American Motorcycle Dealer AMD 224 March 2018 - Page 8

Indeed, following the release of its own 4Q and FY 2017 fiscals, Polaris CEO Scott Wine responded to investor suggestions that Polaris was perhaps falling behind the curve in E-bike terms, after having been well ahead of Harley. Wine said that, for them, it wasn’t so much a technology issue but one of ROI – suggesting that it was difficult, at this stage, to see a pathway to profits in the sector in the short to medium term. In the fourth quarter, Harley-Davidson worldwide retail motorcycle sales declined -9.6 percent compared to the prior year. Harley-Davidson domestic U.S. retail motorcycle sales were down -11.1 percent in a market that was down by around half that at -6.5 percent compared to the year-ago quarter. Fourth quarter market share was down on 3Q 2017 and 4Q 2016 share at -50.8 percent in the 601+cc segment. The commitment to investing in product development was apparent again in February with the announcement of two additional new 1200cc Sportsters. The new models look excellent, but some observers were immediately questioning the extent to which they really marked a “redefinition of its product in traditional spaces” and represented an expansion “into new spaces” of the kind that could excite new customers. If we are counting correctly, that takes their 100 in 10 years “high impact new model” blitz to 16 now? The Forty-Eight Special and Iron 1200 Sportsters are said to “fuse throw-back design with modern performance” and “garagebuilt attitude.” The company says that the new designs “began with inspiration from our customers – reflecting what is happening in customization on the streets. Each motorcycle features a powerful 1200cc engine and brings back a sense of 70s soul that only H-D can bring. “Since its introduction in 1957, Sportster motorcycles have been repeatedly reimagined in the hands of both the Motor Company and bike owners: the Sportster as a bobber, a chopper, a scrambler and a cafe racer; as a hero on flat tracks and drag strips and road-race courses; as an accessible entry-point for first-time riders; and as a custom-of-one cruiser. “Since its inception, the Sportster has offered the perfect combination of size, power and character that makes it appealing to so many different riders,” said Brad Richards, Harley-Davidson V.P. of Styling & Design. “A Sportster is a relatively easy bike to strip down and reinvent. What we’ve done to create the new Iron 1200 and Forty-Eight Special is what Sportster owners have been doing with their own bikes for generations.” Described as an “Urban Brawler,” the Iron 1200 has a satin-black Mini Ape handlebar that Harley says is “an essential element of the garage-built chopper look that adds instant attitude and gives the rider a fists-in-the-wind posture. The gloss black speed screen framing the headlamp amplifies the attitude of the tall bars and is intended to offer some wind deflection at speed and provides a space for easy personalization. “The fast-back Cafe solo seat flows to the rear fender and is shaped to help hold the rider in position when the torque of the Evolution 1200 kicks in. Finished with all-black 9-spoke wheels and a solid black belt guard and rear sprocket, the Harley-Davidson Smart Security System and anti-lock braking system (ABS) are factory-installed options for the Iron 1200 model. Meanwhile, the “burly front end of the Forty-Eight Special – a wide front tire framed by fat forks – looks especially "The EV motorcycle market is in its infancy" menacing when topped with a glossblack Tallboy handlebar. “We specifically selected the Tallboy bar for its shape,” said Richards. “It offers less pull-back than the Mini Ape, a look that really works with the steamroller front end and the smaller fuel tank on the Forty-Eight Special model.” Harley says that “the 2.2-gallon “peanut” Sportster fuel tank features rows of bold, horizontal stripes framing a simple Harley-Davidson text logo. The Evolution 1200 engine features a black top end over an expanse of brilliant chrome covers, plus chrome muffler and exhaust shields. Chrome lower rocker boxes, pushrod tubes and tappet covers contrast with the black cylinders to highlight the V-Twin engine shape. “High-performance Michelin Scorcher 31 tires front and rear are mounted on black split 9-spoke cast aluminum wheels. The Harley-Davidson Smart Security System and anti-lock braking system (ABS) are factory-installed options for the Forty-Eight Special model.” “Only 35 percent of the riders trained bought a bike” In a February interview with the Reuters Financial News Agency, Harley CEO Matt Levatich called on investors to be “patient” with his strategy to turn around the slump in demand for new model sales and denied that the company was exploring a merger with a rival or a private equity buyout “as some investors have speculated,” according to Reuters. Describing the “the ridership program” as one that would “transform the motorcycle-maker into a customer-creator” but admitted that “he does not have an answer when it will return Harley to sales growth in the United States” saying that “mindset shifts are not something that happen overnight … but that’s very much core to the 10- year strategy for the company.” “The moment, however, we feel that the ownership structure of the company...is starting to dictate our strategy, that’s the moment to consider whether that ‘share price has fallen 23 percent since March 2016’ ownership model is the right model,” he said. “So, it is not the case. We are very clear in our strategy.” While the piece published by Reuters doesn’t go as far as the January Motley Fool article that suggested that some investors may be eyeing a change of board and senior leadership, it does point to the 23 percent fall in Harley’s stock price since March last year, and in response to Levatich pointing to the 32,000 new riders that went through Harley’s training program, the author did make the point that “more riders, however, do not necessarily mean higher sales” and pointed to one Illinois based dealer as commenting that “only 35 percent to 40 percent of the riders trained at his dealership last year bought a new or preowned bike.” The Reuters piece was no less positive about Levatich’s E-bikes in 18 months announcement, Matt Levatich, Harley CEO - “We are not going to discount to increase our market share.” with Levatich conceding that “there are some practical problems with EV that still most auto companies are also struggling with. It is very expensive.” Reuters conceded that “Harley is still the dominant player in the heavyweight motorcycle market in the United States,” but went on to say that “its market share has steadily fallen to 50.8 percent from 58 percent in 2013,” while accepting that “Harley’s challenges are in part related to demographic shifts bigger than its strategy or products. “Overall, new motorcycles retail sales in the United States have more than halved since 2006 as younger people shun big motorcycles, according to the Motorcycle Industry Council. “Harley has also stuck to a strategy of protecting profit margins and limiting discount offers, even as rivals such as Polaris Industries Inc (PII.N) are undercutting Harley prices to move bikes out of their showrooms. “Polaris enjoyed a 30 percent on year jump in North American retail sales in the last quarter, whereas Harley’s sales dived 10 percent.” Levatich is quoted as attributing the divergent performance to “math” saying that “growth percentages of a small base are easy to achieve. When you have a high base like ours, a little bit of decline shows up very quickly. “We are not going to discount to increase our market share.” The piece was written by Rajesh Kumar Singh and published by Reuters on February 13. 8 AMERICAN MOTORCYCLE DEALER - MARCH 2018 www.AMDchampionship.com Indeed, following the release of its own 4Q and FY 2017 fiscals, Polaris CEO Scott Wine responded to investor suggestions that Polaris was perhaps falling behind the curve in E-bike terms, after having been well ahead of Harley. Wine said that, for them, it wasn’t so much a technology issue but one of ROI – suggesting that it was difficult, at this stage, to see a pathway to profits in the sector in the short to medium term. In the fourth quarter, Harley-Davidson worldwide retail motorcycle sales declined -9.6 percent compared to the prior year. Harley-Davidson domestic U.S. retail motorcycle sales were down -11.1 percent in a market that was down by around half that at -6.5 percent compared to the year-ago quarter. Fourth quarter market share was down on 3Q 2017 and 4Q 2016 share at -50.8 percent in the 601+cc segment. The commitment to investing in product development was apparent again in February with the announcement of two additional new 1200cc Sportsters. The new models look excellent, but some observers were immediately questioning the extent to which they really marked a “redefinition of its relatively easy bike to strip down and reinvent. What we’ve done to create the new Iron 1200 and Forty-Eight Special is what Sportster owners have been doing with their own bikes for generations.” Described as an “Urban Brawler,” the Iron 1200 has a satin-black Mini Ape handlebar that Harley says is “an essential element of the garage-built chopper look that adds instant attitude and gives the rider a fists-in-the-wind posture. The gloss black speed screen framing the headlamp amplifies the attitude of the tall bars and is intended to offer some wind deflection at speed and provides a space for easy personalization. “The fast-back Cafe solo seat flows to the rear fender and is shaped to help hold the rider in position when the torque of the Evolution 1200 kicks in. Finished with all-black 9-spoke wheels and a solid black belt guard and rear sprocket, the Harley-Davidson Smart Security System and anti-lock braking system (ABS) are factory-installed options for the Iron 1200 model. Meanwhile, the “burly front end of the Forty-Eight Special – a wide front tire framed by fat forks – looks especially "The EV motorcycle market is in its infancy" product in traditional spaces” and represented an expansion “into new spaces” of the kind that could excite new customers. If we are counting correctly, that takes their 100 in 10 years “high impact new model” blitz to 16 now? The Forty-Eight Special and Iron 1200 Sportsters are said to “fuse throw-back design with modern performance” and “garage- built attitude.” The company says that the new designs “began with inspiration from our customers – reflecting what is happening in customization on the streets. Each motorcycle features a powerful 1200cc engine and brings back a sense of 70s soul that only H-D can bring. “Since its introduction in 1957, Sportster motorcycles have been repeatedly reimagined in the hands of both the Motor Company and bike owners: the Sportster as a bobber, a chopper, a scrambler and a cafe racer; as a hero on flat tracks and drag strips and road-race courses; as an accessible entry-point for first-time riders; and as a custom-of-one cruiser. “Since its inception, the Sportster has offered the perfect combination of size, power and character that makes it appealing to so many different riders,” said Brad Richards, Harley-Davidson V.P. of Styling & Design. “A Sportster is a 8 menacing when topped with a gloss- black Tallboy handlebar. “We specifically selected the Tallboy bar for its shape,” said Richards. “It offers less pull-back than the Mini Ape, a look that really works with the steamroller front end and the smaller fuel tank on the Forty-Eight Special model.” Harley says that “the 2.2-gallon “peanut” Sportster fuel tank features rows of bold, horizontal stripes framing a simple Harley-Davidson text logo. The Evolution 1200 engine features a black top end over an expanse of brilliant chrome covers, plus chrome muffler and exhaust shields. Chrome lower rocker boxes, pushrod tubes and tappet covers contrast with the black cylinders to highlight the V-Twin engine shape. “High-performance Michelin Scorcher 31 tires front and rear are mounted on black split 9-spoke cast aluminum wheels. The Harley-Davidson Smart Security System and anti-lock braking system (ABS) are factory-installed options for the Forty-Eight Special model.” AMERICAN MOTORCYCLE DEALER - MARCH 2018 “Only 35 percent of the riders trained bought a bike” In a February interview with the Reuters Financial News Agency, Harley CEO Matt Levatich called on investors to be “patient” with his strategy to turn around the slump in demand for new model sales and denied that the company was exploring a merger with a rival or a private equity buyout “as some investors have speculated,” according to Reuters. 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