These days, if a company – especially a U.S.-based manufacturer of motor vehicles – is still making money, it’s a miracle. That’s why Harley-Davidson’s First Quarter 2009 revenue report is pretty positive, despite showing a 12-percent drop in global sales and a 38-percent drop in new profits compared to the first quarter of 2008. After all, $117.3 million in profits is $117.3 million in profits. Still, H-D’s CEO Jim Ziemer (about to be replaced by incoming president and CEO Keith Wardell) recognizes that the company will struggle in the tough times ahead, and outlined the necessary strategy to weather the continuing storm.
First, H-D continues to build its “brand investment” with various programs to draw in new customers. You’re familiar with the “dark custom” lineup aimed at younger buyers, but there are plenty more untapped markets, like women riders and Latinos (on April 8th, H-D launched the Harlistas section of its website, inviting Latino Harley-Davidson riders to share their stories and experiences). An expanded demo-ride called “Super Ride” lets more prosepctive buyers test the new models, and the “Ride Free” program – that allows Sporster owners a 100% trade-in credit on other models – “successfully created consumer interest and reinforced the brand value of Harley-Davidson motorcycles” according to the release.
H-D must be anticipating a long downturn, and is downsizing, or as it prefers to say, conducting volume reduction and consolidation. Somewhere between 1400 and 1500 employment positions will be eliminated over 2009 and 2010. Parts and accessory and general merchandise distribution will be handled through an outside vendor, as well as transportation operations. Finally, Harley-Davidson Financial Services (HDFS) is being pumped up with a combination of private funding and U.S. Treasury department loans (do you know what TALF is? Neither do I) to provide more loans to customers and move some product.
H-D has had remarkable success over the last 20 years, and it may have enough momentum to keep it coasting through this downturn.
MD Readers Respond:
- A very interesting article about HD profits and its look to the future. I am not being a smart-a#$ here, but has HD ever considered having specials involving price discounts on its bikes…as do the metric bike builders, including BMW? I stopped by one of the 3 HD dealers in my area and the salesman talked all about the new DEMO ride program that HD just introduced. A DEMO ride is a great idea, because, I am told, that statistics indicate that HD has lost potential buyers because they were not able to test-ride the bikes. But after the test ride, the potential customer is looking at a $17,000-plus price tag on a touring bike. I also stopped by the metric dealer that services by current bike and they had a 2008 Star Midnight Stratoliner, on sale for $11,300, all-most 4-grand off the MSRP. I guess HD is not there, yet. David
- I examined the just-released ’10 Mazda 3, a lot of vehicle starting at about $17k base. While waiting for my Mazda 6 to be serviced I walked across the street to the H-D dealer & looked at their offerings from about $13k to $25k. I just can not believe what a rip off it looks like compared to the car (yes, I know the savings in car numbers, etc. But they have to ship that 2800 lb car across the world! When you think how much less raw material & workmanship is in the H-D (& so little performance compared to other motorcycle brands) the H-D looks like a total rip-off. jimbo
- My hope is that other manufacturers are also able to weather this also. Motorcycling, at least for me, has always meant an expanded and diverse offering from which to select from. Motorcycling would never be the same if all we were left with were just a few manufacturers. Rick
- I’ve heard some crazy figures about HD repossessing 1000 bikes a day, do you know if this is accurate? Steven