Harley-Davidson has reported its third quarter sales and earnings to its stockholders, and the Bar & Shield brand is showing a modest up-tick in its Q3 sales. Growing 5.1% globally (61,838 units) for Q3, compared to 2010, Harley-Davidison has had similar growth in the US, where sales were up 5.4% (42,640 units). Year-to-date (YTD) sales globally were up 4.9% (194,829 units), continuing the bottoming-out trend in 2011 (up 4.7% in the US, or 127,930 units). Despite the modest sales increases, Harley-Davidson’s financials are significantly stronger than before, with the company posting a 95.9% increase in income from continuing operations.
Harley-Davidson had some good news to report in its Q2 2011 financial report, as the Milwaukee company reports selling 53,599 units to customers in the US during the three-month period, and total of 83,396 units worldwide (120,642 units worldwide so far this year). These sales figures translate into a 5.6% sales increase worldwide, and an even more impressive 7.5% sales bump in the United States market.
While those increases might seem modest, CEO Keith Wandell’s restructuring efforts have clearly been paying off for the Bar & Shield brand as operating income was up 36.8% for Q2, while revenue was up only 18% to $1.34 billion. This is also the first year-over-year quarterly rise for unit sales that Harley-Davidson has seen since the Q4 2006. Read that last sentence again, but it’s sort of a big deal for Harley-Davidson.
Artist Graham Smith is helping play with our brand awareness today, as the British graphic designer has done up several companies’ logos with the name of another (usually a competitor). The effect is an interesting one, as your mind tries to sort out the shapes it recognizes with the name it actually sees, much like the Stroop Effect in psychology studies – an interesting phenomena where names of colors were shown in a font whose color was different than the name. When subjects were asked to say out loud the color used for the font, it often resulted in the tendency to want to say word shown instead. We had the same effect looking at Smith’s work, making this an interesting take on logo design and a bit of fun psychology all wrapped-up into one. Examples after the jump.
The rumors that Harley-Davidson has been eying a liquid-cooled motor design have always been in abundance, and 10 years ago we saw the company test the waters of that pool with the Porsche-engineered lump that was found in the V-Rod. While the VRSC line may not have been as big of a success compared to the other models in Harley’s line-up, the water-cooled bastard child of Milwaukee still seems to sell in the tens of thousands each year, even after nearly a decade of only cosmetic revisions.
Faced with an aging demographic, an uninspired motorcycle line-up, and 21 takes on the same motorcycle design, there’s a push internally at Harley-Davidson to break-out and find a new way to engage riders, especially younger riders. The core ethos of change seems to start at the motor itself, and Harley-Davidson has already done the rounds at various electric motorcycle and drivetrain companies. There also exists amount of external and internal pressure over Harley’s pervasive use of air-cooled motors, and now whispers of a water-cooled v-twin power plant have gotten louder in Milwaukee. With those rumors now reaching a boiling point (see what I did there?), Harley-Davidson has patented a very clever way of adding liquid-cooling to its iconic v-twin motor design.
Lawyers have begun an investigation into the recent rumors that private equity firm Kohlberg Kravis Roberts (KKR) was targeting Harley-Davidson for a stock takeover. Suspecting that Harley-Davidson executives breached their fiduciary responsibility to Harley-Davidson, Inc., investigators were tipped-off to potential breaches at the Milwaukee company after its stock rose by $2 (+5%) immediately after the rumors were first published in financial reports.
It seems like only two months ago that I wrote that the “Great Distribution Experiment is Over“, and that electric motorcycle companies Brammo and Zero Motorcycles need to get on-board with established motorcycle distribution methods. As I mentioned in what I’m sure many found to be a snooze fest of an article, there are of course drawbacks and flaws to the dealership model, but for early-stage cash-strapped companies like the ones in the E2V market, this is a battle of the middleman is best to be fought another day.
I have to apologize to my regular readers, as I’m sure the relevancy of such an article to your daily “eat, sleep, ride” lifestyle was dubious at best, but from time-to-time the words on this site are meant for a select group, but better aired publicly (even if it does land me in a heap of trouble from time-to-time). As such, it’s refreshing to see then that Zero has recently announced its signing of several key dealerships, and now we get word that Brammo has hired Jim Marcolina away from Harley-Davidson, to build the Ashland, Oregon company’s dealer development team. So…umm…group hug?
Before yesterday afternoon, I had a hard time getting excited about Polaris. I think they make snowmobiles…but I’m not sure. This is how engaged with their brands I was, but of course this has all changed with the news that Polaris Industries, Inc. has acquired Indian Motorcycle for still undisclosed terms. Covering the business strategy side of motorcycling for the past two and a half years, I can tell you that there are few moves or decisions that strike me as truly inspired, but that events of the past 24 hours are surly Mensa-worthy.
Before I can talk about Polaris and Indian, I have to talk about another motorcycle company: Harley-Davidson. Kingdoms are fated to topple, but looking at Harley-Davdion and its dominance in the American motorcycle scene, let alone in popular culture, the legacy of the Milwaukee company seems assured to endure the test of time. So many companies have tried to be the next Harley, and all of their failures reinforce that concept that no company does “Harley” better than Harley-Davidson. Virtually creating the the legacy cruiser segment, and Harley-Davidson’s success in this regard is also the double-edged sword that is slowly prostrating the Milwaukee brand.
If I had to give one piece of advice to a company wanting to compete with Harley-Davidson, it would be real simple: don’t. Seemingly at the risk of painting itself into a corner, Harley-Davidson has refined its marketing message so thoroughly that it has honed in on a particular type of rider, and exhibits such a distinct persona of motorcycling that the company’s identity has found itself heading full-speed down a one-way street of branding. Thus the low-hanging fruit of competing with Harley-Davidson is to go after the brand where it cannot go.
Polaris Industires has just announced its acquisition of the historic Indian Motorcycle company. Terms of the deal have not been disclosed, but the deal sees one of the most historic names in American motorcycling finding a home with a major player in the motorcycle industry. The move is an interesting one for Polaris, as the company already owns cruiser and touring motorcycle manufacturer Victory Motorcycles.
According to the company press release, Indian will function as an autonomous business unit, but will likely gett help from Polaris’s engineering department, along with the obvious supply chain and purchasing power of the larger brand.
Before the opening bell on the New York Stock Exchange, Harley-Davidson posted its first quarter numbers of 2011 this morning. Despite earnings being up 350% when compared to Q1 of 2010, Harley-Davidson is showing only a modest turnaround compared to its competitors, as worldwide sales are only up 3.5% compared to last year’s. Still, the company has to be pleased with being back in the black, as Harley-Davidson reported over $119 million in profits (Harley-Davidson made $33.3 million in Q1 2010).
The reason for the less enthusiastic news is because these positive numbers were fueled by the company’s financial services division, which is finally posting profits after nearly collapsing the company during the recession, instead of an increase in bike sales. While Harley-Davidson is touting a 155% revenue increase from the HDFS side of accounting books, it goes without saying that when one does barely any financing in 2010, it’s easy to post results like this. Furthermore, future HDFS financial success is pegged to new Harley-Davidson motorcycle sales, which still show a bleak future.
Fresh on the heels of Wisconsin’s Harley-Davidson branded license plates, the Keystone State is set to make Harley-Davidson the official motorcycle of Pennsylvania. An honor already bestowed by Wisconsin this past February, Pennsylvania also has a bill in the state’s House of Representatives that would give special status to the Bar & Shield.
Sponsored by Representative William Kortz (D-Allegheny County), the Pennsylvania law would pay homage to the “thousands of Harley-Davidson enthusiasts [who] have trekked to York to witness firsthand the living legacy of Harley-Davidson USA.” The bill continues on with some feel-good patriotic sentiment, saying that “the Harley-Davidson motorcycle is a true-blue American iron horse manufactured in Pennsylvania by American workers using American steel.”