training is concerned, in exchange for purchase commit, take the rider all the way from first start-up to being fully licensed – make it easy for them, make it safe, own them. As for not being able to count how many recipients of Harley training actually go on to buy a new or used model, and if not a Harley, then which brand, or none etc - not knowing simple metrics such as that is a disgrace. Why isn’t a fully comprehensive MSF standard, all-dealers based “Learn to License” program like this offered free and tied to new or used bike purchase? Am I missing something here? o exploit and push Millennial “experiential” and social hot buttons, extend H.O.G “Road Captain” thinking to offer a dealership based training-into-c