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Harley-Davidson has announced its Q1 quarterly earnings today, and the Milwaukee-based company posted a $68.7 million profit. This news comes after Harley-Davidson posted a $218 million loss last quarter, and finished in the hole over $55 million for the 2009 year. Harley’s return to profitability is partially due to the company’s restructuring of its financial services, which are once again generating money for the iconic American brand. Harley-Davidson Financial Services posted a profit of $26.7 million this past quarter, almost a third of HD’s net income in Q1.

35 motorcycles, 7 model lines, 4 chassis, 3 motor families, & 1 market segment, that’s Harley-Davidson’s product line by the numbers. Where many large production motorcycle companies might have 30 or so motorcycles that span the entire gamut of motorcycling’s different sub-markets, Harley-Davidson has put all of its eggs in the heavy cruiser market. This singular pursuit of one market segment has not only been the cause for Harley’s success, but also a significant contributing factor to the company’s recent downfall, which has led to a recently rumored leveraged buyout.

Blasphemy, heresy, stupidity, sacrilege, un-American, and downright irreverence. Go ahead, get all those words out of your system. I’ll wait. The default opinion of marketers, analysts, and the general population is that Harley-Davidson has one of the strongest brands in the United States, this being confirmed by the fact that every business student in America has studied Harley’s marketing efforts if they’ve ever taken a brand management course. So why would I start a three-part series on how to fix Harley-Davidson by arguing to change one of the most revered marketing houses in the motorcycle industry?

For the Buell and MV loyal, Harley-Davidson’s latest earnings report should provide all the information as to why the Milwaukee manufacturer had to close and sell those brands respectively. Reporting a nearly 90% loss in annual income, Harley-Davidson earned only $70.6 million in 2009, compared to the $684.2 million Harley earned in 2008, which results in a staggering loss of income for the iconic motorcycle company.

The Harley-Davidson Sportster Forty-Eight (or is it 48?), has made its way out of Milwaukee in time for the 2010 model year. Based on the Sportster 1200 platform, the Forty-Eight is the latest addition to Harley’s “custom” offering. It differs from its Nightser et al counterparts with a bobber meets cafe racer appeal, but keeps the ubiquitous orange and black color schemes.

Fatties on the front and rear rims, the black on polish Forty-Eight gets its motivation from the 1200cc Evolution v-twin motor that’s wedged into the Sportster chassis. The bike is certainly an attractive piece from Harley-Davidson, but also fails to really distinguish itself from the rest of the Harley line-up. Mirrors are underslung, the license plate is side mounted (we doubt the DOT saw that), and a 2.1 gallon fuel tank keeps things a strictly “around the town” sort of affair.

In conjunction with Harley-Davidson’s Q3 financial results, and shutting down of Buell Motorcycles, the Milwaukee motorcycle manufacturer is announcing that it will be selling Italian sportbike manufacturer MV Agusta.

Harley-Davidson bought MV Agusta just under a year ago, and assumed a substantial amount of debt from the beleaguered company. This past quarter, Harley-Davidson recorded a one-time fixed-asset impairment charge of $14.2 million related to Buell and a goodwill impairment charge of $18.9 million related to MV Agusta.

After releasing grim third-quarter financials today, Harley-Davidson has also announced that it is discontinuing Buell Motorcycles. In a somber video (posted after the jump), Erik Buell confirms the news, and praises the Buell team for taking on the industry giants with “this little American sportbike company.” Buell will continue to sell its motorcycle stock, and Harley-Davidson will continue to honor any warranties and part needs for Buell motorcycles.

With its second quarter sales dropping 35%, Harley-Davidson is going to be trimming its ranks in order to stay afloat. The Milwaukee based company will inject 700 hourly-wage workers, and 300 salaried workers into the ranks of the unemployed, with possibly more joining them in the future. These reductions come after Harley-Davidson earlier this year announced it was eliminating 1,400-1,500 hourly production positions in 2009-2010 along with 300 salary positions.

You may remember the NY Times article that we mentioned a few days ago that was critical of the company’s current status and direction. In response to the NY Times article, Harley-Davidson is running the above ad in an attempt to provide a counter-argument to the criticism that the company is on shaky ground.

It should come with little surprise that Harley-Davidson is again playing on Patriotic themes and rhetoric that shifts the focus from the fact the company has serious issues ahead of it, and to date not clear plan on how they are going to overcome them. In addition to this ad, a message was sent out to all Harley-Davidson employees, read it after the jump.

The New York Times ran a great article this week about the challenges facing Harley-Davidson, both from the current economic depression, and more generally as the quintessential Harley rider gets older in age.

In summation, Harley-Davidson dealers around the US and overseas are seeing sales drop dramatically as people scale back their expensive purchases, and as the access to credit becomes increasingly difficult.

There’s no real surprise there, and any hardcore fan will be quick to tell you that Harley will be back on top once this financial turmoil is over. However, looking farther down the road at Harley-Davidson’s long-term business position, there is additional trouble brewing as well.

Baby boomers account for the majority of Harley sales, and they are getting older. The NY times ends there with its commentary, but we think there’s more to the story on Harley-Davidson and the American bike market in general.