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On Monday, Harley-Davidson (HOG - Free Report) revealed the details of its “More Roads to Harley-Davidson” growth plan. The strategy, which extends to 2022, is aimed at helping the motorcycle company reach its 2027 objectives, such as building 2 million new riders in the U.S, achieving growth without increasing environmental impact, and boosting its international business.
Business sustainability is a major concern due to current riders aging and general motorcycle demand falling in the U.S. In response, the Milwaukee-based company is planning to release new products that better align with market trends and the tastes of younger generations.
A main part of the new product initiative will be a middleweight platform of motorcycles ranging from 500 cc to 1250 cc, set to launch in 2020. The smaller models will be a significant shift away from typical bigger engines that run at around 1700 cc.
Further, Harley plans to release the “LiveWire,” the company’s first electric bike, in 2019. The move offers the company growth potential within a relatively new electric motorcycle market that could expand. Harley can benefit from early market entry while still being able to leverage its already existing network. The company noted that current electric motorcycle brands are mainly startups that “lack distribution and ability to scale.”
Of course, Harley-Davidson doesn’t want to make the same mistake that long-standing U.S car manufacturers, such as Ford (F - Free Report) and General Motors (GM - Free Report) , made by allowing newcomer Tesla (TSLA - Free Report) to capitalize on the electric car market.
The push for customer expansion will also be made internationally by launching a 250 - 500 cc motorcycle in India and investing in China. These emerging markets provide a unique opportunity for Harley to increase its global presence.
Performance has been poor lately, and Harley-Davidson needs the success of these initiatives. Shares of the company have fallen over 18% this year as a result of falling sales in the U.S and increased costs from trade tariffs.
In the second-quarter, U.S sales fell 6.4% from the same period in 2017. Moreover, the company stated its costs would go up $55 million this year because of higher prices for steel and aluminum.
Even on reports of the new plan, shares still fell .54% for the day, revealing the market’s appropriate skepticism.
Harley’s main objective is to turn younger generations into motorcycle riders, but that won’t be an easy task. Millennial consumers are turning more to convenient modes of transportation and ridesharing platforms like Uber, and owning a motorcycle, electric or not, might simply not be an attractive option anymore.
CEO Matt Levatich understands that carrying out the plan will be challenging, stating that “This whole plan to create new riders is a bold, ambitious and bordering-on-audacious goal … but there is no other option.”
Ultimately, Harley-Davidson is another company that has been forced to adapt to a changing landscape across industries derived from younger generations becoming the main consumers of products. Moving forward, the success of this growth plan and the new products will reveal whether Harley-Davidson can prosper in the future—or if it will be left in the past.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Can New Growth Plan Electrify Harley-Davidson?
On Monday, Harley-Davidson (HOG - Free Report) revealed the details of its “More Roads to Harley-Davidson” growth plan. The strategy, which extends to 2022, is aimed at helping the motorcycle company reach its 2027 objectives, such as building 2 million new riders in the U.S, achieving growth without increasing environmental impact, and boosting its international business.
Business sustainability is a major concern due to current riders aging and general motorcycle demand falling in the U.S. In response, the Milwaukee-based company is planning to release new products that better align with market trends and the tastes of younger generations.
A main part of the new product initiative will be a middleweight platform of motorcycles ranging from 500 cc to 1250 cc, set to launch in 2020. The smaller models will be a significant shift away from typical bigger engines that run at around 1700 cc.
Further, Harley plans to release the “LiveWire,” the company’s first electric bike, in 2019. The move offers the company growth potential within a relatively new electric motorcycle market that could expand. Harley can benefit from early market entry while still being able to leverage its already existing network. The company noted that current electric motorcycle brands are mainly startups that “lack distribution and ability to scale.”
Of course, Harley-Davidson doesn’t want to make the same mistake that long-standing U.S car manufacturers, such as Ford (F - Free Report) and General Motors (GM - Free Report) , made by allowing newcomer Tesla (TSLA - Free Report) to capitalize on the electric car market.
The push for customer expansion will also be made internationally by launching a 250 - 500 cc motorcycle in India and investing in China. These emerging markets provide a unique opportunity for Harley to increase its global presence.
Performance has been poor lately, and Harley-Davidson needs the success of these initiatives. Shares of the company have fallen over 18% this year as a result of falling sales in the U.S and increased costs from trade tariffs.
In the second-quarter, U.S sales fell 6.4% from the same period in 2017. Moreover, the company stated its costs would go up $55 million this year because of higher prices for steel and aluminum.
Even on reports of the new plan, shares still fell .54% for the day, revealing the market’s appropriate skepticism.
Harley’s main objective is to turn younger generations into motorcycle riders, but that won’t be an easy task. Millennial consumers are turning more to convenient modes of transportation and ridesharing platforms like Uber, and owning a motorcycle, electric or not, might simply not be an attractive option anymore.
CEO Matt Levatich understands that carrying out the plan will be challenging, stating that “This whole plan to create new riders is a bold, ambitious and bordering-on-audacious goal … but there is no other option.”
Ultimately, Harley-Davidson is another company that has been forced to adapt to a changing landscape across industries derived from younger generations becoming the main consumers of products. Moving forward, the success of this growth plan and the new products will reveal whether Harley-Davidson can prosper in the future—or if it will be left in the past.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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